Both sides are spewing nonsense when they talk Medicare

Medicare has suddenly become a centerpiece issue in the 2012 election—but not in a good way.  Instead of an informed debate about Medicare’s present and future place in our health care system, the politicians have subjected us to a daily assault of nonsense over substance:

Let’s start with the nonsense accusation by Governor Romney that “There’s only one president that I know of in history that robbed Medicare, $716 billion to pay for a new risky program of his own that we call Obamacare.” This charge has been discredited by independent fact-checkers.

“The only element of truth here is that the health care law seeks to reduce future Medicare spending, and the tally of those cost reductions over the next 10 years is $716 billion,” Politifact wrote about Mr. Romney’s charge. “The money wasn’t ‘robbed,’ however, and other presidents have made similar reductions to the Medicare program. We rate this statement Mostly False.”

CNN’s Soledad O’Brien, citing the Congressional Budget Office, www.factcheck.org, AARP, and the statutory language in the Affordable Care Act itself, discredited a similar accusation by former NH governor and Romney supporter John Sunnunu.

There also is the inconvenient fact that Rep. Paul Ryan, Romney’s running mate, included the same $716 billion in Medicare savings in the House-passed budget plan, although Mr. Romney has vowed to “restore” them.

Here are the substantive facts behind the charges and counter-charges.

It’s true that the ACA makes changes in Medicare payment policies that the CBO estimates will slow Medicare cost increases by $716 billion over the next decade.  (In other words, Medicare’s costs will still increase, but by a lesser amount.)   The Medicare savings come from reducing payments to hospitals, Medicare Advantage plans, and some other non-physician providers. (The ACA did not include any new payment cuts to doctors—rather, it temporarily increases Medicare and Medicaid payments to primary care physicians—but it also did not cancel out scheduled cuts from Medicare’s SGR formula, enacted in 1997.)

But instead of taking money “out” of Medicare, the ACA actually shores up the Medicare Part A Trust Fund, extending Medicare solvency by eight years, according to Medicare’s actuaries.  Without the ACA’s $716 billion in savings, Medicare would go belly up in 2016 instead of 2024.

How can this be so?  Well, the Medicare Part A Trust Fund consists of the dollars that are collected from payroll taxes to pay for current and future hospital-related health care expenses.  If Medicare pays the hospitals less, the money in the Trust Fund is drawn down less slowly and it lasts longer—just as if a cut in tuition costs would allow the savings you have set aside for your kids’ college education to last longer.

One could certainly make a substantive argument that the way that the ACA (and Rep. Ryan’s budget for that matter, since it includes the same savings) lowers future Medicare costs increases is unwise, because the cuts in payments to hospitals and Medicare Advantage might cause future access problems.  Or one could make the substantive counter-argument that lowering Medicare payments to hospitals and Medicare Advantages plans is necessary and appropriate–and a better way to achieve savings and efficiencies without harming beneficiaries–than cutting benefits.

One could also have a substantive argument over whether the Medicare savings, if they are to be kept, should be used to finance tax cuts and help lower the deficit, as the Ryan budget proposes to do, or to expand access to the uninsured and improve Medicare benefits (no cost preventive services, phase out of the Medicare Part D donut hole) as the ACA would do.

But such substance is lost when politicians blithely try to scare seniors into believing that benefits are being stolen from Medicare to pay for Obamacare, when the facts show the ACA actually improves Medicare benefits and extends the program’s solvency by almost a decade.

Which brings me to another nonsense accusation—this one from the Obama camp–which is that seniors will pay $6,000 more under the Romney/Ryan Medicare premium support plan, compared to the current Medicare program.

The journalists at the  www.factcheck.org site report that this is “outdated” claim based on CBO estimate of an earlier version of Rep. Ryan’s premium support proposal, which would have capped the federal government’s premium contributions at a much lower rate of increase than Rep. Ryan’s current plan.  “[The earlier] plan had the premium-support payments, or subsidies, growing with the rate of inflation, and health care costs have risen much faster than that for years” they write, but “Under the new Ryan plan, that premium-support payment would be tied to the second-cheapest health care plan, which can’t grow more than gross domestic product plus 0.5 percentage points. So, Ryan’s plan says the premium support would always be enough to cover the two cheapest plans.”   Plus, the Ryan premium support plan wouldn’t apply to anyone who today is 55 or older, so it is misleading to scare current seniors into believing that they will pay $6000 more for their Medicare.

But www.Politifact says that it is “mostly true” that Mitt Romney and Paul Ryan want to convert Medicare into a voucher program—just not now, not for current seniors, but for future beneficiaries starting ten years from now!

Again, there are important substantive arguments that could be made about the wisdom of eventually turning Medicare into a voucher program.  Will limiting how much the federal government contributes to Medicare stimulate cost-savings through competition among insurance plans, or result in cost-shifting to seniors who can’t afford to pay more? Is market competition more effective than the ACA’s approach of squeezing payments and piloting new models of delivery and payment?  Will insurance companies under a voucher system be more or less bureaucratic and transparent than the traditional government-administered Medicare program?  And if Medicare premium support is such a good idea, as Mr. Romney and Ryan maintain, why wait ten years to institute it?  (Read more about my thoughts about the potential impact of Medicare vouchers on my wife’s future Medicare, and the secret truth about vouchers that neither party will admit.)

And, speaking of substantive questions, I would ask Mr. Romney, if the $716 billion in Medicare savings from the ACA is to be restored, as you have promised, and Medicare vouchers won’t be implemented for another decade, as you have also promised, then how do you propose that Medicare cost increases be slowed in the meantime to sustain the program’s solvency and reduce its crushing contribution to the deficit?

And I would ask President Obama, if the ACA’s $716 billion in savings are to be kept, along with the rest of the ACA, and you rule out vouchers as an option, what else should be done to sustain Medicare’s long term solvency and reduce its crushing contribution to the deficit, since the current level of savings is clearly not going to be enough?

Because, as the National Journal’s Margot Sanger-Katz reports, both the Obama and the Romney Medicare plans fail to solve the cost problem.  “Although they won’t admit it, Romney and Obama have pretty similar visions for how much they think Medicare spending should grow in the future” she writes. “Both have backed plans that would cap per-capita spending at about the same rate, though they would use vastly different means to do so. Neither would come close to eliminating Medicare’s projected long-term deficits.”

She hits the nail on the head. How to eliminate Medicare’s projected long-term deficits is one of the most important substantive issues that should be debated by the candidates, but isn’t, since they are too busy trying to discredit each other while reassuring seniors that nothing must change.   Unfortunately, the Medi-scare nonsense being spewed by them will make it even harder to later get the public on board with the tough choices that will need to be made to sustain Medicare while reducing the public debt, which inevitably will involve a combination of reduced benefits, increased cost-sharing, tax increases, and changes in the way that hospitals and physicians are paid.

Bob Doherty is Senior Vice President of Governmental Affairs and Public Policy, American College of Physicians and blogs at The ACP Advocate Blog.

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  • cynholt

    In an environment where healthcare costs are zooming along well ahead of
    the rate of inflation, how in the world can Medicare costs be reduced
    without also reducing Medicare benefits, especially when ObamaCare does
    absolutely nothing to contain, much less rein in, healthcare costs? This
    is very hard, if not impossible, to do — unless you are naive enough
    to believe that money grows on trees. This is why ObamaCare will soon
    prove to be nothing but a Ponzi scheme, built on a house of cards.

  • http://twitter.com/OurH_careSucks John Lynch

    You mention that the Medicare cost savings under Obamacare “would” reduce Medicare Part D drug costs (close the doughnut hole) and offer free screenings (and free annual wellness visits). It’s not a “would”, however, as these benefits are already in existence.

    This is important because it makes false Governor Romney’s claim that his plan will have “zero” impact on current Medicare beneficiaries. They would immediately lose these benefits and would have to pay more out-of-pocket to retain them.

    There’s also the business about why Romney’s plan doesn’t offer his Medicare vouchers until 2023. The bigger question is whether Medicare will be around (“as we know it”) if he revokes Obamacare’s savings that are expected to extend Medicare solvency beyond 2016. That will leave us with six years of much bigger things to worry about than vouchers.

    As for cynholt’s comment, how does she miss the central point about the $716B in Medicare savings? How is that doing “absolutely nothing to contain healthcare costs”? It’s certainly more than Romney’s plan would do, as he’d restore these savings and accelerate cost increases. She’s right, however, that neither does enough to rein in costs – but Obamacare at least makes an effort that will help longer-term. Romney’s plan relies exclusively on private insurers to rein in costs – something they’ve been abject failures at to date. Medicare, in fact, has a much better record for containing costs and is a more reliable means for doing so than unproven free-market theories with little applicability to healthcare.