Fact-check: Obama’s Attack Ad on Romney-Ryan Medicare Overhaul

Aug 15, 2012 6:00am

The Obama campaign wasted no time before rolling out an attack ad featuring Floridian seniors voicing concerns about how Medicare cuts under Republican presidential candidate Mitt Romney and his running mate Rep. Paul Ryan will affect them.  But the ads raise questions about whether the Republican duo will really be “ending Medicare care as we know it” and increasing “seniors’ health costs by $6,350 a year.”

So ABCNews.com fact-checked the claims for you, and found that they’re generally accurate given the information we have – assuming Romney embraces a plan that’s similar to Ryan’s budget proposal, that is.

In other words, they’re somewhere between the truth and Stephen Colbert’s “truthiness.”

The dollar value in the Obama campaign statement comes from the Congressional Budget Office’s long-term review of Paul Ryan’s budget proposal published in April 2011. The report compares Ryan’s proposal and the current Medicare system at several points in time, so ABCNews.com waded through the numbers to tell you what you need to know:

In 2022, Ryan’s health plan is expected to save the government $615.38 per beneficiary compared with the current law (plus other possible policy changes), but it will cost those beneficiaries $6,358.97 more per person, according to the nonpartisan report. That’s where the Obama campaign is getting its $6,350 number.

Here’s a handy chart with data from the CBO report:

Costs in 2022 Ryan Proposal Current Law w/ Expected Updates Difference
Gov’t Share $8,000.00 $8,615.38 ($615.38)
Beneficiary Share $12,512.82 $6,153.85 $6,358.97
Total Cost $20,512.82 $14,769.23 $5,743.59

Ryan’s proposal includes providing citizens with vouchers to pay for competing private health care plans, and it assumes the competition will drive down costs. Medicare currently makes payments to providers that are about 30 percent lower than those made by private insurance companies, but the CBO assumed that this would end under Ryan’s plan, driving up costs for beneficiaries. This accounts for the price discrepancy between beneficiary costs.

Although the original spring 2011 plan completely privatized Medicare, an updated “bipartisan” plan included a traditional Medicare option.

However, the Romney campaign says it has an even newer plan.

“Mitt Romney and Paul Ryan have a bipartisan plan to strengthen Medicare and are committed to ensuring that Medicare remains strong – not just for today’s seniors, but for tomorrow’s seniors as well,” said Ryan Williams, a spokesman for Romney campaign, in response to the attack ad.

There are no long-term reviews for this updated Romney-Ryan plan yet — or specific published details  –  so it appears the 2011 CBO report on Ryan’s original budget proposal is the only thing we have to go on.

“It’s based on what detail they were given at the time,” Judy Feder, a professor of public policy at Georgetown University, said of the CBO report’s relevance. “The burden is on Ryan and Romney to give us more detail.”

Health economist Gail Wilensky, who headed Medicare under the first President George Bush, told ABCNews.com the CBO report is flawed, however, because it assumes private insurance providers and seniors don’t change their behavior in response to changed incentives.

“CBOs ‘excuse’ is they don’t have enough data to make good assumptions but the presumption of no change is every bit as much an assumption as a positive one and most clearly wrong,” Wilensky said. “Long time problem with CBO.”

Obama’s attack ad includes senior citizens telling the cameraman they’re worried Romney will “cut” Medicare, and the ad ends with “Romney-Ryan: Ending Medicare as we know it,” but Wilensky said Ryan’s plan is more of a “change” than a “cut.”

“The Obama administration always changes ‘Medicare as we know it,’” Wilensky said,

The Obama administration ended Medicare as an open-ended entitlement program when it implemented the Independent Payment Advisory Board, she said. The IPAB is a 15-member panel that’s part of Obama’s Affordable Care Act and will tell Congress how to curb Medicare cost growth if it starts growing faster than the Gross Domestic Product. This part of the law isn’t supposed to take effect until 2014.

Williams, a Romney spokesman, said the only person cutting Medicare is Obama.

“To pay for Obamacare, President Obama cut $700 billion from Medicare for today’s seniors, which the Obama campaign described yesterday as an achievement,” he said.

ABCNews.com fact-checked an earlier claim by Romney when he said it was a $500 billion cut, and found a Kaiser Family Health report that said the government will reduce spending on Medicare by $500 billion but won’t cut benefits. Kaiser and CMS said they expect Medicare spending to decrease because ACA will reduce fraud and overpayments to private insurers.

Even if Ryan’s plan isn’t a “cut,” Ted Marmor, professor emeritus of public policy and management at Yale School of Management, and Feder are worried Ryan’s plan will burden Medicare beneficiaries by giving the government a smaller role in American social affairs.

“What Ryan is trying to do, and what I think more orthodox free market types have at the back of their minds is the view that medical care is actually just like a lot of other consumer services,” Marmor said, but it’s not.

He said providing Medicare vouchers to pay competing private insurance companies will shift the risk and increased costs for care from Medicare to the patient. Some patients would have to choose between paying for better coverage and having more money for food and other items.

“If the bill for the hospital turns out to be much higher than expected, and the Medicare client had opted for a larger cost-sharing plan in exchange for not paying for wider coverage, they will face much bigger bills,” Marmor said.

Feder warned that competition among private companies is also problematic to Medicare beneficiaries. Under the current Medicare system, costs and risks are pooled, lowering costs for the sick and raising them for the healthy. Under Ryan’s plan, private insurers will favor healthy individuals, who will favor cheaper private plans, so it could force sick beneficiaries to choose the Medicare option as a last resort, she said.

“What that does is separate the healthy from the sick,” she said, adding that if those sick people are forced to choose Medicare, it will become more expensive for them because the program would be overwhelmed with sick, costly patients.

Feder said she is also concerned Ryan’s vouchers would be limited to an arbitrary rate of growth, meaning that if they can’t keep up with heath care costs, Medicare beneficiaries will have to pay the difference.

She said Ryan’s plan will  damage Medicare’s market power, yet again driving up costs for beneficiaries.

“Medicare gets much better rates from providers–who can’t afford to say no to such a big pool of customers,” she said. ”That’s not true for private insurance plans. If you divvy up the market power among plans, they’ll likely pay more.”

So Ryan’s Medicare overhaul would “end Medicare as we know it,” as the attack ad suggests, Marmor said.

“It’s not ambiguous,” Marmor said. “It’s utterly obvious for anyone who understands what Medicare is like or what it is that this particular brand of Republican would prefer.”

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