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Sen. Ted Cruz says his “fight against Obamacare must continue,” and so must our fact-checking of claims about the law.
Cruz distorted the impact of the Affordable Care Act on two vulnerable populations — the elderly and special needs children:
Cruz said seniors “right now” are being notified that they are “losing their health insurance” during the enrollment period that began Oct. 15. In fact, the number of seniors enrolled in the Medicare Advantage plans to which he’s referring has increased30 percent since the law took effect in 2010 — and enrollment is expected to increase again next year.
He also claimed seniors “are facing higher prescription drug costs” next year. In fact, seniors to date have received $7 billion in rebates and prescription discounts under the Affordable Care Act, and the average senior will have the choice of more prescription drug plans for 2014.
Cruz said “families of special needs children will face a new penalty for using savings” to pay for medical expenses. He’s referring to a $2,500 cap on pre-tax contributions to flexible spending accounts. Actually, advocates for special needs children say that provision hasn’t had much of an impact, and other provisions of the new law “greatly benefit people with disabilities.”
On Oct. 16, when Senate leaders announced a bipartisan deal that would end the partial government shutdown, Cruz held a media availability and issued a press release to say he opposed — but would not block — the agreement.
He said he would oppose the Senate compromise because it does nothing to help “the millions of Americans who are being harmed by Obamacare,” singling out some of the nation’s most vulnerable populations.
Cruz, Oct. 16: And it provides no relief to all the seniors, to all the people with disabilities who are right now getting in-the-mail notifications from their health insurance companies that they’re losing their health insurance because of Obamacare.
Cruz, Oct. 16: As a result of Obamacare, families of special needs children will face a new penalty for using savings to pay for medical therapies and health-related expenses. That’s not part of the discussion. Seniors who are facing higher prescription drug costs as a result of this law won’t be given any consideration, either.
We asked the senator’s office for information on the statements he made about the impact of the law on seniors and special needs children. Let’s start with senior citizens, beginning with the claim that seniors are “losing their health insurance.”
The senator’s office referred us to a recent analysis by the consulting company Avalere of Medicare Advantage plans that will be available to seniors for 2014. The consulting firm’s report found that the number of plans available to seniors in 2014 would “dip modestly” from 2,664 to 2,522, a decline of 5.3 percent. The open enrollment period began on Oct. 15 and ends Dec. 7, so Cruz is no doubt right that some seniors have been told that their insurance plan is no longer part of the Medicare Advantage program.
However, a drop in the number of plans does not mean a drop in the number of persons covered.
In fact, the nonpartisan Kaiser Family Foundation reports that the number of persons enrolled in MA plans rose by nearly 10 percent this year, compared with 2012. A total of 14.4 million persons now are covered by MA plans, more than ever before.
The Centers for Medicare & Medicaid Services says that trend will continue. In a Sept. 19 press release, the CMS said “for the fourth straight year enrollment is projected to increase” in 2014. CMS spokesman Raymond Thorn told us in an email that enrollment “is projected to grow to 14.995 million in 2014,” an increase of 4.7 percent over this year.
This is exactly contrary to the predictions at the time of the law’s enactment. KFF notes: “Since 2010, enrollment in Medicare Advantage plans has grown by 30 percent in spite of concerns that the payment changes enacted in the 2010 Affordable Care Act would lead to significant reductions in enrollment.”
In fact, as Affordable Care Act critic Alyene Senger of the conservative Heritage Foundationwrote recently, “It is not yet known how MA plans will react to Obamacare’s significant reductions or how beneficiaries will respond to any changes made by MA plans.” But that hasn’t stopped Cruz from saying seniors are losing coverage. His office even cites Senger’s article as supporting that claim, perhaps hoping that we would not actually read it.
Allyson Funk, a spokeswoman for the AARP, did not express concern about the slight dip in MA plans. She said there “will remain broad penetration and availability of MA plans” in 2014. Funk also noted that Medicare Advantage premiums have gone down, “while quality has improved,” since the passage of the Affordable Care Act. CMS says the average premiums for Medicare Advantage plans are down by 9.8 percent since the health care legislation became law.
In his criticism of the law’s impact on seniors, Cruz also made reference to seniors with disabilities when he expressed concern about “all the people with disabilities” who “right now” are “losing their health insurance.”
This time, the senator’s office referred us to a Sept. 16 opinion piece written by Scott Gottliebof the conservative American Enterprise Institute about 9 million low-income people who are eligible for both Medicaid and Medicare. Gottlieb wrote that many of these people “will be forcibly moved into Medicaid HMOs once another long-delayed element of the bill starts to get implemented this fall.”
But they are not “losing” coverage “right now” — in fact, most of the 9 million will be unaffected now and for at least three years.
Here’s what’s happening: In April, CMS announced that it would provide funding and technical assistance to 15 states to develop demonstration programs designed to provide better, more cost-effective services to low-income people (elderly and non-elderly) who are eligible for both Medicaid and Medicare. In a recent report, KFF says the demonstration project is limited to no more than 2 million dual-eligible beneficiaries, and, so far, CMS has approved specific plans in eight states covering 1.1 million beneficiaries.
The demonstration programs, which will last for three years, target both the elderly and non-elderly. In fact, Massachusetts’ program will include only non-elderly, dual-eligible beneficiaries, according to KFF’s report. Five of the eight states (and the county of Los Angeles) will seek volunteers for the demonstration programs before automatically assigning beneficiaries to managed care plans. In one state, Minnesota, the demonstration program will be strictly voluntary. Six states will allow beneficiaries assigned to HMOs to opt-out.
According to CMS: “[I]n each Demonstration beneficiaries will receive all the current services and benefits they receive today from Medicare and Medicaid with added care coordination, protections and access to enhanced services.”
In other words, the coverage they are getting is supposed to be better than the coverage Cruz says they are “losing.” Whether it works out that way or not, we can’t say, and at this point neither can he.
‘Higher Prescription Drug Costs’?
Cruz also said that seniors “are facing higher prescription drug costs,” and his office again referred us to the Avalere analysis.
In addition to its analysis of Medicare Advantage, Avalere also reviewed the costs of Medicare Part D standalone Prescription Drug Plans (PDPs) for the 2014 coverage plans that seniors are now signing up to join. The analysis concluded: “On average, PDP premiums will increase by 5.1 percent overall.”
The Kaiser Family Foundation, in its own analysis, says that the average increase for these plans will be a little less than 5 percent — from $38.14 per month to $39.90 — “unless many new or current enrollees select lower-priced plans.” That is entirely possible. KFF notes that Medicare beneficiaries in 2014 “will have a choice of 35 stand-alone PDPs, on average, up by four from 2013.”
KFF also illustrates in Exhibit 3 of its report that average premium increases are nothing new for Medicare Part D standalone plans. Since 2006, the average premium has gone up about 54 percent — including a high growth rate of 17 percent in 2009, which was before the Affordable Care Act took effect. The only year the average premium did not go up was in 2012, when the law was in effect.
But seniors — and about two out of three seniors are in standalone prescription drug plans — should be warned that averages are just that. What any individual will pay will vary — sometimes greatly — as KFF’s study points out.
KFF says: “Enrollees in two of the most popular PDPs will experience 50-percent premium increases if they stay in the same plans in 2014, while enrollees in three other popular PDPs will see lower premiums.” Exhibit 4 provides this breakdown: Forty-four percent will see an increase of $1 to $10 per month, and 14 percent will see an increase of more than $10 per month. Thirty-one percent will see a decrease of $1 to $10 per month, and 4 percent will see a decrease of more than $10. About 7 percent will see a minimal change.
As is the case with most insurance coverage, the actual change in premiums will depend upon an individual’s personal situation and the decisions that he or she makes.
“We encourage our members to carefully evaluate their Part D plan options each open enrollment period by comparison shopping,” the AARP’s Funk said.
It’s also true that premiums are just one component of the prescription drug insurance coverage.
KFF notes that a little more than half of the PDPs — about 53 percent — require a deductible. For those that do, the deductible will fall next year from $325 to $310 — a $15 savings that would help offset the average premium increase for some seniors.
Also, the Affordable Care Act has provided 6.6 million seniors with $7 billion in rebates and discounts on prescription drugs to help them pay for costs that fall into a gap in coverage known as the “doughnut hole.” In 2014, the plans will pay most drug costs (minus a deductible and co-pays) up to a certain level (after a beneficiary incurs $2,850 in total costs). But then beneficiaries will have to pay all of their prescription costs until they reach a “catastrophic level” of $4,550 out-of-pocket expenses “(or $6,691 in total drug costs under the standard benefit),” KFF says in its report. About 82 percent of PDPs offer no or very limited gap coverage, the report says.
However, the Affordable Care Act provided a one-time $250 rebate to seniors who have Medicare Part D drug coverage in 2010 to help cover some of the costs of the doughnut hole. In addition, the law provides discounts each year and eventually (by 2020) phases out the doughnut hole entirely. In 2014, for example, that means that seniors who reach the coverage gap will receive a 50 percent discount on brand-name drugs and the insurance plan will pay 2.5 percent of the cost, leaving seniors to pay 47.5 percent during that gap period.
Special Needs Children
Cruz also said “families of special needs children will face a new penalty for using savings to pay for medical therapies and health-related expenses.” Some may, but advocates for these families say Cruz overstates the impact and ignores the benefits these families will receive from the Affordable Care Act.
Cruz’s office told us the senator was referring to the $2,500 cap the new law places on annual contributions to Flexible Spending Arrangements (FSAs). These accounts allow an estimated 33 million Americans to contribute pre-tax dollars from their pay checks for future medical expenses. Until January of this year, the IRS did not limit how much employees could contribute — although employers could.
The senator’s office referred us to a Sept. 25 blog post on the website of Americans for Tax Reform, a conservative group that is opposed to the law. ATR says the cap “will be particularly cruel and onerous” on special needs children, because these families use the accounts not only for medical expenses but also to pay tuition for special needs education.
This is not the first time that Republicans have cited the cap as being particularly onerous for special needs families who use FSAs for education costs. The Republican National Committee has claimed that the cap will result in a “$13 billion tax increase on families with special needs.” The RNC also says special needs families use these accounts “to pay for fees at special needs schools, transportation costs associated with their child’s education, Braille books, and guide dogs for the visually impaired.”
It is simply not true that the special needs families will have to pay $13 billion in additional taxes. That’s the total amount that the cap is expected to generate in new revenues over a 10-year period, according to the Joint Committee on Taxation. It isn’t known how much of that would be paid by the families of special needs children, but the ARC — one of the nation’s leading advocates for children with developmental disabilities — tells us that it hasn’t seen any evidence of the cap having much of an impact on families with special needs children.
“We do not know how many people may be using FSAs to pay for private school tuition or other expenses — we have tried to research it but found no information,” the ARC said in a statement provided to us by spokeswoman Kristen McKiernan. “We know it can be expensive to have a special needs child but we have not seen any evidence that the ACA change [on FSAs] is very impactful.”
Wendy Fournier, president of the National Autism Association, said her organization hasn’t fielded any questions or complaints about the cap on FSAs for either tuition payments or medical expenses. “We haven’t had any of our members say it is an issue for them,” she said. It may be an issue for some, but she’s not heard that it is. “This is the first I heard of it,” she said.
The ARC statement noted that the IRS still allows special needs families to deduct medical expenses and health-related expenses, including for special education. IRS rules say such families can deduct certain educational expenses for “children who have learning disabilities caused by mental or physical impairments,” including tuition, meals and lodging. The deduction, of course, does not provide the same benefits as pre-tax contributions to an FSA.
The ARC and the United Cerebral Palsy websites say the Affordable Care Act “contains numerous provisions that greatly benefit people with disabilities.”
The ARC and the United Cerebral Palsy: The most important changes that the ACA will bring about are: Prohibiting pre-existing condition exclusions; Eliminating annual and lifetime caps; Prohibiting discrimination based on health status and disability (prevents insurers from dropping individuals when they get sick); Requiring insurers to issue and renew insurance to employers and individuals; Expanding Medicaid eligibility to cover individuals with incomes up to 133 percent of the federal poverty line (approximately $29,000 per year for a family of four); and making a number of improvements to the Medicaid program.
The ARC statement summed it up by saying, “We expect that the ACA will benefit people with disabilities because of the health insurance reforms.”