August 27, 2012

Mitt Romney on Medicare: Facts and Fictions

Mitt Romney:

“There’s only one president I know of in history that robbed Medicare, $716 billion to pay for a new risky program of his own that we call Obamacare” (PolitiFact).

The facts:

1) Under the ACA (Affordable Care Act), Medicare spending will continue to increase, only at a slower rate than it would have otherwise. “[B]efore the health law was passed, Medicare was expected to grow by 6.8 percent a year for 2010 through 2019.  With the health law, that yearly growth rate is projected to be 5.6 percent during that same time frame, according to an analysis from the Kaiser Family Foundation” (Kaiser Health News).

2) Thirty-five percent of these reductions come from the amount Medicare “reimburses hospitals and private health insurance companies.” “The health law changed how Medicare calculates what they get reimbursed for various services, slightly lowering their rates over time. Hospitals agreed to these cuts because they knew, at the same time, they would likely see an influx of paying patients with the Affordable Care Act’s insurance expansion” (WaPo) (The reason for this being “the law’s mandate for nearly all individuals to have insurance, which meant that providers and insurers would have millions of new paying patients and policyholders” [NY Times]).

3) Thirty percent of these reductions come from the amount “Medicare reimburses private, Medicare Advantage plans. That program allows seniors to join a private health insurance, with the federal government footing the bill. The whole idea of Medicare Advantage was to drive down the cost of health insurance for the elderly as private insurance companies competing for seniors’ business.” But that’s now what happened. “By 2010, the average Medicare Advantage per-patient cost was 117 percent of regular fee-for-service. The Affordable Care Act gives those private plans a haircut and tethers reimbursement levels to the quality of care administered, and patient satisfaction” (WaPo).

4) None of these reductions come from “the amount of benefits beneficiaries receive.” Moreover, the ACA adds some new benefits, including closing the ‘doughnut hole’ gap in Medicare prescription drug coverage, and new preventive services, such as an annual wellness visit with a physician” (Kaiser Health News).

5) Many analysts believe that reversing these reductions “would hasten the insolvency of Medicare by eight years—to 2016, the final year of the next presidential term, from 2024” (NY Times).

6) Additionally, reversing these reductions would “immediately add hundreds of dollars a year to out-of-pocket Medicare expenses for beneficiaries,” the reason being that “[b]eneficiaries, through their premiums and co-payments, share the cost of Medicare with the government.” So [i]f Medicare’s costs increase—for instance, by raising payments to health care providers—so, too, do beneficiaries’ contributions.” (Moreover, repealing the ACA “would eliminate expanded coverage of prescription drugs, free wellness care and preventive checkups.”) (NY Times)
7) The Ryan/Romney budget calls for the same $716 billion reduction. Romney/Ryan want to put this money “toward deficit reduction while Obama [wants to spend] it on health care for poor people.” Romney/Ryan argue that, because they’re using this reduction to cut the deficit, their plan would “make future cuts to Medicare less likely.

“But Romney/Ryan also add a trillion dollars to the defense budget. And they have trillions of dollars in tax cuts they haven’t explained how they’re going to pay for. So those decisions make future cuts to Medicare more likely. Meanwhile, Obama cuts defense spending by hundreds of billions of dollars, raises about $1.5 trillion in new taxes, and puts all that money into deficit reduction. So that makes future Medicare cuts less likely. So if the argument is that Romney/Ryan protect Medicare by putting the $770 billion in cuts towards deficit reduction, Obama protects Medicare by twice as much by putting the $1.5 trillion in new tax revenues towards deficit reduction. So far as the deficit is concerned, there’s no difference between a dollar from Medicare and a dollar from taxes” (WaPo).