campaign desk

Medicare and the $500 billion bogeyman

Will a half-truth still work for the GOP?
May 21, 2012

Republicans and their allies are dusting off an old $500 billion deception about Medicare, trying once more to scare seniors into voting their way. The logic on this one turns truth on its head, but some in the media have caught on to this election tactic and have begun trying to supply missing context.

A bit of background: Before the 2010 mid-term elections, I wrote that both Democrats and the GOP had cynically exploited Medicare during the campaign, with Republicans ultimately winning that fight, not to mention the election. The Republicans hammered away at the argument—built on a half-truth—that the new health law would cut $500 billion out of Medicare, and they targeted members of Congress who supported the reform. Seniors carried the GOP to victory.

The facts were and still are these: The health reform law, aka the Affordable Care Act, does call for cutting $500 billion from Medicare to help finance subsidies for the uninsured. The administration portrayed these as “savings”—in other words, money not spent for Medicare that could be used for another purpose. But the important take-away is this: the law does not cut a dime from the basic Medicare benefits seniors receive. All seniors will still get hospital benefits, coverage for physician services, lab tests, hospital outpatient care, prescription drugs, and so on, and will continue to receive them unless pols on both sides of the aisle succeed in changing the fundamental structure of Medicare. (That indeed is possible after the election. But that’s for another post.)

Most of the $500 billion in cuts aim at reducing payments to health care providers—hospitals, nursing homes, home health agencies, though not doctors. And about one quarter of the cuts target Medicare Advantage Plans to reduce the amount of government overpayments insurers have gotten. The government was paying more to these plans to provide benefits than it was paying to provide the same benefits under the traditional Medicare program. Medicare Advantage plans are a popular alternative to traditional Medigap policies because those overpayments have allowed insurers to offer cheap premiums and extra benefits like dental and vision care. But policy experts found these payments were unwarranted, wasted money, and jeopardized the finances of the Medicare trust fund that pays for hospital care.

Of course, none of this is the stuff of campaign ads. That leaves the press to fill in the blanks.

A few news outlets are trying to do that. Tampa Bay Online reported that the US Chamber of Commerce has begun airing TV ads in some of the state’s largest cities attacking Florida Senator Bill Nelson, a Democrat who is up for reelection this year. Nelson’s sin, it seems, was supporting the Affordable Care Act. The Chamber’s ads include the “Republican contention that the plan cuts $500 billion from Medicare,” Tampa Bay Online noted. The website also points out that political fact-checking organizations, including the Annenberg Foundation’s, have found that argument to be “false,” since the $500 billion figure “refers not to cuts but to limits on the planned increases in Medicare costs.” Do the findings of the fact-checking organizations make a difference in the electorate’s mind, or do the ads trump the facts? That’s something the media should explore as the campaign roars on.

Sign up for CJR's daily email

The ads do grab attention, as in this smooth and reassuring message, aired by Jesse Kelly, a Republican running against Ron Barber for the House seat vacated by former Arizona Rep. Gabrielle Giffords: “Ron Barber wants to hide he supports Obamacare, which will cut $500 billion from Medicare. Our seniors deserve better.”

Jonathan Weisman over at The Caucus blog of The New York Times, also smoked out this year’s reincarnation of the $500 billion Medicare cut, reporting that the National Republican Congressional Committee sent out news releases targeting more than 90 Democrats running for Congress and “accusing them of slashing Medicare,” particularly Medicare Advantage plans. One aimed at Rep. Mark Critz, a Pennsylvania Democrat. The news released warned:

It should be remembered that the 865,000 Pennsylvania seniors that are on Medicare Advantage health plans will be particularly hard hit under his big-government law, since Critz’s government health takeover is paid for in part by nearly $200 billion in cuts to Medicare Advantage programs. Seniors currently on these plans could find their benefits at risk.

The release doesn’t distinguish between basic and extra benefits. Or note that actuaries say Medicare Advantage plans will not disappear, although as the years go on they may not be attractive as they once were.

The attack message is getting out just as it did in 2010, and it would be great if the media would keep track of who’s saying what and offer missing context. The group 60 Plus, which bills itself as a conservative alternative to the AARP, has already started its bombardment with the announcement in mid-March of a $3.5 million ad campaign that targets, as the National Republican Congressional Committee does, Democratic members of Congress up for reelection. In an ad aimed at Nelson and other vulnerable Democrats—like Michigan’s Debbie Stabenow and Missouri’s Claire McCaskill—the $500 billion cut emerges as a touchstone message. In an ad featuring 1950s crooner Pat Boone and a narrator, the narrator says: “President Obama’s health care law cuts $500 billion from Medicare to pay for a new government program,” leaving the impression the Affordable Care Act robs some beneficiaries to fund others, when in fact it cuts government spending to providers in order to help fund more health care for now uninsured people. In 2010, 60 Plus spent some $6 million on ads to defeat Democratic candidates, using the same “$500 billion cut to Medicare” line.

This week a news release with the headline “Medicare Heading for Bankruptcy in Next Decade; Obama Plans to Cut Medicare Advantage Program” showed up. It came from an outfit called the Citizen’s Council for Health Freedom, based in Minnesota, and it contained a lot of scary stuff. “The impending demise of Medicare is just one more reason we can’t rely solely on government programs for our health care,” it read. And, yep, there it was, the line that won’t go away: “Obamacare will also drastically cut the Medicare Advantage plan, an alternative to Medicare that more than 12 million seniors choose. This is a little-publicized plan in the small print of Obamacare, but one that seniors will find out about just before election time.”

Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for CJR's Covering the Health Care Fight. She also blogs for Health News Review and the Center for Health Journalism. Follow her on Twitter @Trudy_Lieberman.