Which Candidate Will Cut $700 Billion From Medicare?
Sunday, August 12th, 2012
When he announced Congressman Paul Ryan as his running mate, Republican presidential candidate Mitt Romney said, “Unlike the current president, who has cut Medicare funding by $700 billion, we will preserve and protect Medicare and Social Security.” The next day, RNC Chairman Reince Priebus actually accused President Obama of having “blood on his hands” for cutting Medicare.
Did President Obama really cut $700 billion in funding from Medicare? If you are in or approaching your Medicare years, statements like this can be frightening. And this is true whether you are well or have a life-threatening illness such as mesothelioma. But in order to judge whether this is true or false, it’s important to understand where that $700 billion figure is coming from. And here it is:
Recently Representative John Boehner (R-Ohio), Speaker of the House, asked the Congressional Budget Office (CBO) to analyze H.R. 6079, a bill that would repeal the Affordable Care Act (ACA), or “Obamacare.” Specifically, Speaker Boehner wanted to know how repealing the Affordable Care Act would impact the federal budget.
The CBO responded in a letter, saying that the repeal law, H.R. 6079, would add $109 trillion to federal budget deficits over the period from 2013 to 2022. Then, later in the letter, the CBO says,
“The ACA also includes a number of other provisions related to health care that are estimated to reduce net federal outlays (primarily for Medicare). By repealing those provisions, H.R. 6079 would increase other direct spending in the next decade by an estimated $711 billion.”
There’s your $700 billion. And the assumption is that if repealing Obamacare increases Medicare spending by $700 billion, then Obamacare must be cutting Medicare spending by $700 billion.
But that is not exactly what the CBO said. The “provisions related to health care” are not cuts of Medicare benefits, but changes in the way Medicare is administered that will save money.
For example, when the individual mandate to obtain health insurance goes into effect in 2014, hospital costs will go down dramatically. Why? Because uninsured patients usually can’t pay hospital and emergency room bills. Stuck with unpaid bills, hospitals jack up everyone else’s bills to cover the uncollected revenue. Hospitals also depend on Medicare and Medicaid money to help pick up the slack.
Once millions more Americans have insurance, the hospitals won’t be stuck with so many unpaid bills. Based on this, the Obama Administration negotiated with hospitals to accept lower Medicare payments after 2014.
That’s just one example. The ACA has made a number of other administrative changes to lower Medicare cost and save taxpayers’ money. But no Medicare benefits have been cut by the Obama Administration or by “Obamacare.” So, while Mitt Romney may be able to justify saying that President Obama has “cut” $700 billion from Medicare, he cannot justify implying that these cuts will hurt recipients or put Medicare in danger. In fact, the savings are being used to help pay for benefits.
The irony is that Paul Ryan’s own budget – which has been passed by the House but not the Senate — makes the same cuts to Medicare funding. The difference is that Ryan’s plan doesn’t use that money to help pay for benefits. It’s just taken out of Medicare, period. So who’s cutting Medicare?
