The Latest Lie About Obamacare: Medicare Premiums Will Soar!

Hands off Medicare
Obamacare myths and rumors are nothing new, but in the weeks since the Patient Protection and Affordable Care Act got the all-clear from the Supreme Court, the propaganda mill has picked up steam. Old chestnuts like the famed "death panel" whopper and the rumor that the PPACA will raid Medicare have been joined by new exaggerations and outright falsehoods, like the claim that health care reform will add a new tax to every house sale and that it will provide free health care to illegal aliens.

As I've covered the story over the past few weeks, I've received a deluge of e-mails from readers curious about the truth behind many anti-Obamacare claims. Some have actually proven true -- for example, as I noted in an article published Wednesday, the PPACA will not pay for alternative medicine, and it will actually raise some new taxes.

This week, several readers informed me of a new claim -- that the PPACA will send Medicare premiums through the roof over the next two years. The original version of this rumor dates back to 2010, and stated that monthly Medicare premiums were going to rise from $96.40 to $247 by 2014. By the following year, however, it had transformed into a more specific -- and more realistic-sounding claim, namely that Medicare Part B premiums would rise to $247.

But, while terrifying older voters is generally a productive tactic for opponents of health care reform, the rumor didn't really gain the traction that its creators wanted. So recently, they took a fresh turn with the claim that Blue Cross premiums were going to rise to $247. For an added touch of verisimilitude, the creators of the latest piece of propaganda used the logo for Blue Cross and Blue Shield of Alabama.

Sorry, Wrong Numbers

This claim is not only false from start to finish, but it also demonstrates a striking misunderstanding of actual Medicare premiums. One version of the email claims that the Part B premium will go from $104.20 in 2012 to $120.20 in 2013 to $247 in 2014. In reality, the Part B premium for 2012 is $99.90, a $14.50 drop from 2011 and a $10.60 drop from 2010.

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As the AARP notes in its response to what it describes as a "bogus email," because premiums are calculated based on Medicare costs, there is no way of predicting how much they will rise -- or fall -- in the next few years. However, the AARP points out, there are provisions in the PPACA that could conceivably lower Medicare Part B costs in upcoming years.

"It's just another attempt to scare older Americans and has no basis in fact," continues the AARP bulletin.

As for the Blue Cross claim, the vice president for corporate communications for Blue Cross and Blue Shield of Alabama told reporters that the tale "is not reflective of the company's position [and] contains incorrect information."

In other words, the prediction that Medicare premiums (or Part B premiums or Blue Cross premiums) will go to $247 in 2014 is an absolute falsehood.

Obamacare Myths
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The Latest Lie About Obamacare: Medicare Premiums Will Soar!

Myth 1: Obamacare is being partially funded by a $500 billion cut to Medicare.

Reality: Funding for Medicare will actually increase over the next 10 years. However, the rate of increase will drop, partially due to more aggressive prosecution of fraud and a reduction in overpayments to insurance companies.

In fact, the ACA has already increased funding to Medicare in some ways. It has increased the minimum rebate on drugs, extended coverage to smaller hospitals, set up public health screenings for Medicare recipients, and it introduced a discount to help cover the Medicare "doughnut hole" on prescriptions. The plan is to eliminate the doughnut hole by 2020.

Myth 2: Obamacare will introduce "death panels" that will severely ration care and will force elderly patients to commit suicide or submit to euthanasia.

Reality: Introduced by Sarah Palin in 2009, the idea that health care reform will lead to euthanasia is one of the most persistent lies myths surrounding Obamacare. There have been several versions of this claim; the most recent is that the Independent Payment Advisory Board will ration care and will make end-of-life decisions for patients.

In truth, the IPAB is basically powerless. It will make health care policy recommendations to Congress, which will then have the ability to pass or reject those suggestions. The president, in turn, will have the power to veto Congress' decisions -- as he can with any other piece of legislation.

Ironically, death panels already existed before health care reform -- but they were run by your insurance company. Insurers have regularly denied coverage for pre-existing conditions, canceled policies on sick patients, refused to pay for vital, life-saving operations, and otherwise made financially-based decisions about who would get to live and who would be left to die.

According to one congressional report, three insurance companies -- UnitedHealth (UNH), WellPoint (WLP) and Assurant (AIZ) -- saved $300 million by canceling policies on over 20,000 sick people over a five-year period. The new health care law will make many of these practices illegal. In other words, rather than creating death panels, Obamacare will actually abolish them.

Myth 3: Obamacare will force the middle class to pay for health care for poor people and illegal immigrants.

Reality: Many health care reform critics have argued that America already has a universal health care option: emergency rooms. After all, the argument goes, when people without insurance find themselves in desperate need of medical attention, they can always find help in ERs, which are required by law to open their doors to anyone in need of care. Consequently, critics claim, poor people can get health care without passing the charges on to the middle class.

But this health care isn't free -- in fact, standard treatment through a primary care physician is far cheaper than crisis care in an ER. Many hospitals aggressively bill emergency patients -- and their insurers -- to recoup the inflated costs of such care. Even so, they come up short.

So who covers the shortfalls? Well, a significant source of hospital funding is taxes. For the rest, hospitals make up their ER losses by inflating the prices that insured customers pay -- and according to the Center for American Progress, this amounts to a $1,100 yearly "hidden tax" on health insurance. Put simply, emergency room care is already funded by taxpayers and the insured middle class.

Granted, Obamacare will extend Medicaid to lower income families, and will subsidize health insurance for people who make up to 400% of the poverty line. On the other hand, it will also require people who can pay for health insurance do so, and will more aggressively prosecute Medicare fraud. More to the point, it will levy a 0.9% tax on households making more than $200,000 per year, and will increase taxes on medical machinery manufacturers, pharmaceutical companies, and insurers. Thus, it will, in all likelihood, actually reduce the burden on middle class families.

Myth 4: Obamacare is a socialist program.

Reality: Socialism is a system under which the government directly runs a nation's industries. Under this standard, New Deal programs like the Works Progress Administration and the Tennessee Valley Authority could, arguably, be considered socialist. After all, they represented instances in which the government directly employed people to build and administer power plants and other public works that generated income.

Obamacare, on the other hand, will work through private companies. Rather than directly providing health insurance, either through a national program or through some sort of public option, the government will require that people deal with private insurers. Far from competing with private industry, the health care law will likely give it a lot of new customers.

Myth 5: Obamacare will bankrupt small businesses by making them pay for their employees' health insurance.

Reality: The basis of this claim is a requirement that companies with more than 50 "full-time equivalent" employees must offer affordable health insurance to their workers. The insurance in question must not cost more than 9.5% of the employee's annual salary and must pay for at least 60% of covered health care costs.

A big part of the disagreement over the impact of this requirement lies in how you define a "small business." According to the government, the cutoff line between a small and a large business is 50 "full-time equivalent" employees. In other words, if a company's weekly work load totals more than 1500 hours -- the equivalent of 50 employees working for 30 hours per week -- then it is, officially, a large business, and is required to provide a competitive health insurance option.

As a side note, Obamacare contains a pretty significant tax break for businesses with up to 25 employees that offer health insurance.


Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at, or follow him on Twitter at @bruce1971.
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