Romney accused Obama of taking $716 billion from Medicare. This $700 billion figure comes from the difference over 10 years (2013-2022) between anticipated Medicare spending (what is known as “the baseline”) and the changes that the law makes to reduce spending. The savings mostly are wrung from health-care providers, not Medicare beneficiaries — who, as a result of the health-care law, ended up with new benefits for preventive care and prescription drugs.
While it is correct that anticipated savings from Medicare were used to help offset some of the anticipated costs of expanding health care for all Americans, it does not affect the Medicare trust fund. In fact, 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.
Romney is correct that 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. But all government money is fungible.
Under the concept of the unified budget, money that is collected by the federal government for whatever purpose (such as Medicare and Social Security payroll taxes) is spent on whatever bills are coming due at that time. Social Security and Medicare will get a credit for taxes collected that are not immediately spent on Social Security, but those taxes are quickly devoted to other federal spending.
Under the health-care law, spending does not decrease in Medicare year after year; the reduction is from anticipated levels of spending in future years. Moreover, the “cuts” did not come at the expense of seniors.
The House Republican budget plan crafted by Romney's running mate, Paul Ryan, retains virtually all of the Medicare “cuts” contained in the health-care law, but diverts them instead to his Medicare overhaul. Republicans argue that that is a more effective use of the savings.