Cutting Medicare by $716 Billion?

Before I get started, I was sent a great video of synchronized swimming.  If you’ve ever wanted to see what I would look like while participating in this Olympic sport, here’s the link.

It’s that ugly time of the year…when Sandy’s summer vacation ends.  I know what you’re thinking, “say it ain’t so…don’t make Sandy work.”  I think that’s a relatively universal sentiment (with the exception of Jenny – who anxiously awaits my return to work) and I appreciate that.  This week, I hope to write some very short blogs that will attempt to answer some basic questions that many people have emailed me about.  As an example, later this week, I’ll answer the question, “what is a premium support program for Medicare?”

Today, I want to start with the question of “what are Gov. Romney and Rep. Ryan describing when they say that President Obama is cutting Medicare by $716 billion?”  Is this true?

Is this true?  President Obama’s Affordable Care Act does, in fact, cut Medicare by $716 billion.

Where does this number come from?  On July 11, 2012, the House of Representatives passed a bill, titled the Repeal of Obamacare Act.  House Speaker Boehner asked the CBO to analyze the cost of this Act.   Specifically, the CBO said that if The Affordable Care Act is repealed, “Spending for Medicare would increase by an estimated $716 billion over the 2013 – 2022 period.”  In other words, the ACA reduces Medicare spending.

What do these $716 billion of cuts entail?  The Affordable Care Act makes the following cuts (here, I’m showing the majority of the $716 billion of cuts):

1. Reducing the annual updates to Medicare’s payment rates for most services in the fee-for-services sector (other than physicians’ services).  A significant amount of this is in hospital services.  (Total for this category: $415 million)

2. A new mechanism for setting payment rates in the Medicare Advantage program.  (Total savings from this category: $156 billion)

3. Reductions in Medicaid and Medicare payments to hospitals that serve a large number of low-income patients.  (Total savings of $56 billion)

So what is the Republicans’ argument?  Since The Affordable Care Act cuts these payments, President Obama is taking money from Medicare.

What do Republicans really object to?  Regardless of the sound bites that we see in the media, Gov. Romney and Rep. Ryan don’t really have a problem with these cuts.   They don’t like the fact that these cuts are being used to pay to insure the uninsured.  They say that they object to these cuts because they are used for “Obamacare.”  In fact, PolitiFact states that under Rep. Ryan’s budget plan, he has similar cuts.

What is the irony of this political claim?  By saying that President Obama is cutting Medicare, the Republicans are implying that the Democrats are cutting an entitlement program and that the Republicans want it to continue unabated.

Why are the Republicans taking a big risk with this approach?  The Republicans oppose the Affordable Care Act.  That opposition is a somewhat popular view and should have some success among voters.  But, the Republicans are going for the political home run – trying to convince voters that President Obama is trying to cut Medicare.  That’s starting to attract attention to the fact that it’s only partially true.  They will find themselves spending more and more time defending their position in the coming months – rather than being on the offensive.  They will have more success arguing that the President is pro-government (with laws such as the Affordable Care Act) rather than casting him as cutting an entitlement program.

Have a great week.

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