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Angie Drobnic Holan
By Angie Drobnic Holan October 4, 2010

Ad against Barbara Boxer says hospitals might stop taking Medicare. We find that unlikely.

Republicans are using the health care law as a springboard to attack Democrats on Medicare, the government-run health insurance program for seniors. But some ads leave out so many details that they seem intended to simply scare people with threats of lost care.

Such is the case in an ad from Crossroads GPS, a Republican-controlled issues advocacy organization that is not required to disclose its donors. Crossroads GPS released an ad targeting California Democratic Sen. Barbara Boxer, who faces Republican challenger Carly Fiorina on Nov. 2, 2010.

"California seniors are worried," the ad begins. "Barbara Boxer voted to cut spending on Medicare benefits by $500 billion, cuts so costly to hospitals and nursing homes that they could stop taking Medicare altogether. Boxer's cuts would sharply reduce benefits for some, and could jeopardize access to care for millions of others."

The ad then advises, "Check the facts and take action. Call Boxer; stop the Medicare cuts." So we decided to step in. We're checking the ad's claim that Boxer voted "to cut spending on Medicare benefits by $500 billion, cuts so costly to hospitals and nursing homes that they could stop taking Medicare altogether."

We've looked into the claim of $500 billion in cuts to Medicare several times. The health care law --- formally known as the Patient Protection and Affordable Care Act of 2010 -- does not take $500 billion out of the current Medicare budget. Rather, the bill attempts to slow the program's future growth, curtailing just over $500 billion in future spending over the next 10 years. Medicare spending will still increase -- the nonpartisan Congressional Budget Office projects Medicare spending will reach $929 billion in 2020, up from $499 billion in actual spending in 2009.

The health care law tries to change Medicare in a couple of ways. It improves the program for beneficiaries by paying more for prescription drugs and preventive care. It attempts to curb Medicare spending, both to make the program more efficient and to help pay for new programs for the uninsured. (The nonpartisan Kaiser Family Foundation created an easily digestible tutorial on the overall changes to Medicare under health care reform.)

Of the $500 billion in reduced spending going forward, some comes from relatively minor changes, such as $36 billion in savings from increased premiums for higher-income beneficiaries and $12 billion for administrative streamlining. The law directs a new national board to identify $15.5 billion in savings, but the board -- the Independent Payment Advisory Board -- is prohibited from proposing anything that would ration care or reduce or modify benefits. More significantly, there's $136 billion in projected savings from changes to the Medicare Advantage program. About 25 percent of Medicare beneficiaries are enrolled in Medicare Advantage plans.

Finally -- and here's where we get to the part about hospitals and nursing homes -- there's $220 billion in Medicare savings achieved by reducing annual increases in payments to hospitals, nursing homes and other skilled nursing facilities and home health agencies. The reductions are part of programs intended to improve care and make it more efficient -- for instance, by lowering payments for preventable hospital re-admissions.

These reductions have some people concerned, particularly Richard Forster, the chief actuary of the Centers for Medicare and Medicaid services. Foster has issued several reports warning that the reduced payments will not achieve the cost savings that the law projects. The ad against Boxer throws up the logo of the Washington Post when it runs the words "could stop taking Medicare altogether" on the screen. We tracked the quote back to the actuary's November 2009 report. The report says that, over time, health care providers would have a more difficult time finding efficiencies and that some facilities might find it difficult to remain profitable. The actuary repeated that concern after the health care law's final passage in an April 2010 report. The actuary's projections showed that about 15 percent of all providers would become unprofitable during the next decade if the payment reductions stay in place. "Although this policy could be monitored over time to avoid such an outcome, changes would likely result in smaller actual savings than shown here for these provisions," the report concluded.

At this point, let's take a minute to note a few factual conclusions: Yes, Boxer voted for the health care bill, but it didn't cut $500 billion out of the current Medicare program. Instead, it slowed growth over the next 10 years. And not all of that $500 billion applied to hospitals and nursing homes. It was only about $220 billion in prospective reduced payments that concerned the chief actuary. That's what the ad calls "cuts so costly to hospitals and nursing homes that they could stop taking Medicare altogether."

Opinions differ on whether the reductions in Medicare payments are realistic or impossible to achieve. We won't resolve this policy dispute here. However, it's important to note that even those who think the payment reductions are unrealistic don't necessarily expect hospitals to stop taking Medicare. Instead, they expect the law to cost more than is projected.

"Hospitals are not going to stop taking Medicare. It's too big a part of their revenue," said Gail Wilensky, who ran the Medicare program under President George H.W. Bush in the early 1990s.

"I can say that's not going to actually happen, because someone is going to intervene. And when you intervene, you're not going to have the budget consequences that you originally envisioned," she said.

This same issue has played out with payments to doctors, who have been scheduled for payment reductions under Medicare for several years. Congress has delayed those payment reductions repeatedly. The current fix will expire Dec. 1, 2010. Wilensky said this is the critical issue Congress will have to address soon. "You can't really talk sensibly about fixing Medicare unless you address how you pay physicians," Wilensky said. "We're not really addressing what we have to do to fix Medicare in a key, fundamental way."

Boxer's campaign, meanwhile, pointed to her votes on fixes for physicians as evidence that she also wouldn't let payment reductions to hospitals and nursing homes affect patient care. Boxer voted for a bill in October 2009 that would have permanently fixed doctor's payments; the bill failed in the Senate.

"Sen. Boxer has consistently voted against dangerously high pay cuts to doctors that provide services to Medicare beneficiaries, because she is concerned that these cuts would limit seniors’ access to health care," said campaign spokesman Matthew Kagan.

In our ruling, it's true that Boxer voted for the health care law, and that law includes reductions in payments for hospitals and nursing homes. But $500 billion includes all the cost reductions for Medicare; the reductions for hospitals and nursing homes are about $220 billion. Finally, those warning about the spending reductions say that it's unlikely Congress will allow them to go forward if they affect patient care. Boxer, meanwhile, has voted for similar types of payment fixes in the past. Because the ad leaves out important facts that undermine most of its claims, we find the statement from Crossroads GPS Barely True.

Featured Fact-check

Editor's note: This statement was rated Barely True when it was published. On July 27, 2011, we changed the name for the rating to Mostly False.

Our Sources

American Crossroads GPS, "Worried" TV Ad, Aug. 25, 2010

U.S. Senate, vote on the Patient Protection and Affordable Care Act, Dec. 24, 2009

The Washington Post, Report: Bill would reduce senior care, Nov. 15, 2009

Office of the Actuary, Centers for Medicare and Medicaid Services, memo on the estimated financial effects of health care proposals, Nov. 13, 2009, via House Committee on Ways and Means Republicans

Office of the Actuary, Centers for Medicare and Medicaid Services, memo on the estimated financial effects of health care proposals, April 22, 2010, via ABC News

Interview with Gail Wilensky, Oct. 4, 2010, Waiting for November, Oct. 4, 2010 (subscription required)

American Enterprise Institute, A Mistaken Prognosis for Medicare, Aug. 5, 2010

The Center on Budget and Policy Priorities, House-Passed and Senate Health Bills Reduce Deficit, Slow Health Care Costs, and Include Realistic Medicare Savings, Dec. 4, 2009

U.S. Senate, Motion to Invoke Cloture on the Motion to Proceed to S. 1776; Medicare Physician Fairness Act of 2009, Oct. 21, 2009

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Ad against Barbara Boxer says hospitals might stop taking Medicare. We find that unlikely.

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