The Mitt Romney campaign has a new talking point that it’s hitting hard: President Obama “robbed” Medicare of $716 billion to help pay for his health-care reform legislation. Is this assertion accurate?
Well, it is true that the Affordable Care Act – known to some as Obamacare – would reduce spending on Medicare by $716 billion from 2013 to 2022, according to a Congressional Budget Office analysis. It is also true that this reduction is used to offset spending on other ACA provisions.
However, the ACA does not literally lop this figure off Medicare’s bottom line. Most of these reductions would occur due to the fact that the law makes changes meant to lower future costs for the big health-care program for seniors.
For instance, the ACA cuts many of the payments Medicare makes in its fee-for-service system to hospitals, nurses, and other health-care providers. (Doctors would not be affected by this payment squeeze.) According to CBO, over the 10-year period it measured, Medicare payments for hospital services would go down by $260 billion, for instance. Payments for skilled nursing services would go down by $39 billion and for home health services by $33 billion.
The other big category of ACA Medicare reductions is aimed at Medicare Advantage, a sub-section of Medicare plans run by private insurers. Medicare Advantage began as a pilot program under President George W. Bush, who pushed it as a means to save money by pitting private insurers against each other in a competition to cover Medicare beneficiaries.
This approach has not worked out as intended. Currently Medicare Advantage plans cost the government more on a per-person basis than traditional fee-for-service Medicare.
“The Affordable Care Act gives those private plans a haircut and tethers reimbursement levels to the quality of care administered, and patient satisfaction,” writes Washington Post Wonkblog writer Sarah Kliff in her analysis of the $716 billion reductions.
In essence, the Medicare cuts contained in Obama’s health-care reforms reduce the pay of providers within the system. That’s why restoring them could actually make the program less fiscally sound in the longer term. If the reductions are reversed Medicare’s cost structure would suddenly be higher, and it would be paying out cash faster well past the 2022 period, bringing its day of insolvency closer as a result.
Does all this mean Obama has looted Medicare? On “60 Minutes” last Sunday, Mr. Romney said: “There’s only one president that I know of in history that robbed Medicare, $716 billion to pay for a new risky program of his own that we call Obamacare.”
“The only element of truth here is that the health-care law seeks to reduce future Medicare spending and the tally of those cost reductions over the next 10 years is $716 billion,” writes Politifact. “The money wasn’t ‘robbed,’ however, and other presidents have made similar reductions to the Medicare program.”
However, on Thursday the Romney campaign released a video of the presumptive GOP presidential candidate in which he charged that Obama’s reductions would have a real effect on beneficiaries.
Due to the cuts, 4 million people would lose Medicare Advantage plans, Romney charged. (They would presumably still be eligible for the regular Medicare system). Plus, ever-shrinking payments to health care providers would cause them to drop Medicare patients, said Romney.
“The Medicare actuary estimates that 15 percent of hospitals and nursing homes will stop taking Medicare patients,” Romney said.