The story I covered on Sunday about how the Romney-Ryan campaign would have to cut current Medicare benefits because of the box they’ve shoved themselves into by promising to “restore $716 billion in Medicare cuts” finally gets picked up by the New York Times in a front-page story. If the story gets a bigger platform, all the better. But I don’t think Jackie Calmes did a complete job of explaining this, so let me try again.
The “$716 billion in Medicare cuts” are actually savings in the form of reduced payments to Medicare providers and subsidies to insurance companies. If you “restore” those savings, it means that Medicare will pay out higher subsidies to Medicare Advantage and higher reimbursement rates to providers. This does two things. First, because Medicare beneficiaries pay a share of all costs in Medicare, it means higher out-of-pocket costs and premiums for them. That’s what Calmes focuses on.
Second, the Romney proposal accelerates the insolvency of the Medicare trust fund. By cutting costs, ACA savings extended the Trust Fund another 8 years, according to the CBO; so repealing ACA and eliminating those savings just ensures that insolvency could still happen by 2016, the last year of a Romney Administration’s first term. By law, once the Medicare Trust Fund is insolvent, you would have to initiate immediate cuts to the program, to get it within the Trust Fund’s spending authority.
All this has been established about a week ago. What’s new is that Romney campaign advisor Ed Gillespie was asked about this on Fox News Sunday and responded, when asked how they would deal with an insolvent Medicare Trust Fund in 2016, that Romney supports increasing the Medicare eligibility age, in addition to more means-testing (Medicare is already means-tested). Those are cuts to near current beneficiaries, and that’s what would have to happen. So Romney-Ryan cannot preserve Medicare for current seniors, claiming to shield those over 55, under their plan. They would have to make cuts. And the bargain that Romney-Ryan are making is that they will force Medicare to pay higher rates to providers and higher subsidies to private insurance companies, and in turn cut senior benefits.
This is an extremely important point. The President is an imperfect messenger for it, because he too proposed an increase in the Medicare eligibility age in 2011 during his grand bargaining. But under his plan, the Trust Fund solvency gets pushed out to 2024. Under the Romney-Ryan plan, they would have to make cuts in the first term, by law. It’s a big difference.
The Romney campaign either doesn’t understand this or is being deliberately obtuse.
The Romney campaign adamantly disputes the critics’ assertions.
“The idea that restoring funding to Medicare could somehow hasten its bankruptcy is on its face absurd,” said Andrea Saul, a spokeswoman for the Romney campaign. She added, “Governor Romney’s plan is to repeal Obamacare and replace it with patient-centered reforms that control cost throughout the health care system and extend the solvency of Medicare.”
That reflects a total ignorance of trust fund accounting and the implications of the Romney-Ryan plan. They cannot keep up the fiction that current beneficiaries would see no cuts. One group – 65 and 66 year-olds, or wealthier seniors – would see immediate cuts, plus everyone would see across-the-board higher costs on their out-of-pocket expenses. Not to mention the fact that the Medicare drug donut hole would be opened up again, free preventive care would be lost, etc., by a repeal of the Affordable Care Act.
The Obama campaign hasn’t really pursued this full line of attack, but now that it’s made its way into the Grey Lady, I’d expect to see it coming.