As Democrats go on the Medicare offensive after Mitt Romney picked Rep. Paul Ryan, the author of the GOP’s Medicare-transforming budget, to be his vice-presidential nominee, Romney has fired back with with a predictable broadside: Obama cut Medicare too. “The president’s idea for Medicare was to cut it by $700 billion. That’s not the right answer. We need to make sure we can preserve and protect Medicare,” Romney said yesterday in Florida, and again today in Ohio, and will almost certainly say again tomorrow and the day after. Republicans even argue that Obama’s plan is more damaging that Ryan’s because it affects current seniors, while Ryan’s plan doesn't apply to people over the age of 55. Ryan told Brit Hume in an interview set to air tonight, "We're not the ones hurting current seniors ... raiding Medicare to pay for Obamacare." So are Romney and Ryan right?
The short answer: Nope. Here’s the long answer: The $700 billion figure comes from cost savings created in Medicare to help pay for the Affordable Care Act. Romney is correct in the figure and correct in asserting that the money is being diverted from Medicare to help pay for Obamacare, but he misleads on the mechanism and its effects. First of all, the change affects reimbursements to hospitals, insurance companies and other providers, not benefits for average enrollees. As the Boston Globe’s health policy expert Health Stew noted, “Except for insurers, all the affected groups publicly supported the reductions to help finance the ACA's expansion in health insurance to about 32 million uninsured Americans.”
Politifact called a similar claim “false” when Romney made it back in December, noting that there “are not actual cuts,” as the savings come from projected future growth in the program, no on-paper budgeting. The Washington Post’s fact checker also rated the claim poorly. "The Affordable Care Act improves the benefits in Medicare, in terms of prevention, in terms of filling in the donut hole in Medicare Part D for prescription drugs," explained Jonathan Oberlander, a health policy professor at the University of North Carolina-Chapel Hill.
But it gets worse for Romney’s claim. Paul Ryan, in his GOP budget, preserves the very same $700 billion “cut” Romney is now attacking Obama with in order to defend Paul Ryan’s budget. This annoyed some Republican health policy wonks at the time, as the Wall Street Journal noted last April, when Ryan embraced a provision they had been attacking for months. And while Obamacare may "raid" Medicare to pay for expanded healthcare to the uninsured, Ryan's plan doesn't specify where the savings would go, but it's reasonable to assume they would be needed to reduce the budget impact of the tax reductions for the wealthy he calls for implementing. So if Ryan wants to characterize the $700 billion in savings as a raid, then he can fairly be accused of wanting to raid Medicare to pay for, in part, his cut in the capital gains tax, which applies exclusively to investors.
But beyond the mendacity of Romney’s latest attack is a much bigger strategic problem for Republicans. Implicit in Romney’s counterattack is an understanding that Medicare is centrally important and that there’s broad consensus against cutting it. But starting from the premise that cutting Medicare is bad is already a loser for Romney, as Ryan’s plan would unquestionably do more to fundamentally change Medicare than even the most demagogic interpretations of Obamacare. The Ryan plan would reduce costs of Medicare by semi-privatizing the system and then providing subsidies to seniors that wouldn’t keep up with medical cost inflation. That would directly impact seniors (or, rather, future seniors, since the plan wouldn’t kick in for a decade after it became law), unlike Obamacare’s reductions, which mostly hit providers willing to take the hit in exchange for new customers.
If Romney and Ryan wanted to defend their Medicare plan, whose entire purpose is to reduce the cost of Medicare, they wouldn’t attack Obama for reducing the cost of Medicare.