1 of the primary questions about Congress’ moves towards healthcare reform is how they are planning to pay for it. A assortment of budget cuts and tax increases have been proposed by the House of Representatives and the Senate in order to supply inexpensive health care. Quite a few are especially worried about the impact of the Senate’s proposed decrease in Medicare health insurance plan spending. Nevertheless, AARP (American Association for Retired Persons) recently announced that they support the Democratic bill, which consists of approximately billion in Medicare cuts. Why would they back legislation that may harm individuals over the age of 65, half of whom are card-carrying members?

Detractors would point to their history of supporting several laws proposed by Democrats, and say that the group is too cozy with that party. AARP takes a different view; CEO A. Barry Rand told its members that the proposal would not reduce any guaranteed advantages associated with the government-sponsored health insurance plan. Moreover, he pointed out that Medicare has recently been plagued by inefficiency, waste, and fraud–eliminating such expenses should cover most of the shortfall. Some believed that such wasteful spending is inevitable when the federal government is involved, making their support of a public choice (successfully taking the form of “Medicare for all” health insurance plan) ludicrous.

Republicans such as Senator John McCain warn that the cuts will target some of the add-on advantages many seniors have come to anticipate from Medicare Benefit. These benefits typically contain gym memberships to maintain their fitness, in addition to higher quality vision and dental care. A Medicare Benefit health insurance plan is sold by private insurers as a supplement to standard Medicare. Proponents of the healthcare reform bill admit that Medicare Advantage programs will face the bulk of the cuts in federal funding, but accuse the health insurance plan providers of utilizing the partially subsidized premiums primarily to finance corporate profit margins for their shareholders and exorbitant salaries of their executives.

There is undoubtedly some opportunity for cost saving. Studies show that a senior citizen covered by a private health insurance plan (e.g. Medicare Advantage) costs the government 14% more than one on regular Medicare. It remains to be seen if the advantages to seniors outweigh the continuous additions to the spending budget deficit. McCain admonished the AARP for utilizing Medicare funding as a “piggy bank” to pay for other health care programs, thereby driving it closer to bankruptcy. The organization has also been criticized for not recognizing the wishes of their own membership: there is no doubt some overlap between their membership roster and attendance at the town hall rallies earlier this year.

The Senate is expected to vote on the Medicare cuts today, prior to debate on the complete healthcare reform bill. Democratic Sen. Michael Bennet has proposed an alternative amendment that would result in all guaranteed Medicare advantages being spared–a move which he recognizes could cost him his seat. His proposal could see far more support from Democrats wary of alienating the most consistent demographic of voters. Meanwhile, McCain has proposed his own amendment to change the language of the Medicare-related provisions and send the bill back to senatorial committees. They are accustomed to their health insurance plan and understandably resistant to change.

Is AARP likely to succeed in its objective? The likelihood is high. It is 40 million members strong, and has been a powerful lobbying group for decades. Even a fraction of them writing letters or making phone calls can have a substantial effect on pending legislation. The impact such a move will have on AARP-branded health insurance plan offerings remains to be seen.

(Image: ChiBart under CC 2.)