September 9th, 2009
11:03 PM ET
5 years ago

CNN Truth Squad: Keep your plan under Obama's proposal?

The Statement:

"If you are among the hundreds of millions of Americans who already have health insurance through your job, Medicare, Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have," President Barack Obama said during his September 9 address to Congress.

The Facts:

Concerns that Democratic plans to extend health insurance coverage would result in Americans losing their current coverage have been a common theme of the summer's debate over the issue.

The bill that has been marked up by three House committees specifically states that it protects "the choice to keep current coverage." A similar passage in the version approved by the Senate Health, Education, Labor and Pensions Committee is titled, "No changes to existing coverage."

But while the language of the bills now before Congress is clear, critics of the proposals argue that some of their provisions would effectively drive private insurers out of the market. Sen. John McCain, R-Arizona, told CNN that a government-administered insurance plan, which both bills call for, would have an "unfair advantage" over the estimated 1,500 private companies in the market.

"If it has an unfair advantage, then obviously Americans are going to gravitate in that direction and private health insurance will be more expensive," said McCain, the Republican presidential candidate in 2008.

And on another point, Obama called for reducing what he called "unwarranted" subsidies to private insurers "that do everything to pad their profits and nothing to improve your care." During a Labor Day speech to the AFL-CIO two days earlier, Obama said Democratic proposals ultimately would save taxpayers $100 billion.

A 2007 study by the nonpartisan Congressional Budget Office found that the privately run Medicare Advantage program - which pays private insurers to provide Medicare benefits which are sometimes more generous - costs about 12 percent more per person than traditional fee-for-service Medicare. That works out to more than $11 billion a year, according to an analysis by the liberal-leaning Commonwealth Fund.

Medicare Advantage was created by the 2003 Medicare overhaul the Bush administration pushed through Congress, a measure that also added prescription drug coverage to the federal health insurance program for Americans over 65.

The subsidized offerings were controversial from the start.

But Peter Orzag, the CBO's director in 2007, told a House committee in at the time that cutting those subsidies would cause some policyholders to drop their policies and return to traditional Medicare, while keeping others from joining the private plans. Orzag, now Obama's budget director, said that getting rid of the differential could reduce the projected number of Medicare Advantage beneficiaries by about half.

"Reducing the payment differential between Medicare Advantage and the fee-for-service program could result in substantial savings to the Medicare program but also in a reduction in the supplemental benefits and cash rebates that Medicare Advantage plans can offer to enrollees and reduced enrollment in those plans," he told the House Ways and Means Committee.

The Verdict:

True, but incomplete. While the Democratic bills now working their way through Congress don't force anyone to enroll in a proposed public health plan or ban private coverage, a congressional study found that at least one program now offered to seniors could be cut back if other parts of the bill survive.


Filed under: Health care fact check
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