Analysis: Medicare will be insolvent by 2016 if Obamacare is repealed


Repealing the Affordable Care Act will accelerate Medicare’s insolvency, bankrupting the program within 4 years, according to the Kaiser Family Foundation. 

Projected Medicare insolvency date if the Affordable Care Act (also dubbed ‘Obamacare’) is repealed. SOURCE: Kaiser Family Foundation

The Kaiser analysis was released as Republicans escalated their campaign rhetorics to undo the 2009 health care law.

Read more: Paul Ryan: “Let’s get this done”

“The greatest threat to Medicare is Obamacare, and we’re going to stop it,” said Republican vice presidential nominee, Paul Ryan, during his acceptance speech at the Republican National Convention.

But, according to the Kaiser Family Foundation, repealing Obamacare would reverse the $716 billion in cost savings, thereby accelerating Medicare’s insolvency by 8 years, from 2024 to 2016.

“As a result, within four years, Medicare would not be able to fulfill its obligations to pay for all Part A covered services”, concluded the Kaiser analysis, “Repealing the Affordable Care Act: Implications for Medicare Spending and Beneficiaries.”

According to the Social Security Administration, Medicare Part A covers “inpatient hospital care, skilled nursing care, hospice care and other services.” Therefore, Medicare insolvency would necessitate lawmakers to impose: 1) a tax increase; 2) drastic cuts to Medicare provider reimbursements that would reduce seniors’ access to medical services and significantly increase their out-of-pocket costs; or 3) a combination of options 1 and 2.

How the Affordable Care Act saves Medicare money

The Affordable Care Act enacted several reforms to save Medicare $716 billion over the next 10 years, thereby extending the life of the Medicare program by 8 years.

The Medicare cost savings where achieved by:

How ‘Obamacare’ strengthens Medicare benefits

The $716 billion Affordable Care Act cost savings were then used to strengthen Medicare prescriptions drug benefits and provide free preventive care to help seniors stay healthy.

By closing the Medicare Part D “donut hole” (or coverage gap), about 5.4 million American seniors have saved more than $4.1 billion on their prescription drug costs so far this year, averaging $768 in savings per senior.

Read more: HHS: ‘Obamacare’ saved Medicare seniors $4.1 billion in prescription drug costs so far this year

Moreover, under the Affordable Care Act, many costly preventive health services – such as annual wellness exams and cancer screenings – are now provided free of charge to seniors on Medicare. The free preventive health services not only lower seniors’ out-of-pocket medical costs but they help seniors stay healthy and save Medicare money in the long-run by treating illnesses and diseases before they worsen.

During his speech at the Democratic National Convention, former President Bill Clinton criticized Republican presidential nominee Mitt Romney’s vow to repeal Obamacare.

“[Romney] actually wants to repeal those savings and give money back to the insurance companies. He wants to go back to the old system which means we’ll re-open the donut hole and force seniors to pay more for drugs, and we’ll reduce the life of the Medicare Trust Fund by 8 full years,” said Clinton. “So if he’s elected and if he does what he promised to do, Medicare will now go broke in 2016. Think about that. That means after all we won’t have to wait until their voucher program kicks in 2023 to see the end of Medicare as we know it. They’re going to do it to us sooner than we thought.”


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2 Comments on “Analysis: Medicare will be insolvent by 2016 if Obamacare is repealed

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