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News October 2012

Washington Watch

The Politics of Medicare: Separating the Facts from the Fiction

By Alan M. Schlein

In this election season, what seems to have fallen by the side of the road – besides the rhetorical grandmother off the cliff – are facts.


In this election cycle, facts don’t seem to be relevant. If you can get your point across rhetorically – and then can reinforce it with millions of dollars of ads – what matters is persuading voters even if what you say is just plain wrong, or a slight mistruth.

c_stingeroct12_smDemocrats accuse House Republicans of proposing to end Medicare as we know it. Mitt Romney accuses President Obama of ending Medicare as we know it.

More specifically, Republicans charge President Obama is raiding Medicare to fund his “disastrous health care socialism,” known derisively as “Obamacare.” Democrats counter that Republicans will wreck Medicare by sticking future grandmothers with vouchers, gutting a program they’ve secretly despised since its 1965 inception.

How could they both be right? They can’t. But in this election season, what seems to have fallen by the side of the road – besides the rhetorical grandmother off the cliff – are facts.

In this election cycle, facts don’t seem to be relevant. If you can get your point across rhetorically – and then can reinforce it with millions of dollars of ads – what matters is persuading voters even if what you say is just plain wrong, or a slight mistruth.

At the Republican National Convention, Paul Ryan faulted President Obama for failing to act on a deficit-reduction plan that Ryan himself had helped kill. He criticized Democrats for seeking $716 billion in Medicare cuts that he too had sought. In his acceptance speech, Republican nominee Mitt Romney warned that the President’s Medicare cuts would “hurt today’s seniors.”

At the Democratic National Convention, former president Bill Clinton presented himself as the official fact-checker, setting voters straight on what Obama’s health care law really does and what “really happened” with those Medicare cuts Republicans are using to attack President Barack Obama.

Clinton did score some points in his speech, correctly pointing out that Ryan kept the same Medicare savings in his own budget plan. “It takes some brass to attack a guy for doing what you did,” Clinton told the Democrats. But some of Clinton’s claims were, at best, half correct, either leaving out a crucial part of the story or using it in a misleading way.

The political bomb-throwing has gotten so volatile that both sides praise the fact-checkers when it is in their best interest and trash them as being slanted when it isn’t.

Although news organizations have tried for many years to distinguish facts from spin beyond the he-said, she-said coverage, in this polarized election year, let’s look at Medicare, Medicaid and the presidential campaigns in an attempt to truth-squad their political statements, drawing heavily from the work of three of the best fact-checking organizations in journalism --, a project of the Annenberg Public Policy Center, run by former CNN reporter Brooks Jackson;, the Tampa Bay Times, Pulitzer-prize winning fact-checking site; and the Washington Post’s FactChecker blog, written by Glenn Kessler). So this column is an attempt to help you sort through the political spin and give you a basis from which you can determine whom you want to vote for.

What’s the Context?

The real controversy about Medicare is about how to control Medicare spending. Both Obama and Romney each believe their approaches will move the health care system to become more efficient, keeping costs in line with little or no sacrifice by people currently covered under Medicare.

What neither side talks about is what if their approach fails? Obama would slow Medicare spending in the future by reducing payments to the health care industry, while Romney and Ryan would shift costs to the people in the program, those now 54 and younger.

According to Jonathan Oberlander, author of Health Politics and Policy, and a professor at the University of North Carolina, “there’s a fundamental debate here about who should bear the risk of rising medical costs.” Both approaches are less simple than the sound bites coming from the politicians. One thing all sides agree on – the growth in Medicare spending must be slowed. Actually, both Ryan’s proposed budget, and Obama’s plan, would cap growth at the same rate.

What’s the Real Question?

As Romney and the Republicans paint it, the election must be decided on Obama’s stewardship of the economy. They want you to ask “Are you better off than you were four years ago?” And, in their eyes, if the answer is no, they want you to ask who is to blame.

Former president Bill Clinton, reframed the Republicans’ question: “In Tampa, the Republican argument against the president reelection was actually pretty simple, pretty snappy,” Clinton argued. “It went something like this: "We left him a total mess. He hasn't cleaned it up fast enough, so fire him and put us back in."

Obama and Democrats want you to frame the election as a choice between two vastly different visions. They want seniors to ask who do you trust more to protect your Medicare, Medicaid and Social Security.

So remember when you listen to each side’s arguments, what matters more, sometimes in
politics, is how you frame the question than what the question is.

Two Side on Three Issues

So far, points to three highlights or low-lights in this campaign:

* An Obama spokeswoman says that “benefits would go down” under the Medicare plan put forth by Ryan, and largely embraced by Romney – cuts in Obama’s health care law to the growth of spending “will lead to fewer services for seniors.” But actually, neither plan has much of a direct impact on current beneficiaries.

* A Romney campaign ad wrongly claims that “money you paid” for Medicare is being used to pay for Obama’s health care law. But the law doesn’t take money out of the existing hospital insurance trust fund. It cuts the future growth of spending. And in the future, seniors will still receive more in benefits than they paid in.

* Obama says Ryan’s “original plan would force seniors to pay an extra $6,400 a year.” But that’s based on an outdated analysis; Ryan’s current plan is more generous than his first. In fact, over the long run, both Obama and the Romney-Ryan plan propose capping the growth of Medicare spending at the same rate.

Medicare, Vouchers and the $716 Billion

Medicare is going to have to change no matter who wins the White House. Unless Washington does something, the Social Security and Medicare trustees say the Medicare hospital trust fund will start spending more than it takes in come 2024. Both Obama and Romney say they’ll slow the growth of Medicare spending to make sure that doesn’t happen.

Ryan, who chairs the House Budget Committee, spoke out strongly against “the $716 billion funneled out of Medicare by President Obama,” without noting that his own past budget plans had counted on the very same savings. He pledged to protect Medicare without explaining how the Romney-Ryan plan would change it.

Obama hasn’t actually cut Medicare spending – and he’s not proposing that anyone do that. The $716 billion figure comes from the difference over 10 years (2013-2022) between anticipated Medicare spending (what is known as “the baseline”) and the changes that the law makes to reduce spending. His savings would come from the projected growth in reimbursements to hospitals and insurers over the next decade, not from trimming benefits to current recipients. Medicare recipients, as a result of the health care law, ended up with new benefits for preventive care and prescription drugs.

While it is correct that anticipated savings from Medicare were used to offset some of the anticipated costs of expanding health care for all Americans, it does not affect the Medicare trust fund. The Obama health care law also raised Medicare’s payroll tax by $318 billion over the new 10-year time frame, further strengthening the program’s financial condition.

But in election years, one man’s “slow the growth” is usually another man’s “cuts.” Romney and Ryan have proposed limiting the government’s open-ended financial commitment to Medicare. They want to rein in the program’s cost by moving it from a guaranteed set of benefits to a guaranteed annual payment. Future beneficiaries could use that money to buy private insurance or to help pay for coverage under the traditional Medicare program. It would apply only to people currently under 55 years old.

Democrats call this proposal “vouchercare,” but Republicans dispute the description of their plans as a defined contribution rather than a defined benefits program. They say their plan to repeal the health care reform law would spur innovation. Republicans contend that by offering a choice between the “premium support” and traditional Medicare, they aren’t ending Medicare at all.

Republicans argue that free-market competition between health plans will bring premiums down. But if it doesn’t, seniors could be on the hook for the difference between the “premium support” and the premiums, Democrats counter.

Democrats see another problem with the Romney-Ryan plan. What if healthier seniors use their “premium support” option. That leaves the sickest seniors – the ones whose care will cost the most – with the only remaining option, traditional Medicare. That, the Democrats warn, could overburden Medicare, making it more expensive down the road.

And there’s another big if. Analysts say that to get premium support right and keep traditional Medicare affordable, Republican administrations in the future would have to be willing to abide by a rigorous regulatory approach they may not be so philosophically happy to follow.

Where the two sides sharply divide is on Ryan’s earlier plans, which called for capping the rate at which Medicare spending would grow, which analysts from impartial groups like the Kaiser Family Foundation found would lead to higher out-of-pocket costs for future beneficiaries. Romney initially voiced support for Ryan’s plan during the Republican primaries, but as the nominee, the Romney campaign now says that their plan would work differently from Ryan’s earlier proposals and would have the flexibility to raise the proposed cap on spending if it does not keep up with costs. The Romney campaign doesn’t provide much more detail, however.

Henry J. Aaron, a Brookings Institution scholar, helped write the Medicare voucher program now championed by the Republicans. He’s an economist and well-respected health care expert, who now opposes the defined benefit idea. In a recent interview with “Marketplace,” Aaron points out a problem in the Romney-Ryan plan to repeal Obama’s health care law. “What isn’t acknowledged is that if the savings and the additional revenues that would flow into Medicare as a result of health care reform were repealed, as Mr. Romney has pledged to do,” Aaron says, “the date of insolvency of the Medicare hospital trust found would move up from 2024 to 2016 – forward eight years – by their proposal,” he noted. “And we have not seen any suggestion of how equivalent savings could be achieved in some other way.”

Both Obama and Romney’s plan would cap the growth in Medicare spending at gross domestic product plus 0.5 percent. If the provider payment changes, in Obama’s case, or if competition isn’t enough to keep spending that low, for Romney’s plan, both have fallback plans, but -- no surprise -- neither like the other’s idea.

Obama’s Affordable Care Act calls for an independent board – the Independent Payment Advisory Board – to make recommendation on how Medicare can reduce costs. It is scheduled to
be made up of 15 Senate-confirmed presidential appointees, who will come from medical, economic, health care and consumer experts. Republicans warn of “unelected bureaucrats” getting between you and your doctor and throw out the word “rationing” as a scare tactic. But the law specifies that the IPAB board cannot propose anything that would ration health care, raise taxes, raise premiums or cost-sharing, so its potential power is limited.

Perhaps the biggest problem the IPAB board will have will be ever getting a quorum of members. Each nominee will need U.S. Senate approval, whenever they are nominated. There seems little chance if Obama is re-elected that, given the partisan nature of the U.S. Congress, Republicans may block the nominations of every member of this board. The key will be who controls the U.S. Senate and if Romney wins, he plans to repeal the law in its entirety.

Romney’s backup plan leaves the cost-cutting up to Congress. That would mean that whatever one Congress did, the next Congress could undo.

Cutting Medicare spending isn’t an easy proposition for either side. “There are not any magic answers out there,” says Marilyn Moon, a former Medicare and Social Security trustee and now senior vice president and director of the health program at the nonpartisan American Institutes for Research. Unless someone finds a more efficient way to deliver more care at the same price, she says, “somebody (gets) hurt,” – the beneficiaries, the taxpayer or the provider.”

Before You Vote

A few links that may prove useful in understanding facts and getting more information on
subjects before you vote:

To learn more about the nine key states expected to decide the election:


Also contributing to this column, Politifact; Politico, Washington Post, Kaiser Health News,, New York Times, Congressional Quarterly, Milwaukee Journal Sentinel, Marketplace.

Alan Schlein runs, an internet training and consulting firm. He is the author of the bestselling “Find It Online” books.

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