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That Darn Mitt II (Medicare Edition)

Posted by John McDonough  February 4, 2012 09:05 AM

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Here's Mitt speaking to a Florida audience this past Monday as quoted by Politico's Playbook:

"If I'm president, I will repeal Obamacare and return to the states and the people their right to set their own health care priorities. [Applause.] Now, by the way, I understand a few of you here are on Medicare. Is that true? [Crowd laughs.] That being the case, I hope you tell your friends who always fear that Republicans somehow might go after Medicare, you can tell them a couple of things. One, we will never go after Medicare or Social Security. We will protect those programs. But also, you make sure and tell them this: There's only one president in history that's cut Medicare $500 billion and that's Barack Obama. And guess what he did it for? He did it to pay for Obamacare.?

OK, let's review some facts here.

First, to pay for somewhat less than half the total cost of the Affordable Care Act (ACA/ObamaCare), the law includes reductions in the rate of growth of Medicare and other savings (listed below) by about $449B over ten years between 2010 and 2019, as estimated by the Congressional Budget Office (CBO) -- as years move forward, the total figure rises, so $500B is a good enough estimate for now. Here's a list of the largest of those reductions:

  • $156.6B in payment reductions to hospitals (which the hospital industry agreed to in exchange for the ACA's insurance coverage expansions for the uninsured)
  • $135.6B in reductions to private insurers participating in Medicare Part C, (aka: 'Medicare Advantage"). The insurance industry opposed these reductions predicting they would harm enrollees; since 2010, Part C premiums have gone down 16%, enrollment has gone up 17%, according to new federal data).
  • $40B in reductions to home health (the home health industry agreed to these reductions)
  • $25B temporary adjustment to the calculation of Medicare Part B premiums for high-income beneficiaries.
  • $22.1B in reduced Medicare payments to disproportionate share hospitals.
  • $20.7B revision to the Medicare improvement fund.
  •  $15.5B in savings generate through the Independent Payment Advisory Board.
  • $10.7B in reductions in the Part D subsidy for higher income beneficiaries.
  • $7.1B in hospital preventable readmissions reduction program
  • $5.7 in savings on dispensing of outpatient drugs in long-term care facilities.

Justifiable or not, it's true. The Democrats who passed the ACA financed it significantly by reducing Medicare's expected growth rate by $449B over 10 years (the total cost of the Medicare program will still grow substantially over those ten years in spite of the reductions). Republicans used this fact to criticize Democrats during the legislative process leading to passage of the ACA. After the law was signed in March 2010, Republicans continued to attack Democrats for these reductions up to the November 2010 Congressional elections when the Republicans reclaimed control of the House and gained seven seats in the Senate. They won with the highest share of the elderly voting Republican in modern political history, surpassing 60%. Fair is fair. Democrats did it, and Republicans used the reductions to carry the day.

Now it gets interesting.

In the new Republican-controlled House of Representative in 2011, House Budget Chair Paul Ryan (R-WI) advanced a controversial federal budget plan which included a major restructuring of the Medicare program to change the program from largely fee-for-service to premium support/vouchers. This proposal drew widespread praise and condemnation, and mountains of attention.

Less noticed was the part of the Ryan budget plan which repealed most of the ACA, with one huge and unnoticed exception -- the $449 billion in Medicare reductions, documented in the CBO report on the Ryan plan. The Ryan plan was put before the entire House, and nearly every Republican member voted for it; the plan was also put before the Senate and endorsed by all Republican members minus four (one of those four was MA Senator Scott Brown).

If, in the coming fall elections, Republicans hold onto control of the House, win the Senate, and win the White House, it is clear how they will try  to repeal the ACA. They will repeal all the access expansions for private insurance and Medicaid scheduled to take effect in January 2014; they will repeal all the tax increases on higher income, on insurance and drug companies, to pay for those expansions; and they will leave in place the $449B in Medicare reductions that they used to such great effect against Democrats. That way they can repeal the law using the budget reconciliation process because such a move would reduce the federal deficit. Never mind that hospitals, home health agencies, and others supported the $449B reductions only because they would be helped by the insurance coverage increases the Republicans will be sure to repeal.

Quite a scenario.

Back to that rascal Mitt. Romney has publicly and warmly embraced Cong. Ryan's budget plan, saying he would sign it if he were president; indeed, he heavily attacked rival Republican candidate Newt Gingrich for being critical of the plan last spring.

So it's reasonable, in my humble opinion, to ask:

Governor Romney, you attack President Obama and the Democrats for reducing Medicare's rate of growth to pay for a big chunk of the ACA. At the same time, you warmly embrace Cong. Ryan's budget plan that  sustains the same $449B in reductions. If elected, will you demand repeal of the Medicare reductions or will you sustain them?

Because right now, Governor Romney, your position is quite confusing.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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About the author

John E. McDonough is a professor of practice at the Harvard School of Public Health. He is the author of the book “Inside National Health Reform”, published in 2011 by More »


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