Fact-Checking Romney: Does Health Reform Cut Medicare, Levy $500 Billion Tax?

Jun 28, 2012 7:02pm

ABC News’ Chris Good and Shushannah Walshe report:

In expressing his opposition to Thursday’s Supreme Court ruling, Mitt Romney provided some jaw-dropping numbers as to why he believes the Affordable Care Act (ACA) is “bad policy” and a “bad law.”

“Let me tell you why I say that. Obamacare raises taxes on the American people by approximately $500 billion,” Romney told reporters. “Obamacare cuts Medicare by approximately $500 billion. And even with those cuts, and tax increases, Obamacare adds trillions to our deficits and to our national debt, and pushes those obligations onto coming generations.”

So, where does the Romney campaign come up with those numbers?

They cite a memo written by Richard Foster, chief actuary of the Centers for Medicare and Medicaid Services (part of the U.S. Dept. of Health and Human Services),  that claims the ACA will, says Romney, “cut Medicare by more than $500 billion.”

So does it “cut” Medicare by $500 billion?

Medicare spending will continue to grow, according to the Centers for Medicare and Medicaid Services (CMS), but ACA will slow that growth. According to a report from the Kaiser Family Health Foundation  over the next 10 years, the federal government will devote about $500 billion less to Medicare than it would have without ACA.

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. This is all unless Congress makes drastic changes to Medicare, for example passing House Budget Chairman Rep. Paul Ryan’s Medicare Plan.

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.

Get more pure politics at ABC News.com/Politics and a lighter take on the news at OTUSNews.com

The doughnut hole is a gap in Medicare Part D prescription drug coverage, which requires seniors to pay for their prescription drugs out of pocket after surpassing a certain level of spending and before reaching a level where coverage resumed.

The Romney campaign’s explanation for why Obamacare is rife with taxes is testimony from the nonpartisan Congressional Budget Office that the ACA will raise approximately $500 billion in taxes over its first 10 years.

According to the CBO, this claim is right.

According to the CBO’s latest, revised estimates released in March 2012, the reform law raises “$510 billion in receipts and other budgetary effects (primarily revenues from penalties and other sources)”—including the “individual mandate” tax penalty and penalties on employers.

The Kaiser Foundation points out that in the CBO report there are $808 billion in tax credits to low-income and middle-class families to help them afford health insurance over the next 11 years.

In February 2011, the CBO estimated that Obama’s health-reform law would reduce the deficit by $210 billion over 10 years. Part of that reduction will come from slowing the rate of Medicare spending growth and imposing taxes.

The Obama campaign did not explicitly refute Romney’s $500 million in tax increases claim, but they said it ignores the fact that they predict health care costs will go down.

Larry Levitt, a senior vice president of the Kaiser Family Health Foundation, said it’s important to note the tax increases are “all quite specific.”

“Taxes on drug companies, on insurance companies, and on medical devices makers,” Leavitt said, adding even tanning beds will be subjected to a tax increase.

“What’s important is that the congressional budget office projects that on net the law will decrease the federal budget deficit,” Levitt said.

Romney also claimed the health law will cost $1.76 trillion. That’s the gross cost of its provisions to expand health coverage from 2012-2022, according to a 2012 CBO estimate. According to the latest CBO data, the new law’s insurance-coverage provisions will have a gross cost of $1.49 trillion from 2012-2021, the more common timeframe for spending comparison.

ABC News’ Michael Falcone and Daniel Steinberger contributed to this report. 

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