It’s been hard to escape from Medicare in the 11 days since Wisconsin Rep. Paul Ryan burst into the news as vice presidential candidate with big and well known ideas about the health program for nearly 50 million Americans. Medicare zoomed to the top of the issues parade, elbowing the economy.
Romney and Ryan hope it will be a winning issue for them; they are preaching the conversion of Medicare, a social insurance program, into a privatized voucher plan, in order, they say, to save it. The problem is that many experts believe such a plan will heap more medical costs on seniors. And if, as in their latest version, it offers seniors a choice between traditional Medicare insurance and vouchers, a number of experts also fear that the healthiest and youngest citizens would take the vouchers, leaving the traditional plan in what insurers call a “death spiral,” which, as the term suggests, is not good.
Romney and Ryan’s plan of attack, meanwhile, is to blast the president for “cutting” funds from Medicare in order to help fund Obamacare, the nation’s new health reform law. Last week a GOP campaign ad told seniors: “The money you paid for your guaranteed healthcare is going to a massive new government program that’s not for you.”Romney reinforced that line of attack on the stump in Ohio: “He’s raided that trust fund. He’s used it to pay for Obamacare, a risky unproven federal government takeover of healthcare.”
This tack offers new twists on an old argument, which reporters need to understand. This past May, I noted that the GOP successfully had used a similar argument about Medicare cuts—at the time the number for the “cut” was $500 billion—to win Congressional seats in the 2010 elections, and they used it again this primary season. With Ryan’s ascendency to the GOP ticket, and egged on by GOP strategy gurus, the claim is back, this time morphing into a $716 billion “cut.” So it has worked as a strategy. But is it accurate?
For starters it bears repeating that the Affordable Care Act (ACA), sometimes called Obamacare, is not an “unproven government take-over of healthcare.” The health law was patterned closely on the reform model that Romney championed and fought for in Massachusetts when he was governor. That law, although far from perfect, seems to be working reasonably well there. And under Obamacare, the government takes over nothing. Private insurers will continue to provide the insurance; private doctors will continue to provide the care.
And as for the $716 billion dollar cut, the facts are and continue to be: The health reform law did take $500 billion out of the future spending projections in the Medicare budget to help fund subsidies for the uninsured, and to help shore up Medicare’s finances further into the future. Most of these cuts centered on reduced reimbursements to providers—mostly to hospitals, which agreed to smaller payments over 10 years in return for more patients with insurance, which the ACA promised to deliver. In other words, they didn’t squawk about it.
About $136 billion were cuts to payments made to sellers of Medicare Advantage plans, which provide benefits to seniors who opt for them instead of traditional Medicare. The rationale: Policy experts and the government’s Medicare Payment Advisory Commission (MedPac) found that there was no justification for paying Medicare Advantage insurers fourteen percent more on average than it costs the government to provide the same coverage under the traditional Medicare program. In other words, the government was wasting money. Insurers didn’t make a big fuss either; at the time, they worried more about a “public option” becoming law.
And this should also be clear: None of these cuts/savings affect any basic benefits, meaning that hospital care, doctor visits, lab tests, and outpatient services will be covered as they are now. When the cuts to Medicare Advantage plans are fully phased in, by the end of the decade, some plans may not be able to offer extra benefits—like vision care or chiropractic visits—which have attracted seniors in recent years, but it’s still too early to predict what will happen. Will seniors be hurt by that part of the cuts? Actuaries who design these policies tell me that’s unlikely in many parts of the country, where there are well over 100 plans to choose from.
What about the $716 billion versus $500 billion? The Congressional Budget Office updated the numbers because they may be looking at a different timeline now, explained Tricia Neuman, a senior vice president of the Kaiser Family Foundation. “Because Medicare spending increases each year, the effects of the savings provisions [in the ACA] increase each year.”
The old spin