The Many Misleading Claims In Mitt’s Monday Medicare Memo

As part of an effort to reverse the public’s perception of the parties’ positions on Medicare, Mitt Romney’s campaign is appropriating a common Democratic attack and using it against President Obama. To wit, it’s Obama, not Romney and the GOP, who plans to “end Medicare as we know it.”

There are multiple, and conflicting, facets to this claim, all of which are intended to obscure one fundamental fact — the GOP broadly supports a plan that, over years, will phase out traditional Medicare, and replace it with a subsidized private (or private-public) insurance system for seniors; President Obama supports, and has signed into law, efforts to make the existing single-payer Medicare plan more cost-effective in order to avoid “ending Medicare as we know it.”Romney’s own Medicare framework is fairly vague. But he has articulated support for the more detailed plan in the GOP’s budget, written by Rep. Paul Ryan. That model would provide future seniors federal subsidies to buy private insurance, and allow the existing Medicare program to phase itself out as current seniors pass away, or opt into the private system. A different version of this same program, (the so-called Wyden-Ryan plan, which Romney also supports) would provide future seniors more generous subsidies, and allow them to buy into the existing Medicare program as a public option. The unifying feature of these plans is that they end the Medicare benefit guarantee, and replace it with a subsidy (or defined contribution).

President Obama, by contrast, has made cutting waste on the provider side a key goal. His 2010 health care law includes myriad new policies and pilot programs aimed at bringing costs down by eliminating waste and introducing new efficiencies into Medicare. He also enacted the Independent Payment Advisory Board — the health care law’s cost-cutting panel, whose expert members will, in the years ahead, be tasked with reducing provider payments in order to keep Medicare spending growth at or below GDP growth plus 1 percent. Crucially, the plan is designed to preserve the basic structure of the existing program for all seniors, current and future.

A new Romney camp memo elides all of this. First it ignores the fact that Obama’s health law and the Romney-backed Wyden-Ryan plan hold Medicare cost growth at the same level. Instead, it asks, “Why is President Obama ending Medicare as we know it by allowing it to go bankrupt in less than 15 years?” There are reasons to doubt Medicare will go bankrupt in the next 15 years, but if Obama’s cost-growth plan leads to bankruptcy, then either Romney’s does too, or else he’ll have to lay out how much he plans to cut future seniors’ vouchers to keep his plan sustainable for a longer period of time.

Romney’s staff refers to the plan outlined on the campaign website, which notes “Mitt continues to work on refining the details of his plan, and he is exploring different options for ensuring that future seniors receive the premium support they need while also ensuring that competitive pressures encourage providers to improve quality and control cost.”

The memo goes on to attack Obama for “ending Medicare as we know it,” by cutting $500 billion from Medicare spending in the health care law. This line frustrates some conservatives who say it exposes Romney’s unwillingness, in the face of political pressure, to truly roll back Medicare — the GOP vilified the health care law’s Medicare cuts to great effect, making them politically toxic even for those who claim to support cutting Medicare spending.

But those cuts were aimed at providers (other than physicians) and at over-payments to private insurers participating in the Medicare Advantage program (corporate welfare essentially). They didn’t change the architecture of Medicare, didn’t cut patient benefits directly, if at all and were paired with new benefits under the program like free annual checkups and a prescription drug rebate for seniors who fall into Medicare’s prescription drug “donut hole.”

Next, the memo knocks Obama for “ending Medicare as we know it” by creating IPAB — a critique that’s at odds with the notion that Obama’s made no hard choices to rein in Medicare spending. Indeed, IPAB’s unpopular enough that several Democrats have joined a GOP effort to repeal it. But IPAB’s goal is precisely to avoid “ending Medicare as we know it” by making the existing single-payer structure sustainable.

Romney says Obama’s cuts to Medicare Advantage over-payments “ends Medicare as we know it” for diminishing that program for today’s seniors. That’s of a piece with the attack on the health care law’s $500 billion Medicare spending cuts. But it also ignores the fact that Medicare Advantage — a private option for seniors who want to be insured outside of government-payer Medicare — has failed mightily to control costs, leaving taxpayers on the hook for more money than they would have been if seniors didn’t have the Medicare Advantage option. The health care law brought Medicare Advantage costs per patient in line with those of traditional Medicare, but did not end the program. Indeed early evidence suggests the health care law made Medicare Advantage both cheaper and more attractive to seniors.

Finally, Romney dings Obama, in essence, for not achieving a permanent “doc fix” to eliminate the threat physicians face each year that their Medicare reimbursement rates will drop dramatically. This is true as far as it goes, but the formula that determines those reimbursement rates has been flawed since it was implemented years ago, and Congress has always patched it to make sure doctor reimbursement rates rise over time. Democrats initially hoped to include a permanent “doc fix” in the health care bill, but the added costs to the law gave Republicans wider berth to attack the legislation’s price tag, and Democrats ultimately retreated. This issue has flummoxed both parties for years, but Romney is no closer than anyone else to providing a workable solution.

Read Romney’s full memo below.


“There are two proposals on the table for addressing the nation’s entitlement crisis. Mitt Romney – along with a bipartisan group of leaders – has offered a solution that would introduce competition and choice into Medicare, control costs, and strengthen the program for future generations. President Obama has cut $500 billion from Medicare to fund Obamacare and created an unaccountable board with rationing power – all while America’s debt is spiraling out of control and we continue to run trillion-dollar deficits. If President Obama’s plan is to end Medicare as we know it, he should say so. If he has another plan, he should have the courage to put it forward. Until he explains his position and answers the following questions, he and his spokespeople are irrelevant to the national debate.” -Andrea Saul, Romney Campaign Spokesperson

ONE: Why Is President Obama Ending Medicare As We Know It By Allowing It To Go Bankrupt In Less Than 15 Years?

President Obama Has Failed To Propose “Meaningful Reforms In Entitlements.” “His budget also proposes no meaningful reforms in entitlements, which are the fastest growing part of the budget and will grow even faster once ObamaCare really kicks in.” (Editorial, “The Amazing Obama Budget,” The Wall Street Journal, 2/14/12)

President Obama Has Proposed “Only Minimal Curbs On The Unsustainable Growth Of Medicare.” “[The budget proposal] avoids sacrifice with only minimal curbs on the unsustainable growth of Medicare even as it proposes a 10-year, $61 billion ‘financial crisis responsibility fee’ on big banks to recoup the 2008 Wall Street bailout.” (Andrew Taylor “Obama Budget: New Spending With Recycled Tax Ideas,” The Associated Press, 2/11/12)

The Medicare Trust Fund Will Be Bankrupt In 2024. “Medicare is in serious trouble. The Medicare Trust Fund will be bankrupt in 2024, according to the 2011 Medicare Trustees Report – five years earlier than projected just last year.” (Rep. Fred Upton, Op-Ed, “Dems Squeeze Medicare With IPAB,” Politico, 7/13/11)

TWO: Why Is President Obama Ending Medicare As We Know It By Funding Obamacare Through $500 Billion In Medicare Cuts For Today’s Seniors?

President Obama “Will Reduce Medicare Outlays By $507 Billion.” “In February 2011, CBO estimated that the permanent reductions in the annual updates to Medicare’s payment rates for most services in the fee-for-service sector (other than physicians’ services) and the new mechanism for setting payment rates in the Medicare Advantage program will reduce Medicare outlays by $507 billion during the 2012-2021 period.” (Douglas W. Elmendorf, “CBO’s Analysis of the Major Health Care Legislation Enacted in March 2010,” Congressional Budget Office, 3/30/11)

THREE: Why Is President Obama Ending Medicare As We Know It By Creating An Unaccountable Board To Ration Care For Today’s Seniors?

IPAB “Can Severely Limit The Health Care Services Available To Medicare Beneficiaries.” “Created under the health care law, IPAB would consist of 15 unelected, unaccountable members who can severely limit the health care services available to Medicare beneficiaries, while operating outside the usual system of checks and balances. In addition, this group of 15 is authorized to extend their rationing to the entire health care system. Beginning in 2013, if the chief actuary of the Centers for Medicare and Medicaid Services decides that spending is expected to exceed certain targets, the IPAB will make recommendations to the secretary of health and human services to cut it. Barring an act of Congress, the secretary is mandated to implement these proposals.” (Rep. Fred Upton, Op-Ed, “Dems Squeeze Medicare With IPAB,” Politico, 7/13/11)

“The System Is Set Up So That IPAB … Makes The Policy Choices About Medicare.” “Third, IPAB is effectively unaccountable. In practice, the law makes it almost impossible for Congress to reject or modify IPAB’s decisions, even if those decisions override existing laws and protections that Congress passed. It’s not really an advisory body, despite its name. The system is set up so that IPAB, rather than Congress and HHS acting under Congress’ authority, makes the policy choices about Medicare.” (Douglas Holtz-Eakin, Testimony before the House Budget Committee, 7/12/11)

FOUR: Why Is President Obama Ending Medicare As We Know It By Destroying Medicare Advantage For Today’s Seniors?

Under President Obama’s Plan, Enrollment In Medicare Advantage Is Projected To Decline By 50% And Choices Will Decline By Two-Thirds. “Nationwide, compared to what would have been the case under prior law, by 2017, when the changes are fully phased-in, enrollment is projected to be 50 percent lower [7.4 million], the average would-be beneficiary will lose $3,700 in benefits (accounting for both those who remain in MA and those who leave), and the number of choices available in the average county will be reduced by about two-thirds.” (Robert A. Book and Michael Ramlet, “What Changes Will Health Reform Bring To Medicare Advantage Plan Benefits And Enrollment,” Medical Industry Institute: Carlson School of Management, 10/11)

FIVE: Why Is President Obama Ending Medicare As We Know It By Ending Access To Care For Today’s Seniors?

52 Percent Of Doctors Say Obamacare Will Compel Them To Close Or Significantly Restrict Their Practices To Medicare Patients. (Merritt Hawkins, “Health Reform and the Decline of Physician Private Practice,” The Physicians Foundation, 10/10)

“One In Seven Hospitals Will Have To Leave The Medicare System.” “The Office of the Medicare Actuary predicts by the end of this decade Medicare will pay doctors even less than Medicaid pays and, by then, one in seven hospitals will have to leave the Medicare system. So the Medicare Actuary cannot but conclude ‘large reductions in Medicare payment rates to physicians would likely have serious implications for beneficiary access to care; utilization, intensity, and quality of services.'” (“Democrats Already Ended Medicare ‘As We Know It’,”, 6/3/11)

“Today, Medicare Coverage No Longer Guarantees Access To Care.” “If Medicare’s provider reimbursements are drastically reduced the market will react in accord with the basic laws of economics. Providers will have three options: to close up shop, to refuse Medicare patients, or to shift the costs onto the other patients. None of these options help our healthcare system operate more effectively or more efficiently. Today, Medicare coverage no longer guarantees access to care.” (Douglas Holtz-Eakin, Testimony before the House Budget Committee, 7/12/11)

FLASHBACK: President Obama Has Repeatedly Acknowledged The Severity Of The Entitlement Crisis, Even If He Does Not Have The Courage To Address It:

In October 2008, Candidate Obama Said The Country Needed To Tackle Social Security And Medicare Reform: “We’re Going To Have To Take On Entitlements And I Think We’ve Got To Do It Quickly.” NBC’s TOM BROKAW: “Would you give Congress a date certain to reform Social Security and Medicare within two years after you take office? Because in a bipartisan way, everyone agrees, that’s a big ticking time bomb that will eat us up maybe even more than the mortgage crisis.” OBAMA: “Well, Tom, we’re going to have to take on entitlements and I think we’ve got to do it quickly. We’re going to have a lot of work to do, so I can’t guarantee that we’re going to do it in the next two years, but I’d like to do in the my first term as president.” (Sen. Barack Obama, Presidential Debate, Nashville, TN, 10/7/08)

· Click Here To Watch Candidate Obama’s Remarks

In January 2009, President-Elect Obama Warned That “The Real Problem With Our Long-Term Deficit Actually Has To Do With Our Entitlement Obligations … It Is Just Not Sustainable.” OBAMA: “I think everybody here is familiar enough with the budget problems to know that as bad as these deficits that we’re running up over the next – that have already been run up have been, and despite the cost of both TARP and the stimulus, the real problem with our long-term deficit actually has to do with our entitlement obligations and the fact that historically if our revenues range between 18 and 20 percent of GDP, they are now at 16, it is just not sustainable.” (President-Elect Barack Obama, Remarks to The Washington Post Editorial Board, 1/15/09)

President-Elect Obama, On Entitlements: What We Have Done Is Kicked This Can Down The Road. We’re Now At The End Of The Road. And We Are Not In A Position To Kick It Any Further.” OBAMA: “[W]e’re going to have to craft what George Stephanopoulos called a grand bargain. I try not to use the word grand in anything that I say, but we’re going to have to shape a bargain. This, by the way, is where there are going to be some very difficult choices, and issues of sacrifice and responsibility and duty are going to come in, because what we have done is kicked this can down the road. We’re now at the end of the road. And we are not in a position to kick it any further.” (President-Elect Barack Obama, Remarks to The Washington Post Editorial Board, 1/15/09)

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