Chris Van Hollen’s Curious Claim on “Arbitrary” Medicare Cuts
The Washington Post’s Ezra Klein published an interview with House Budget Committee Ranking Member Chris Van Hollen over the weekend, in which the latter made an interesting claim about Obamacare’s Medicare provisions. Klein asked a question noting that “the Democrats like to say…that they’re just cutting providers, not beneficiaries. But providers often pass their costs along to beneficiaries, either by making them pay more or giving them worse service. So how real is that distinction?” Van Hollen responded thusly:
Obviously, if you were just to do across-the-board, arbitrary cuts, that would be the case, but the whole idea behind Obamacare is to change the incentive structure behind Medicare so the payments to providers focus on the value of care rather than the volume of care. So, for example, before the Affordable Care Act was passed, hospitals…had no financial incentive to coordinate the care of the condition once the beneficiary left the hospital. We’re now changing the model so hospitals don’t get reimbursed every time the patient gets readmitted.
There’s only one problem with that statement: Obamacare is paid for largely by “across-the-board, arbitrary cuts.” Take a look at the below chart, which Klein’s own colleague Sarah Kliff published last week:
The red section is the savings from hospital reimbursements – which was achieved by arbitrary, across-the-board cuts. The blue section is the savings from Medicare Advantage – which was achieved by arbitrary, across-the-board cuts. And the green section includes miscellaneous savings provisions, many of which (hospice, home health, etc.) come from – you guessed it – arbitrary, across-the-board cuts. And while CBO hasn’t released a recent re-estimate of the hospital re-admission provision Van Hollen cited, a March 2010 score of Obamacare credited only $7.1 billion in savings – just over 1% of the law’s total Medicare savings – from this particular policy. By comparison, “arbitrary, across-the-board cuts” comprise more than two-thirds of the Medicare savings, as the chart above clearly demonstrates.
Klein didn’t challenge Van Hollen on his assertion that Obamacare doesn’t include across-the-board cuts – because, well, he’s Ezra Klein. But Van Hollen’s claim is striking nonetheless. It’s one thing to say that the Medicare provisions in Obamacare are painful but nonetheless necessary, or that the provisions wouldn’t affect beneficiaries at all. But what Van Hollen said was that “arbitrary, across-the-board cuts” WOULD harm beneficiaries – and then proceeded to deny the clear fact that most of Obamacare’s savings comes from these types of provisions.
Last week came word that Rep. Van Hollen will be tapped to play Paul Ryan in preparations for the vice presidential debate. Given the level of competence on health care Van Hollen showed in his interview with Klein this week, Joe Biden might want to think about a Plan B.