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Is President Biden really slashing Medicare Advantage benefits?

A lot of folks have asked us about an ad that accuses President Joe Biden of cutting Medicare benefits while U.S. Rep. Marie Gluesenkamp Perez stands idly by.

PORTLAND, Ore. — If you've been watching KGW over the past few weeks, you've likely noticed some new political ads running during commercial breaks — despite the fact that it isn't election season, at least not for most of the issues advertised.

One ad currently on the air accuses President Joe Biden of slashing Medicare Advantage benefits while Washington Congresswoman Marie Gluesenkamp Perez remains silent on the matter.

During the election season last fall, The Story took a look at some of the political ads running constantly on network TV to find out how truthful they were. The segments were pretty popular, and there have been plenty of requests to keep it going with these latest ads — like this one from Story viewer Vicky:

"What's the story behind the ads about Biden cutting Medicare by $300 billion dollars? I don't think it's true, but what can you tell us about these inflammatory ads and the company?"

In this story, we're going to break the ad down piece by piece.


Is the Biden administration proposing cuts to Medicare Advantage plan benefits?



This is false.

The short answer is no, the Biden administration is not proposing cuts to Medicare Advantage plan benefits.

What the administration has done is propose changes to how insurance companies that offer Medicare Advantage are paid, at least partially to reduce fraud and waste. But those changes don't require cuts to the benefits of enrollees.


First, let's address who made the advertisement. That's a group called the American Action Network, which spent $2 million to launch this ad and similar ones in 13 other Congressional districts in the U.S. They call themselves an "action tank" that promotes center-right policies based on freedom, limited government, American exceptionalism and strong national security.

American Action Network works to promote those priorities through nationwide advocacy campaigns consisting of print and TV ads like the one we're fact-checking, along with mailers, robocalls and online videos. They aren't affiliated with any political candidate in particular, which is a requirement of their 501(c)(4) status.

The organization was founded in 2010 by Fred Malek and Norm Coleman. Malek was a businessman and political adviser who worked on every Republican presidential general election campaign of the last 40 years with the exception of Donald Trump's successful 2016 bid. Coleman is a lobbyist and attorney who once served as a U.S. Senator from Minnesota.

AAN's current president is Dan Conston, a man well-known for his work on political ad strategy. He's also president of the Congressional Leadership Fund, a super PAC which works to elect Republicans to the U.S. House.

Raiders of the lost Medicare

Here's how AAN's Medicare ad begins:

"How did DC liberals fund $200 billion for IRS and Green New Deal pet projects? By raiding our Medicare."

The ad is referring to the increase in Internal Revenue Service funding and other projects under the "Inflation Reduction Act" that was passed last August. The law did grant an additional $79.6 billion in funding to the IRS and more for clean energy projects. But it wasn't funded by raiding Medicare as the ad claims.

The Committee for a Responsible Federal Budget — an independent nonprofit that analyzes policy — took a look at the new law. They concluded that the Inflation Reduction Act included three major policies to reduce Medicare costs, especially prescription drug costs, by about $300 billion through 2031. The think tank concluded that the policies would actually improve benefits for people on the plan, lowering premiums and out-of-pocket costs.

The Congressional Budget Office's analysis of the law said "the main contributors to that decrease were pricing reforms for prescription drugs, which CBO estimates will reduce prescription drug spending in Medicare Part D and Medicare Part B."

The CBO mentions that the government's savings would offset increased spending on the IRS and clean energy projects.

However, to say that Biden "raided" Medicare is a bit of a leap. Policies were enacted to reform pricing structures in order to reduce Medicare costs. To simplify, it's a bit like if you figure out a way to save money in one part of your budget — perhaps by finding a cheaper place to buy gas or groceries — and free up that money to be spent somewhere else. But you didn't cut back on your gas or groceries, you just got them cheaper.

Claims like these have popped up repeatedly over the last year, though the amount of Medicare "cuts" has changed over time: $300 billion, $280 billion, and now $200 billion.

Passing the buck

The ad continues thusly: "Now President Biden's proposing massive Medicare Advantage cuts to seniors."

AAN's ad cites a headline from the Washington Examiner, an online-only right-wing news outlet. But if you go to the quoted article, you can see that it's not news — it's clearly marked as "opinion."

The article actually argues in favor of cutting costs to Medicare as a whole without touching Medicare Advantage benefits, which are sometimes called Medicare Part C. Those are plans offered by private insurance companies rather than the government.

The author, Ryan Ellis, writes: "Medicare Advantage is not the place where we should be looking to save pennies on the dollar within Medicare. Rather, it should be the model toward which the rest of Medicare should be moving, with some additional reforms that will prevent program collapse or massive tax increases."

AAN's ad goes on to claim that Biden wants to make cuts to Medicare Advantage benefits "that could slash $500 dollars in benefits per retiree while Biden breaks his promise to 30 million seniors who chose Medicare Advantage."

It turns out, this isn't true at all. The Medicare Advantage plans come from private insurance companies, and the Biden administration wants to change how those companies are paid. However, the administration is not requiring any cuts to benefits.

There are two rule changes being proposed. First, the government would be allowed to recover money from times they overpaid insurance companies in the past — an estimated $4.7 billion over 10 years.

Several studies and federal government audits have shown that private insurance companies have over-billed billions to the government through Medicare Advantage plans, often by attaching as many diagnosis codes as possible to patients' records in order to harvest bonus payments — diagnoses that didn't necessarily need to be included.

The second rule change is an update to the way insurance companies will be paid by the government. It would reduce some payments to insurers, but the Centers for Medicare & Medicaid Services estimates that the overall effect of the changes would actually end up increasing total payments to companies by about 1%.

Still, some opponents say that insurance companies will just pass any price increases onto customers — and that people on Medicare Advantage plans could end up having to pay more that way. But that would be a choice the insurance companies make on their own, not a requirement.

Finally, the ad makes a local connection: "Congresswoman Marie Gluesenkamp Perez is silent."

The Story reached out to Gluesenkamp Perez about the ad. She wasn't entirely silent about it, and her staff sent along the following statement:

"The ad is a lie, paid for by big drug companies who know Marie is going to hold them accountable for the outrageous prices they charge Southwest Washington seniors. Marie rejects contributions from corporate PACs and cannot be bullied by desperate misleading attacks like these."

What's the deal with these ads?

This ad once more brought up a question that The Story receives often, particularly around election season. Here it is from viewer Carol:

"Why does KGW take ads that state falsehoods? While it's definitely an ad, it still promotes a lie. Is there a requirement that ads must be factually supportable?"

The short answer is no. Political ads are not required to be factual.

Laws allow political campaigns to say just about whatever they want in a commercial — this is because political ads are regulated by the FCC, which applies just two rules. The first is that all candidates have the same opportunity to buy commercial time on stations. Second, politicians can say whatever they want, and TV stations are not allowed to censor a political ad.

These rules differ from those for consumer ads, the ones selling products. Consumer ads must be able to back up their claims, but political ads can make whatever claims they like. The FCC generally does not ensure the accuracy of statements in political ads.

Of course, it is possible for someone targeted in a political ad to sue for defamation under certain circumstances. Last year, Republican candidate Mike Erickson, running against Democrat Andrea Salinas for Oregon's newly created 6th Congressional District, sued Salinas and her campaign over claims made in a political attack ad against him. That case is still grinding its way through court. But the bar for defamation cases is extremely high when the person involved is a public figure, like a political candidate or elected official.

If you're wondering why this particular ad is airing now, outside of election season, there's an article in The New York Times that's worth your time. It explains how the Biden administration has been working to cut Medicare waste and fraud — like with the rules described above — and how it's set off a frenzy of lobbying and advertisements from health insurers and other medical groups for whom Medicare Advantage has been a cash cow.

The Biden administration's proposed rule changes to Medicare are set to start taking effect the first week of April, so these groups are ramping up their efforts to get the message out and scuttle the proposals. The article also explains why many members of Congress are not necessarily stepping up to defend private insurance companies.

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