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Chris Van Hollen: Dem Medicare Cuts Good, GOP Medicare Cuts Bad

How Republicans can play the "granny card" in good conscience.

2:16 PM, Oct 22, 2010 • By JOHN MCCORMACK
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Democrats are facing a staggering deficit among senior voters. A Gallup poll showed that, in the month of September, Democrats were winning 18- to 29-year-olds by 19 points, losing 30- to 49-year-olds by 2 points, tied among 50 to 64-year-olds, and losing those 65 and older by 12 points.

Chris Van Hollen: Dem Medicare Cuts Good, GOP Medicare Cuts Bad

And, as everyone knows, seniors love to vote. A big reason why they'll vote against Democrats this year is because of the more than $500 billion in cuts from Medicare between 2010 and 2019 that will be used to fund Obamacare (according to CBO, it's nearly $1.1 trillion in cuts over the first decade when Obamacare is in effect--2014 to 2023). The polling deficit Democrats face among seniors has grown 9 points since March, when the health care law was signed.

But Democrats, led by Democratic Congressional Campaign Committee chairman Chris Van Hollen, have nevertheless done their best to counter that seniors should be more afraid of Republican congressman Paul Ryan's plan to turn Medicare into a means-tested voucher program for Americans under 55 years old. Van Hollen called out Ryan by name yesterday and told reporters at a meeting sponsored by the Christian Science Monitor that when seniors "learn about the Republican plan to privatize Medicare--which again is more than a plan, it was in the alternative budget the Republicans voted on last year--when they learn about that, I think they recognize that putting in charge a Republican majority that voted to privatize Medicare already last year does put them at risk.”

But having voted for Medicare cuts in the health care law, it's a difficult argument for Democrats to make. "Obiously there’s been a lot of misinformation," Van Hollen said, "on what exactly happened with respect to Medicare financing" in the national health care law. Van Hollen said that Obamacare's Medicare cuts are "primarily changes in the Medicare Advantage plan."

"It’s important to understand that the Medicare Advantage plan was subsidized with about 114 percent of the regular Medicare fee-for-service plan," said Van Hollen. "And as a result, not only were taxpayers giving an additional subsidy to these health insurance companies … but other folks in the fee for service Medicare were actually subsidizing these other plans."

There are a lot of problems with Van Hollen's argument. First, Medicare Advantage is popular with the 10 million seniors who choose it, and some insurance companies are already dropping their Medicare Advantage plans because of Obamacare.

Second, the Medicare cuts in Obamacare are not "primarily" cuts to Medicare Advantage. Only $136 billion of the more than $500 billion in Medicare "savings" by 2019 come from cutting Medicare Advantage. Most of the cuts are to hospital and doctor reimbursement rates. As Peter Ferrara and Larry Hunter wrote in the Wall Street Journal:  

In his analysis accompanying the recently released Annual Report of the Medicare Board of Trustees, Richard Foster, Medicare's chief actuary, noted that Medicare payment rates for doctors and hospitals serving seniors will be cut by 30% over the next three years. Under the policies of the Patient Protection and Affordable Care Act, by 2019 Medicare payment rates will be lower than under Medicaid. Mr. Foster notes that by the end of the 75-year projection period in the Annual Medicare Trustees Report, Medicare payment rates will be one-third of what will be paid by private insurance, and only half of what is paid by Medicaid.

Altogether, ObamaCare cuts $818 billion from Medicare Part A (hospital insurance) from 2014-2023, the first 10 years of its full implementation, and $3.2 trillion over the first 20 years, 2014-2033. Adding in ObamaCare cuts for Medicare Part B (physicians fees and other services) brings the total cut to $1.05 trillion over the first 10 years and $4.95 trillion over the first 20 years.

These draconian cuts in Medicare payments to doctors, hospitals and other health-care providers that serve America's seniors were the basis for the Congressional Budget Office's official "score"—repeatedly cited by the president—that the health-reform legislation would actually reduce the federal deficit. But Mr. Obama never disclosed how that deficit reduction would actually be achieved.

As Jeffrey H. Anderson has pointed out, "The Medicare chief actuary writes, 'roughly 20 percent of Part A [hospital] providers would become unprofitable within the 10-year projection period as a result of the productivity adjustments' and therefore 'might end their participation in the [Medicare] program.'”

These cuts will either happen--and the quality of care for seniors on Medicare will significantly decrease, or the cuts won't happen--and Obamacare will blow a huge hole in the federal deficit.

So it's difficult for Democrats to inspire a greater fear in Paul Ryan's plan--especially when one considers the fact that Ryan's plan would only change Medicare for those under 55. Making seniors afraid of Ryan's plan requires Democrats to pretend that the reform he supports would affect those who are currently retired or near retirement. Sometimes the media have been happy to assist in obscuring this crucial fact.

In reality, if anyone ought to be opposed to Ryan's plan it should be those under 55 who would actually see its effects. But the thing is, people under 55 don't expect entitlement programs to be around when they retire. 

Gallup reports that most people under 55 don't think Social Security will be around when they retire:

So those under 55 would seem to be more open to reforming entitlement programs. 

Some conservatives like Indiana governor Mitch Daniels have scolded fellow Republicans for playing the "granny card" against the Democrats who voted for Obamacare and its Medicare cuts.  "I do not think it was a proud moment for the Republican Party at all," Daniels said in June. "Medicare is going to have to change. I have to say, the granny card has been played so cynically against Republicans so many times, that I can certainly understand the turnabout there. But it is not a grownup attitude."

But Ryan takes a different approach. When Democrats attack him for wanting to "privatize" Medicare, he counterpunches that Democrats are the ones who have slashed the program for current beneficiaries and want to impose a "rationing system"; he simply wants a free-market reform for those under 55.

"What I'm proposing is, make sure that we don't cut benefits to people in and near retirement, 55 and above," Ryan said during a debate on CNN last month with Democratic congresswoman Debbie Wasserman-Schultz. "They just took $522 billion out of the Medicare fund to spend it on another government program. They are the ones who raided Medicare."

"What I'm saying is," Ryan continued, "let's get these programs solvent. If we don't fix this debt crisis and get ahead of it, Wolf, we will shred the social safety net that people have counted on. What I am trying to propose is something responsible, prevent cuts from hitting current seniors, people nearing retirement, and then reform these programs for those of us who are under 54, because we know they are going bankrupt, and put them on the path of solvency and sustainability."

Entitlement reform still scares a lot of Republicans, which is why not many have signed on to Ryan's Roadmap. And Ryan acknowledges that President Obama would never go along with his free-market reforms. But taking on the deficit and national debt ultimately requires reforming Medicare, because that's where the money is. Ryan does seem to have the better of the argument—and come January 20, 2013, there just might be a Congress and a president willing to act on it.

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