Medicare has had a weird couple of weeks. First we heard that Medicare Advantage plans would be cut over 2% in the 2014 budget. Then we heard that CMS (Medicare HQ) actually would increase MA funding by over 3%. What gives?

In a word, politics is still at work in Washington. There are something in excess of 11 million seniors and qualified disabled people on Medicare Advantage plans at the moment. Funny thing about these people — they ALL vote. As the current administration is intent on reclaiming the House of Representatives for like-minded politicians in 2014, one could speculate that handing Medicare beneficiaries a major haircut in their Medicare coverage for 2014, would not encourage them to vote for the current regime.

Apparently, the switch hit came about due to massive lobbying and a major policy change. Specifically, CMS has decided that after Congress has voted 25 or so times over the past 14 years to “fix” the doctor reimbursement formula with additional funding, they might as well go right ahead and presume they will do the same this next year. This will be interesting to watch as the Chief Medicare Actuary decried the change in policy.

But rather than getting too excited, remember that the built in cuts to Medicare due to the federal health insurance reform plan are not affected. Since this amounts to roughly 2%, can we just say that the 3.3% budget increase really only nets out to be a little bit north of 1%? Also, this week the administration is supposed to publish it’s plans for future budgets, and a key element of these plans is supposed to be entitlement cuts (read:: Medicare, Medicaid).

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