Medicare and the $716 billion bogeyman

Will a new version of a half-truth work for the GOP?

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?

The facts

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

The administration portrays these cuts in the projected budget as “savings” to the program because provider and insurance reimbursements won’t grow as fast as they otherwise might. Who uses which word depends on where spinners sit on the Great Ideological Divide.

Today the GOP likes the word “cuts” because it sounds oh so scarier to old people. The administration prefers “savings” because slowing down the rate of reimbursement to providers and insurers does save money for the program and frees up money for other purposes (like healthcare insurance subsidies).

But there is some interesting background to these word choices. In the mid 1990s, during another drive to privatize Medicare led by the conservative Heritage Foundation, it was the GOP who policed the media, making sure they did not use the word “cut” to describe changes they were promoting. As I reported in my book Slanting the Story: The Forces That Shape the News, Haley Barbour, then GOP National Chairman and now governor of Mississippi, vowed to raise “unshirted hell” with the news media whenever they used the word “cut.” As I wrote, “Barbour called news anchormen and correspondents and held breakfasts and lunches with reporters “educating” them on the difference between cuts and slowing Medicare’s growth.”

It wasn’t long before news anchors and reporters began using the different words. On the CBS Evening News correspondent Linda Douglas told viewers a Republican bill would double monthly premiums, create incentives to use managed care, and limit doctor and hospital fees—“all adding up to a savings of $270 billion in the growth of Medicare spending.”

So, in the mid-90s, Republicans wanted cuts in the growth of Medicare to be labeled “savings.” Now, Obama prefers that word, and the Republicans call them “cuts.”

The press coverage now

So far, in this round of privatization talk, some in the press have pushed back against spin. Sunday on Meet the Press David Gregory noted the $716 billion were “not benefit cuts. Indeed, Ryan made those same cuts in his own budget.”

Gregory asked one of his guests, Virginia Gov. Bob McDonnell, a Republican, if he thought that kind of talk was “over the top by the Republican ticket.”McDonnell didn’t answer the question and instead bridged to his talking points—“we have serious, hard talk and real solutions from the Romney-Ryan ticket. We’re in trouble in the country. We’ve got to make changes.”

On CNN, Soledad O’Brien pressed former New Hampshire Gov. John Sununu so hard he became visibly agitated. Sununu charged that “Obama gutted Medicare by taking $717 billion out of it. The Romney plan does not do that.” O’Brien responded:

“I understand that this is a Republican talking point because I’ve heard it repeated over and over again. These numbers have been debunked, as you know by the Congressional Budget Office. It cuts a reduction in the expected rate of growth, which, you know, not cutting budgets to the elderly. Benefits will be improved.”

Sununu shot back: “Soledad, stop this! All you’re doing is mimicking the stuff that comes out of the White House and gets repeated on the Democratic blog boards out there.”

From my perspective, having covered this issue in the past, the coverage seems somewhat better than it was years ago. But: there has been little examination of what might happen if Medicare is divided into two parts, one with vouchers, the other with traditional Medicare—what experts call the “death spiral” for traditional Medicare.

And there is still way too much he said/she said reporting on this issue, in which reporters assume each side’s argument carries equal weight, even when they don’t, resulting in a faux balance. An NPR interview last week featuring Joe Antos, who represents the American Enterprise Institute, and Neuman of the Kaiser Family Foundation comes to mind. So does a piece that ran Sunday in the Tampa Bay Tribune, which is classic he said/she said. The dueling positions were headspinning.

The new spin

The media are beginning to understand that the president’s cuts to Medicare do not affect basic benefits. Now a new line of attack from the GOP is emerging. Antos on the NPR Morning Edition segment warned that seniors may find it harder to find the care they want—access problems, in other words—as a result of the spending cuts. “If you take enough money out of the Medicare program,” he said, “eventually you will run into access problems for seniors.”

On the NewsHour Friday, National Review editor Rich Lowry told Judy Woodruff that “technically they don’t hit benefits, the cuts. But when you are hitting the providers, the physicians, and the hospitals as hard as these cuts do year over year, they become totally unsustainable.”

The specter of rationing rides again! Still, Lowry’s comments touches on the crux of the nation’s health care dilemma: How do we control costs? On whose backs will sacrifice fall?

Each time there’s an attempt to reduce what providers are paid, they fight back, refusing to care for Medicare patients or threatening to do that. And that raises a question for jounos to explore: Is the country serious about reducing the national health care tab? And if so, how should it be done?

Trudy Lieberman’s “Medicare primer” is here. And an archive of her critiques of press coverage of the issue is here.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman. Tags: , , , ,