Wednesday, August 22nd, 2012
As the presidential campaign heats up, both President Obama and his Republican challenger, Mitt Romney, are polishing their sales pitches on Medicare. And as with any sales pitch, the buyer would do well to read the fine print before making a choice. This is true whether or not you already are on Medicare, and whether you are healthy or have a severe illness such as mesothelioma.
Let’s look at Mr. Romney’s pitch. One of his most consistent sales points is that with his plan to save Medicare, nothing would change for today’s seniors. The new plan would be phased in ten years after being signed into law, so that anyone age 55 or older now wouldn’t be affected. But is that really true?
Although the changes specific to Medicare might not be made right away, Mr. Romney also has promised to repeal the Affordable Care Act, called “Obamacare.” As explained in the last post, the Congressional Budget Office has said that repealing Obamacare would add — that’s right, add — $109 trillion to federal budget deficits over the period from 2013 to 2022. That’s because Obamacare contains many cost-saving measures, and repealing those would make the nation’s health care expenses go up, not down.
Within that $109 trillion is a estimated $711 billion in savings that mostly affect the Medicare budget. The CBO’s announcement of the $711 billion in savings caused a number of Republican politicians, including Mr. Romney, to shriek hysterically that the President is “gutting” the Medicare program by $711 billion.
Contrary to what Republicans imply, no benefits have been cut, and the $711 billion is not being siphoned out of the Medicare trust fund to spend on something else. The $711 represents estimated savings to future budgets, not money that already is in the trust fund.
Even so, Mr. Romney has vowed to reinstate that $711 billion in spending that the Affordable Care Act saves, and he says he will do this as soon as he becomes President. But now policy analysts say that if Mr. Romney actually does this, it will hasten Medicare’s insolvency by several years, causing parts of the program to be out of money as early as 2016. And if Medicare runs out of money to pay hospital bills after 2016, that certainly would affect a lot of today’s seniors.
If Obamacare were to be repealed, it would also reverse the closing of the “doughnut hole” in Medicare Part D prescription drug benefits. Last year, because of Obamacare, seniors who fell into the “hole” saved an average of $604 in prescription drug costs. If Obamacare remains law, by 2020 the doughnut hole will be closed, and seniors with high prescription drugs costs will be paying thousands of dollars less than they would have without Obamacare.
But if Obamacare is repealed, the doughnut hole snaps back open, and many seniors will go back to paying a lot more for prescription drugs. And that would happen immediately, not ten years from now.
Mr. Romney proposes to gradually turn Medicare into a system in which Medicare no longer pays directly for seniors’ health care, and instead taxpayer funds are turned over to private insurance companies to partly subsidize private insurance policies that seniors could buy. When he says that today’s seniors won’t see any change to Medicare, he means that this particular phasing won’t begin for another ten years. But if Mr. Romney becomes President and keeps his campaign promises, today’s seniors will be affected by changes to the Medicare program, and they won’t be beneficial changes.