Sebelius Touts Medicare Advantage, Despite Obamacare Stripping Billions of Dollars from Successful Private Insurance Plans

By Penny Starr | February 2, 2012 | 5:49pm EST

Health and Human Services Secretary Kathleen Sebelius.  ( Starr)

( – In a conference call with reporters on Wednesday, Health and Human Services Secretary Kathleen Sebelius touted Medicare Advantage as being “stronger than ever,” while not mentioning the Congressional Budget Office’s projection that $254 billion of the $500 billion cuts in Medicare to fund Obamacare will come from slashes to the private-sector insurance program.

“The program is stronger than ever with improved benefits and lower costs,” Sebelius said. “As we projected in September, Medicare Advantage premiums have fallen by an average of seven percent while enrollment has risen by about 10 percent.”

Sebelius also said that in addition to the falling costs of premiums, beneficiaries “have robust choices no matter where they live,” citing the approximately 26 plans available in most counties around the country.

Sebelius credited the Patient Protection and Affordable Care Act, which became law in March of 2010, for the continued success of Medicare Advantage.

“The best news is that along with lower premiums and more choices, the quality of choices is also improving, with more and more beneficiaries in 4- and 5-star plans – a rating system that recently has become part of this important program,” Sebelius said, adding that the government was offering “incentives” to encourage other plans to follow suit. She did not elaborate on the incentives.

“Now this is just one of the ways the Affordable Care Act is making stronger and more sustainable Medicare for years to come,” Sebelius said.

But Kathryn Nix, a policy analyst in the Center for Health Policy Studies at The Heritage Foundation, told that Medicare Advantage has a record of success dating back well before Obama’s health-care plan and that Obamacare will actually damage the plan.

“Extensive research has shown that Medicare Advantage was achieving higher quality than fee-for-service well before passage and enactment of the Affordable Care Act,” Nix said. “Instead of protecting the successful program, the health law makes harmful cuts to Medicare Advantage plans.”

Nix said that according to Centers for Medicare and Medicaid Services, an estimated $145 billion will be cut from Medicare Advantage over the first decade of Obamacare alone.

“The effect will be higher premiums or fewer benefits for Advantage enrollees, forcing seniors back into the flawed traditional Medicare program,” Nix said.

Nix authored a research paper in January for Heritage that analyzed the success of the Medicare Advantage program, which was created in 2003 through the Medicare Modernization Act.

The law gives seniors and other recipients the choice of using Medicare-approved private health care plans as an alternative to Medicare fee-for-service plans. Nix said in the report that in 2010, close to 25 percent of the Medicare population was enrolled in Medicare Advantage.

At least one senator has estimated that 46 percent of current Medicare Advantage enrollees in his state will lose their insurance plans by 2017.

Sen. James Inhofe (R-Okla.) said once Obamacare is fully implemented, those who are able to keep their plans in place will see a cut of $3,140 in services -- cuts that will disproportionally affect low-income seniors and disabled beneficiaries, he added.

Meanwhile, as reported earlier by, a CBO report released in January evaluated 10 demonstration projects conducted by Medicare in which managed care programs and value-based payment programs were evaluated – both programs are key features of Obamacare.

“The evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program,” the report said.

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