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Obama Ad Falsely Claims Romney-Ryan Medicare Reform Would Cost Seniors $6400

2:04 PM, Aug 25, 2012 • By JOHN MCCORMACK
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Via Politico, here's the latest Obama campaign ad attacking Mitt Romney on Medicare reform:

"It’s a promise that was made long ago: you work hard, pay in, your Medicare benefits are guaranteed. But Mitt Romney would break that promise," the ad says. "Replace your benefits with a voucher. Insurance companies could just keep raising rates. Instead of a guarantee, seniors could pay $6,400 more a year."

The claim that the Romney-Ryan plan would cost seniors $6400 is based on an outdated and questionable analysis of an old Medicare reform plan offered by Ryan—not the plan Romney and Ryan actually support. Ramesh Ponnuru explained all of this in a Bloomberg column the day Ryan was named Romney's running mate:

Under the original Ryan plan, retirees would have chosen a private health plan and the government would have contributed money toward the cost. The amount of money would have depended on the beneficiary’s age and health status. Over time the average amount of money would have risen with inflation.

Critics pointed out that health-care costs have risen faster than inflation for a long time. If competition failed to change this trend, senior citizens would indeed have been left paying more.

The new version of the plan cleverly fixes the problem. Insurers would submit competitive bids to see who could cover Medicare’s traditional benefits for the lowest premium. The average amount of financial assistance would be equal to the second-lowest bid. So seniors will always have an option that leaves them with no higher costs than now. If they pick something even cheaper, they will come out ahead.

Ryan’s budget includes a failsafe to make sure the plan saves money even if competition doesn’t lead to restraint in premium growth: Total spending on Medicare would be limited to the growth of the economy plus inflation plus 0.5 percent.

That failsafe doesn’t rescue the Democratic attack, however, because the Obama administration caps Medicare spending at the same level. There is no scenario under which Medicare recipients have to pay more under the Romney-Ryan plan than they have to pay under the Democratic plan. The Obama campaign is, in short, responding to new thinking with stale talking points.

Update: The Romney campaign debunks the charge that Romney's plan will cost seniors $6400 in this memo.

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