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Medicare cuts imminent - could harm Democratic chances in mid-term elections

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The U.S. government is expected deliver bad news to senior citizens this week concerning the proposed payment hikes for Medicare plans next year. That means higher co-pays and fewer benefits for seniors, according to industry officials.

That will be a different story from President Obama’s reversal on his pledge to make cutbacks on Social Security. Something the White House felt they would be held personally responsible for in an election year that could gravely harm Democrats.

Approximately 50 million senior Americans carry Medicare, while 15 million of that group carries Medicare Advantage plans. The rest use Medicare fee-for-service programs, in which doctors are reimbursed by the government for patient visits and procedures.

The difference between the White House being blamed directly for any Social Security cuts while Medicare cuts are determined by the Centers for Medicare and Medicaid Services who propose reimbursement rates. Rates Medicare agrees to pay insurers for managing the privately run programs.

Final results are then made publicly in 45 days.

Those results will cut about 6 to 7 percent when announced this Friday. Obviously health insurance executives have been lobbying against such alarming cuts.

Some insurance companies may eliminate plans and withdraw from certain markets. That was the pattern last year when the government cut rates by nearly 6 percent.

Robert Zirkelbach, spokesman for the healthcare industry's key trade and lobbying group commented, "The concern is that a second consecutive 6 percent cut to the program will be devastating for seniors."
Whether the cuts are tied directly or not to the Obama administration, the news is not good for capturing the senior vote in the midterm elections this November. The president is already under heavy political pressure concerning the disastrous Obamacare roll-out last October and the continuing problems the law has created for millions of Americans.

It could also leave investors in large Medicare Advantage businesses angry as predicted payments decline. That may not be the case if the cuts come in far below or far above 6 percent, according to CRT Capital analyst Sheryl Skolnick.

As Skolnick put it, "It is by no means a secret. Everyone knows it is coming and everyone knows it is going to be bad."

The hammer is expected to drop April 7, approximately a month before primary season begins.

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