Fact-Checking the Medicare Advantage Clash at Biden/Ryan Debate

Like most, I found the Biden/Ryan debate last week some of the best TV of the election season.  Both were well-prepared and spoiling for a fight, and moderator Martha Raddatz did a terrific job.  There was one exchange that really got our attention when the topic turned to Medicare Advantage:

Rep. Paul Ryan:“7.4 million seniors are projected to lose their current Medicare Advantage coverage they have. That’s a $3,200 benefit cut.”

Vice President Biden: “That didn’t happen.”

Ryan:“What we’re saying. . .”

Biden:“More people signed up.”

Ryan:“These are from your own actuaries.”

Biden:“More people signed up for Medicare Advantage after the change.”

WaPo’s Fact Checker Glenn Kessler did a nice piece today on the veracity of the claims made:

“Many viewers were probably puzzled by this back-and-forth over Medicare between Vice President Biden and the GOP vice presidential nominee, Rep. Paul Ryan (R-Wis). The strange thing is that both are right — but Ryan has a distinct edge in the argument.

The Facts

Medicare Advantage is the private alternative to the traditional insurance program for seniors, with 13.1 million beneficiaries, or about 27 percent of the Medicare population. We’ve previously explored some of the debate concerning the $145 billion reduction in projected spending for Medicare Advantage contained in the health-care law, which is intended to reduce costs in a program in which the government pays more per senior than in traditional fee-for-service Medicare.

Ryan is correct that the Medicare actuary, Robert S. Foster, estimated that the projected enrollment in Medicare Advantage would be halved under the law. “We estimate that in 2017, when the MA provisions will be fully phased in, enrollment in MA plans will be lower by about 50 percent (from its projected level of 14.8 million under the prior law to 7.4 million under the new law),” Foster wrote.

Note that this is from a projected level that is currently higher than enrollment today (13.1 million), so the actual projected reduction from today’s level is 5.7 million. But Ryan absolutely nailed the number in Foster’s estimate, even noting that it is a projected figure. (His claim of a $3,200 benefit cut came from a report by the right-leaning Heritage Foundation.)

What about Biden’s response that enrollment has gone up “after the change”? This is technically correct, but misleading. Enrollment in Medicare Advantage plans have gone up from 11.1 million (when the health care law was approved) to 13.1 million today — but most of the reductions in Medicare Advantage have not taken effect yet.

Moreover, in what Republicans believed was a politically motivated move, the administration earlier this year essentially deferred the planned cuts with a $6.7 billion infusion of funds into Medicare Advantage. The cuts were to begin to take effect this year, but the action helped mitigate the impact in this election year.

Still, the Kaiser Family Foundation cautioned in a report that the extra payments could not fully explain why enrollment has continued to climb:

The Medicare Advantage marketplace is robust based on plan participation and enrollment. While new quality based bonus payments may have helped to mitigate the effects of the payment reductions that are now being phased in, the trend towards growing Medicare enrollment has been persistent over time and is unlikely to be fully explained by quality bonus payments alone, but rather a combination of historical trends in payment, new quality bonuses, the continued erosion of retiree benefits, and other factors affecting beneficiary choice.

The Pinocchio Test

Readers should always keep in mind that projections are only estimates, and so claims of potential cuts should be taken with a grain of salt. Still, Ryan was correct that the Medicare actuary estimated that millions of retirees would switch out of Medicare Advantage in response to the reductions contained in the health care law — and Biden was being misleading when he said enrollment has continued to climb “after the change.” Those cuts have largely not yet taken place, in part because of some election-year spending by the administration. So Biden gets the (2)Pinocchios in this case.”

I think Kessler is showing the Vice President some tough love here.  Technically Joe is also right, and it’s not misleading to make the claim he did without the cuts having been implemented yet (they were deferred via CMS’s massive $8 billion Star Ratings Demonstration).  Medicare Advantage continues to grow at a blistering 10+% pace even after health reform’s passage.  And that’s something both parties can claim credit for.