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Obama’s Medicare Myths

8:55 PM, Aug 16, 2012 • By FRED BARNES
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President Obama is creative. He’s given up on a palpable falsehood about the Romney-Ryan plan to reform Medicare. But he’s retained a few old canards and trotted out a new one.

Obama at AIPAC

The new charge? In his speech in Dubuque, Iowa, on Wednesday, he said: “My plan reduces the cost of Medicare by cracking down on fraud and waste and subsidies to insurance companies.”

But roughly 80 percent of Medicare benefits are dispensed by the federal government, not insurance companies. And while Obama’s health care law would ultimately kill the Medicare Advantage program, under which seniors choose private insurance providers, the president is keeping it alive, at least through the election, with an emergency $8 billion subsidy.

The old canards?  Obama said Medicare would not be guaranteed for seniors under Romney-Ryan. Sorry, but it would. And he said his reforms in Obamacare “will not touch your Medicare benefits – not by a dime.” But they’re bound to.

A White House spokesman insists the $716 billion in reductions in Medicare spending “do not cut a single guaranteed benefit.”  However, they’ll cut fees to providers – hospitals and doctors – which will cause cuts in services to Medicare beneficiaries. Yes, seniors would still have their benefit, but it would be more difficult to use.

Obama also noted that a Medicare plan “authored” by Ryan would “force seniors to pay an extra $6,400 a year.” This is both an exaggeration and irrelevant in the current presidential race. The Romney-Ryan plan is different. Under it, the $6,400 problem, to the extent there was one, is eliminated. 

Obama’s claim is that the Congressional Budget Office looked at the first Ryan budget in 2011 with its Medicare reform plan. That's true, but things are more complicated. CBO assumed the rise of health care costs would not be slowed at all and that the premium support benefit wouldn’t keep pace. By 2022, the gap between the Medicare benefit and its actual cost could be as much as $6,400.

But the assumption of rising costs was wrongheaded. The whole purpose of the reform plan was to use free market competition to hold down the cost increases. CBO ignored this, thus reaching an unjustified conclusion.

In any case, the plan embraced by Romney and Ryan today uses an annual competitive bidding process among insurance providers to determine the cost of the premium support payment to seniors.  In selecting a plan, seniors would be able to choose at least one option with no added out of pocket costs.

Sorry for that tedious explanation. There’s a more important point.  What Obama talked about in Dubuque was a discarded plan, not today’s Romney-Ryan plan.  His implication was that the plan dropped a year ago by Ryan is on the table now. It's not.

But let’s give Obama a bit of credit. He seems to have abandoned the charge that Ryan would have cut $716 billion from Medicare just like he has. Ryan wouldn’t have, nor would he and Romney now. 

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