Fact check: Medicare

  • Updated: September 3, 2012 - 8:20 PM

Both sides profess to be concerned about the financial health of Medicare but then bash each other with scary rhetoric. Here are some answers to key questions:

Q Did President Obama cut $700 billion from Medicare?

A The current Medicare system is essentially a government-run health care program, with hospital and doctors' fees paid by the government, though beneficiaries also pay premiums for some services as well as deductibles and co-insurance.

During the primaries, Republicans used to claim that Obama cut Medicare by $500 billion. So how did it balloon to a $700 billion figure? There is a simple explanation. The Congressional Budget Office last month issued a new estimate based on a different 10-year time frame (2013 to 2022). Of course, Republicans decided to pick the biggest number possible.

But Medicare spending is not being reduced. It still goes up year after year.

The $700 billion figure comes from the difference over 10 years between anticipated Medicare spending (what is known as "the baseline") and the changes the law makes to reduce spending. Moreover, the savings mostly are wrung from health care providers, not Medicare beneficiaries.

The proposed reduction in spending actually strengthens the long-term health of the Medicare program, according to Medicare trustees reports. And spending on Medicare over that 10-year period would still be $7.8 trillion.

In fact, House Republicans adopted many of these same cuts in their own budget. Both parties agree that controls are needed on Medicare spending -- that is the only way that the Medicare trust funds last longer -- but they disagree over the best path forward.

Q Did Obama use Medicare savings to fund "Obamacare"?

A All government money is fungible, but depending on how this claim is phrased, one could certainly make this rhetorical point. In the health care bill, the anticipated savings from Medicare were used to help offset some of the anticipated costs of expanding health care for all Americans. This sort of "double-counting" accounting has been used by both parties for decades.

The Obama health care law also raised Medicare payroll taxes by $318 billion over the new 10-year time frame, further strengthening the program's financial condition.

In sum, the health care bill actually puts Medicare on a more solid financial footing. WASHINGTON POST

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