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The Return of the Republican Medicare Frauds

July 7, 2012

Back in 2010, Republicans swept to power in no small part by scaring the bejesus out of elderly voters over supposed Democratic cuts to Medicare. But now that the Supreme Court has preserved the Affordable Care Act, Mitt Romney and his GOP allies on Capitol Hill are once again darkly warning that "Obamacare cuts Medicare by approximately $500 billion."
That Republican fear-mongering is more than a little ironic, and not just because the same GOP that tried to kill the Medicare program in the 1960's and hoped to see it "wither on the vine" in the 1990's now pretends to be its savior. For starters, most of the $500 billion in savings from the continued growth of Medicare are realized from private insurers and providers, not patients. As it turns out, the Paul Ryan Republican budget which garnered the votes of 235 House Republicans and 40 GOP Senators contains exactly the same Medicare changes as the Affordable Care Act they seek to repeal. Worse still, it is the Ryan-Romney prescription to convert Medicare into a voucher system that promises to dramatically shift health costs onto future generations of seniors.
On Friday, Jackie Calmes of the New York Times explained why the Republicans' demagoguery on Medicare has become such a delicate dance:

That is a reprise of Republicans' mantra of the 2010 midterm elections, which gave them big gains at both the state and federal levels and a majority in the House. Yet the message conflicts not only with their past complaint that Democrats opposed reining in Medicare spending, but also with the fact that House Republicans have voted twice since 2010 for the same 10-year, $500 billion savings in supporting Mr. Ryan's annual budgets.

Which is exactly right. And last week, House Budget Chairman and potential Romney running mate Paul Ryan admitted as much. "What Obamacare does is it takes that money from Medicare to spend on Obamacare," Ryan explained to ABC's George Stephanopoulos, adding disingenuously, "Our budget keeps that money for Medicare to extend its solvency." Disingenuous, that is, because the $500 billion in Medicare savings is just a small down payment on the multi-trillion dollar tax cut windfall for the wealthy Ryan's Republicans promise to deliver.
Regardless, those $500 billion in savings shared by the Democrats' Affordable Care Act and the Ryan Republican budget endorsed by Mitt Romney do not, as Senate Minority Leader Mitch McConnell repeatedly warned, constitute "sticking it to seniors with cuts to Medicare." As Politifact recently noted, "the health care law does not cut $500 billion from Medicare. It just reduces future growth." ABC News elaborated on that point:

CMS and the Kaiser Family Foundation tell ABC News that there will be no benefit cuts to Medicare. They say instead of Medicare's being cut, there will be much more spending at the end of a 10-year window, but it does slow the rate of that growth...CMS says--and Kaiser agrees--that spending will be reduced by getting rid of fraud and ending overpayments to private insurance companies. It sends a message to those insurance companies: Operate more efficiently.
And instead of cuts, the CMS says they will be able to fund new benefits, including free preventive care and broader prescription coverage, including closing the "doughnut hole" affecting seniors.

As for those private insurers whose Medicare Advantage plans used by about 15 percent of beneficiaries (and which cost taxpayers about 120 percent of government-provided Medicare), the Republican budget maintains the same $136 billion in reductions.
But if Republicans win control of the White House and Congress, America's future seniors will be the real losers.
In April 2011, those 235 House Republicans and 40 GOP Senators voted for Paul Ryan's plan to convert Medicare into a system of under-funded vouchers in which millions of seniors would be left to the devices of the private insurance marketplace. But when Americans learned that the Ryan scheme would inevitably lead to massive cost-shifting to - and rationing for - the elderly, Paul Ryan went back to the drawing board. So along with Democratic Senator Ron Wyden, Ryan in December introduced the Ryan-Wyden plan, which would continue government Medicare as one of many choices. But as ThinkProgess explained, even by tying the value of the voucher to the second-lowest plan in the Medicare "exchange," the result would be much the same:

Beginning 2023, the guaranteed Medicare benefit would be transformed into a government-financed "premium support" system. Seniors currently under the age of 55 could use their government contribution to purchase insurance from an exchange of private plans or traditional fee-for-service Medicare. But the budget does not take sufficient precautions to prevent insurers from cherry-picking the healthiest beneficiaries from traditional Medicare and leaving sicker applicants to the government. As a result, traditional Medicare costs could skyrocket, forcing even more seniors out of the government program. The budget also adopts a per capita cost cap of GDP growth plus 0.5 percent, without specifying how it would enforce it. This makes it likely that the cap would limit the government contribution provided to beneficiaries and since the proposed growth rate is much slower than the projected growth in health care costs, CBO estimates that new beneficiaries could pay up to $2,200 more by 2030 and up to $8,000 more by 2050. Finally, the budget would also raise Medicare's age of eligibility to 67.

Again, the specifics may vary, but Mitt Romney's prescription for Medicare is essentially the same poison pill as the "Ryden" model. As the New York Times documented in November:

Mr. Romney's proposal would give beneficiaries the option of enrolling in private health care plans, using what he, like Mr. Ryan, called a "premium support system." But unlike the [original] Ryan plan, Mr. Romney's would allow older people to keep traditional Medicare as an option. However, if the existing government program proved more expensive and charged higher premiums, the participants would be responsible for paying the difference.

Which brings us to the final irony of the Republican Medicare frauds. The only potential bright spot - and it's a small one if indeed it is one at all -in the premium support plan backed by Paul Ryan and Mitt Romney is that their proposals in essence endorse the approach of the Affordable Care Act Republicans so loathe. As Ezra Klein explained, "Paul Ryan and Ron Wyden want to bring Obamacare to Medicare":

But the secret of these types of premium-support platforms is that they are, in essence, a vindication of the Affordable Care Act. The cost containment is supposed to come through competition between plans, and works like this: "All plans, including the traditional fee-for-service option, would participate in an annual competitive bidding process to determine the dollar amount of the federal contribution seniors would use to purchase the coverage that best serves their medical needs. The second-least expensive approved plan or fee-for-service Medicare, whichever is least expensive, would establish the benchmark that determines the coverage-support amount for the plan chosen by the senior. If a senior chose a costlier plan than the benchmark, he or she would be responsible for paying the difference. Conversely, if that senior chose a plan that cost less than the benchmark, he or she would be given a rebate for the difference."
In other words, the competition is driven by tying the subsidy to the second-least expensive plan in the market. That way, the system gives beneficiaries a financial incentive to choose the cheaper plan. That is exactly-- exactly! -- how the Affordable Care Act works. The difference here is that the system will include a massive public option in Medicare, which is something conservatives refused to allow in the Affordable Care Act.

For his part, Congressman Ryan now as in the past wants to keep his dirty secret, well, secret. As the Democrat Wyden explained, "What a lot of progressive folks have talked about is that in effect, traditional Medicare operates like a public option. Now, that's not very appealing, as you know, to conservatives." Ryan quickly responded, "Try not to use those words."
Of course, when it comes to Republicans charging that Democrats want to cut Medicare, they shouldn't be using those words at all.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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