Obamacare: The Return of the HMOs

I wrote last week about the "magic pot of money" that everyone thought they had found to fund the Patient Protection and Affordable Care Act -- money that didn't harm patients or anger important interest groups. One of those magic pots was Medicare Advantage overpayments; it costs more to provide Medicare Advantage (in which Medicare money is used to purchase a private insurance policy) than it does to run patients through traditional Medicare.

At the time the law was being debated, folks like Alex Tabarrok pointed out that those "overpayments" were actually being used to fund extra benefits, as the law required, and that cutting them would be politically difficult. But cuts to Medicare Advantage nonetheless ended up in the law. In fact, they're one of the major revenue-raisers. The administration has balked at actually letting them go into full effect in the past, but now, reports the New York Post, they are beginning to bite: