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August 16, 2012

The Great Medicare Debate Begins

If you haven't seen the latest commercial from team Romney called "Paid In," here it is:

The reaction from liberals to this has varied from "the Ryan plan would also cut medicare," to "you Republicans want to throw granny off a cliff," to "can we talk about global warming now?"

The whole issue is horribly complicated and more than I can deal with in one post, but here's a bit of background on what's going on:

From the Miami Herald

At issue is the fact that, while Romney running-mate Paul Ryan wants to transform and cut future Medicare expenditures by about $700 billion, President Obama's healthcare plan cuts $700 billion over a decade

So although both Obama and Ryan's plan would cut Medicare...

There is a big difference, though, in the thrust of the reductions bewteen Ryan and Obama's plans. ObamaCare specifically calls for no reductions in benefits (though, again, if you squeeze providers, benefits will be harder to receive) because it's essentially a defined benefit plan. Ryan calls for a defined contribution plan. And under Ryan's scenario, there's a good bet that the contribution won't be enough to cover health expenses that ObamaCare seeks to guarantee.

Well, maybe Ryan's plan wouldn't have enough money to over expenses that Obama allegedly "guarantees," but we can be sure that if we stick with Obama's plan the money won't be there.

James Capretta, writing in National Review, provides more details:

A fair reading of the facts shows that the Romney-Ryan campaign has every reason to believe that they can put the Obama-Biden ticket on the defensive over Medicare. The most salient fact is that, to pass Obamacare, the president cut Medicare by more than $700 billion over the coming decade, according to the Congressional Budget Office (CBO). And these cuts are of the worst kind. They are arbitrary and across the board. They reduce reimbursement rates for all who provide services to Medicare patients, regardless of how well or badly they treat their patients. Among the cuts is a $156 billion reduction in payments to Medicare Advantage plans over ten years. These cuts will force seniors to pay $3,700 more for their health care by 2017, according to a study I co-authored with Robert Book (for those who might be interested, the cuts are distributed by congressional district here). The Medicare trustees project that the cuts will drive some 4 million seniors out of Medicare Advantage plans between 2012 and 2018.

Further, the Medicare cuts in Obamacare would slash payment rates for hospitals, so much so that the chief actuary of the program has warned repeatedly that the cuts will jeopardize access to care for seniors. He has estimated that if the cuts go into effect, 15 percent of hospitals and nursing homes will have to stop taking Medicare patients to avoid the large financial losses that result from getting paid at Medicare rates. By 2030, some 25 percent of these institutions would need to drop out of the Medicare program.

Moreover, as Charles Blahous has pointed out, the Medicare cuts in Obamacare aren't used exclusively to replenish the trust funds that pay Medicare benefits. Instead, they are used to pay for a massive expansion in entitlement spending. To put it in slightly more political terms, President Obama has raided Medicare for $700 billion to pay for his government takeover of American health care.

In other words, the charge is accurate.

Ryan Schools Obama

Watch the whole thing here, but you can get a taste of it in this Youtube excerpt:

Thursday Update

In a post at NRO's The Corner, Avik Roy examines some widely-used Democrat arguments and takes them apart one-by-one:

Defense #1. Paul Ryan's GOP budget preserved Obamacare's Medicare cuts.

- APOTHEFACT CONCLUSION: Romney's budget doesn't preserve Obamacare's Medicare cuts. Simple as that.

Defense #2. Obamacare's Medicare cuts don't harm seniors' health benefits.

- APOTHEFACT CONCLUSION: Seniors' benefits won't change on paper. But they will change in reality, because fewer and fewer doctors will accept their insurance.

Defense #3. Obamacare cuts wasteful spending from the Medicare Advantage program.

- APOTHEFACT CONCLUSION: Medicare Advantage offers seniors higher-quality care at a lower cost than government-run Medicare. Obamacare should have sought to save money by expanding the program, instead of undermining it.

Defense #4. The Romney plan for Medicare is worse, because it would shift costs to seniors.

- APOTHEFACT CONCLUSION: President Obama is not being honest about the Romney Medicare reform plan, which was expressly designed to respond to the cost-shifting critique of the 2011 Ryan plan. The Romney plan preserves Medicare's benefits without exposing seniors to rising health-care prices.

See his full article at Forbes for details.

Posted by Tom at August 16, 2012 6:28 AM

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