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The Romney-Ryan $700B Disagreement

Posted by John McDonough  August 12, 2012 05:49 PM

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Even in Washington, $700 billion is a lot of dough, so it's worth focusing on the fact that Republican Presidential nominee Mitt Romney and his chosen running mate, Cong. Paul Ryan (R-WI) disagree about $700 billion in Medicare reductions included in the Affordable Care Act (aka: ACA, ObamaCare).

This difference is important and compelling from both policy and political vantage points. So let's explore.

To begin, it is undeniable that Congressional Democrats and the Obama White House chose to pay for nearly half the cost of the ACA by reducing Medicare's expected rate of growth by about $450 billion between 2010 and 2019. The number, according to the non-partisan Congressional Budget Office (CBO),  is now up to around $700B because three early no-or-little reduction years have been supplanted by three full impact years (2013-2022).

None of these reductions were financed by cuts to Medicare enrollees' eligibility or benefits; benefits were improved in the ACA. Cuts were focused on hospitals, health insurers, home health, and other providers. Except for insurers, all the affected groups publicly supported the reductions to help finance the ACA's expansion in health insurance to about 32 million uninsured Americans.

During the Senate and House debates on the ACA in 2009 and 2010, Congressional Republicans pilloried Democrats for cutting Medicare $500 billion to finance ObamaCare. After the law was signed on March 23, 2010, Republicans brought the drumbeat to the campaign trail, urging seniors to vote Republican to repeal ObamaCare and stop the Democrats' cuts to Medicare. In November 2010, senior citizens voted Republican by the largest margin in modern political history and gave the GOP control of the U.S House of Representatives and a stronger minority caucus in the Senate.

With me so far? All's fair in love and war. Live by the sword, die by the sword. Politics ain't beanbag. So true.

Then it gets really interesting.

In the spring of 2011, the new Republican House majority votes overwhelmingly in favor of the budget proposal advanced by the new House Budget Chairman Paul Ryan. Ryan proposes a controversial restructuring of Medicare to move it in a premium support/voucher direction beginning in 2023, a proposal that gets lots and lots of attention, pro and con. Ryan's budget proposal also includes complete repeal of the ACA, with one little-noticed exception, the $500 billion in ACA Medicare reductions.


Nearly every House and Senate Republican votes for the Ryan proposal. In the spring of 2012, Ryan again releases the plan, and includes the same repeal of the ACA, minus the Medicare reductions, now approaching $700B. And, again, nearly every House Republican votes for the plan.

Meanwhile, as this is all happening, another group of Republicans is spending their time running for the Republican presidential nomination, among them, Mitt Romney. After initially putting some distance between himself and Ryan's budget plan, Romney gives the plan an enthusiastic embrace, though not a complete endorsement. Mitt, you see, wants to repeal every word and punctuation mark of the ACA, including the Medicare reductions.

Now, the Romney campaign's budget proposal includes major tax cuts, defense spending hikes, a balanced budget amendment, and enormous (though unspecified) reductions in all other federal spending (he holds Social Security, not Medicare, harmless). These reductions would require Medicare cuts far greater than anything in the ACA; indeed, the ACA reductions would only be a down-payment on the necessary cuts to come.

Then there is ObamaCare, and Romney's promise to repeal it in toto. Best circumstance for Republicans -- they hold the House, retake the White House, and retake the Senate with less than a filibuster proof 60-vote margin. Their only way to delivery on their (and Romney's) promised ACA repeal is to use the budget reconciliation process which requires that legislation must reduce lower, and not increase, the federal debt. The ACA, as confirmed repeatedly by the CBO, reduces the federal debt by more than $100 billion over ten years. The only practical way for Republicans to surmount this hurdle is to repeal all coverage expansions for the uninsured -- plus the ACA's tax increases -- and leave in place the Medicare reductions.

Such a move would be seen an act of extreme bad faith with hospitals, home health agencies and other health care stakeholders who agreed to the Medicare reductions in exchange for the coverage expansions. But, hey, Republicans will say, that's what happens when you lie down with Democrats, so stuff it.

All of which brings us back to the Romney-Ryan disagreement on the ACA's Medicare reductions. Romney knows he can't forfeit the talking point of ObamaCare's cuts to Medicare; and Ryan understands the budget math and politics.

So what happens?  My guess: during the campaign, Romney wins and Ryan folds -- if he has to. After all, Republicans have suffered just about zero damage on this issue after voting overwhelmingly for the Medicare cuts in Ryan's 2011 and 2012 budget plans. So why worry? And once Republicans are in power in 2013, bring out the Etch-a-Sketch because it's time for another "reset."

And maybe not.

On today's Meet the Press, Republican National Committee Chair Reince Priebus walked onto this thin ice and the cracks can already be heard. Here's the TPM summary:

"This president stole -- he didn't cut Medicare -- he stole $700 billion from Medicare to fund Obamacare," said Republican National Committee Chairman Reince Priebus, on NBC's Meet The Press. "If any person in this entire debate has blood on their hands in regard to Medicare, it's Barack Obama. He's the one that's destroying Medicare."

Maybe, just maybe, the issue of the ACA's Medicare reductions is reaching the public's radar screen.

Will new VP candidate Paul Ryan be able to avoid recanting his most public endorsement of the Medicare reductions in ObamaCare?

Stay tuned. This may get interesting.

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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