Tuesday, April 9, 2013

Some perspective on granny and catfood

This post will likely place me squarely in the land of wonks, but I thought it would be interesting to compare the out-of-pocket savings seniors will get from the Medicare changes included in Obamacare to the reduced income that would result from the implementation of chained CPI.

This article at Healthcare.gov does a great job of pointing out the four ways Obamacare will save seniors money.
First, premiums for Part B physician and certain other services are expected to increase at a slower rate than would have occurred without the Affordable Care Act, resulting in lower Part B premiums over time. Second, beneficiary copayments and coinsurance under Part A and B will increase more slowly because the Affordable Care Act slows the rate of growth in payments to hospitals and other providers. Third, closing the Medicare prescription drug coverage gap, often called the “donut hole,” will lower costs for beneficiaries who otherwise would have been required to spend thousands of dollars out of their own pocket for their prescription drugs. Finally, the Affordable Care Act will provide many preventive services to seniors at no additional cost.
Then they provide this chart to estimate the annual savings for seniors over the first 10 years.
Table 1. Estimated Affordable Care Act Annual Savings per FFS Medicare Beneficiary
YearBeneficiaries Not Reaching the Donut HoleBeneficiaries Reaching the Donut HoleAll FFS Beneficiaries

Now lets look at the reductions in income that would result from implementing chained CPI. I couldn't find an apples-to-apples comparison, but check this one out.
This suggests that 10 years after implementation, the average senior would recieve $560 less per year if chained CPI were implemented. And Obamacare will save that same senior about $600 per year. 

Due to the fact that chained CPI is about COLA increases, the impact is compounded over time - as the chart demonstrates over the next 20 years. That's why any plan to implement it will have to be accompanied by a bump in benefits for the very elderly. 

I don't post this to make an argument for or against chained CPI - simply to provide some perspective. The President who put it on the negotiating table is the same one who - not too long ago - assured that seniors will pay less for health care. So puhleeze can we stop with the "Obama wants granny to starve bullshit!" 


  1. "That's why any plan to implement it [chained CPI] will have to be accompanied by a bump in benefits for the very elderly."

    That being the case, why implement it at all? (Rhetorical question. I understand that you are not making an argument for or against.)

  2. I believe it is intended to induce stress on the other side by triggering conflicting Pavlovian responses. On one hand they want to hurt Seniors and hack away at the Big 3, but it's paired with revenues so no can do. That conflict is causing stress that is increasing exponentially within the GOP, impacting their unity and effectiveness, leading to mistakes, missteps, gaffes, and other such Republican stupidity. In short, revealing who and what they really are. And if a gaggle of Firebagging Poutragers get caught in the trap as well, we'll call it a twofer.

  3. 1badbaba3 I think you've nailed it!