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Paul Ryan Spoke the Truth About Obamacare

2:35 PM, Aug 30, 2012 • By JAY COST
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Shortly after Paul Ryan’s speech ended last night, the left wing blogosphere and commentariat launched an attack on the vice presidential nominee for his supposed mendacity. They attacked from many angles, but the most substantial assault was on Medicare.

This is a complicated issue, and it is important for the facts of the situation to be laid bare for all to see, unvarnished and plain.

Last night, Paul Ryan said this about Medicare:

And the biggest, coldest power play of all in Obama Care came at the expense of the elderly.  You see, even with all the hidden taxes to pay for the health care takeover, even with the new law and new taxes on nearly a million small businesses, the planners in Washington still didn't have enough money; they needed more.  They needed hundreds of billions more.  So they just took it all away from Medicare, $716 billion funneled out of Medicare by President Obama.

This is an entirely true statement. In fact, some have been suggesting for years that the Democrats would pay a dear price for their raid on Medicare. And the time has come to pony up.

Here are the facts:

(1) Obamacare cost about $1 trillion dollars over 10 years, according to the Congressional Budget Office. Democrats raised roughly half of that money through new taxes, and the other half was “raised” from cuts in Medicare.

(2) If they had cut Social Security, Democrats would not have been able to apply that revenue to Obamacare because money that comes from Social Security actually belongs to the Social Security Trust Fund. When the federal government uses it for other purposes, it is actually borrowing the money, to be paid back with interest at a later date. The exact same is true of Medicare; the catch is that the rules of CBO budgeting allowed the Democrats to count it as an offset to the new spending. So, Obamacare looked deficit neutral on paper, when in fact half of it was paid for with borrowed money.

(3) The $500 billion in cuts to Medicare do not amount to cuts in benefits to patients, at least nominally. However, government accountants believe that is what effectively will happen. Obamacare imposes efficiency requirements on doctors and hospitals that, over time, will be virtually impossible to maintain. Richard Foster, the government’s chief accountant for Medicare, estimates that 15 percent of all hospitals will fall into the red because of these cuts. Thus, seniors will have the same benefits on paper – but, much like those in the Medicaid program, they will find it difficult to find a doctor or hospital willing to provide the service.

(4) The original version of the Ryan budget retained these cuts. However, there was an important difference: the money was not funneled out to sponsor a new entitlement. Instead, it was credited back to the Medicare Trust Fund, thus strengthening our long term deficit situation. [In my opinion, this was a mistake: Medicare needs reforms that lower its costs, but the Obamacare cuts are poorly designed and impractical.]

(5) The Romney-Ryan plan restores all of the lost funding to Medicare.

His criticism of Obamacare is perfectly legitimate. It is a simple matter of mathematics, and the verdict of the government’s top accountant for the program: Obama cut $500 billion from the program; he used that money to cover the cost of Obamacare; the cuts are likely going to result in barriers to access for seniors.

Democrats made a terrible political mistake with Obamacare. They should not have used Medicare funds as a way to pay for it; Republicans were always going to burn them on this (just as Democrats burned the GOP in 1996 for the same kind of trick). And in fact, conservative analysts everywhere were commenting on this in 2009 and 2010. Democrats blithely ignored them, and now their chickens have come home to roost.

Jay Cost is a staff writer for THE WEEKLY STANDARD and the author of Spoiled Rotten: How the Politics of Patronage Corrupted the Once Noble Democratic Party and Now Threatens the American Republic, available now wherever books are sold.

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