Wonkbook: The Medicare — and Medicaid — wars

August 15, 2012

Wonkbook dashboard

RCP Obama vs. RomneyObama +3.7%; 7-day change: Obama +0.2%.

RCP Obama approval48.4%; 7-day change: +0.6%.

Intrade percent chance of Obama win57.8%.

Top story: After Ryan pick, Medicare and Medicaid in spotlight

Obama and Ryan have set off a major political clash over Medicare. "With 50 million beneficiaries, Medicare is a major concern for both parties...Representative Paul D. Ryan’s budget blueprint assumes the same amount of Medicare savings as President Obama’s health care law, even though Mitt Romney and Mr. Ryan have said those cuts would be devastating to millions of older Americans on Medicare. As the partisan brawl over Medicare continued on Tuesday and threatened to become the focus of the race, the Obama campaign said that Mr. Ryan’s budget plan — broadly endorsed by Mr. Romney — “would end Medicare as we know it” and shift costs to beneficiaries." Simon Johnson in Politico.

The Romney/Ryan campaign's first ad attacks Obama for cutting Medicare: Watch it here.

The Affordable Care Act does cut $716 billion from Medicare. Here's how. "The Romney campaign has gone on the offense on Medicare, charging that the Affordable Care Act 'cuts $716 billion' from the entitlement program. That $716 billion figure is one you’ll probably be hearing a lot about during this election cycle. It’s worth understanding where it comes from and what the spending reductions mean for the Medicare program...The majority of the cuts, as you can see in this chart below, come from reductions in how much Medicare reimburses hospitals and private health insurance companies." Sarah Kliff in The Washington Post.

@ByronTau: Asked to say something nice about Romney, Obama says: "I really think he had a great health care plan when he was in Massachusetts."

Interview: Sen. Ron Wyden on his, versus Romney-Ryan's, Medicare reform plans. "My view is that the policies that were adopted by the Republican House majority and the Romney campaign do not preserve the Medicare guarantee...[T]he Romney approach completely pulls the rug out from under the poorest and most vulnerable seniors."

Romney and Ryan, in fact, don't see eye-to-eye on Medicare. "What makes this battle unusual is the lineup on each side. Rep. Paul Ryan's budget plan this year incorporated the Obama cuts. But presumed Republican candidate Mitt Romney, who just tapped Mr. Ryan as his running mate, says the cuts will gut Medicare, and he is pledging to repeal them. The divide on the GOP ticket—as well as Democrats' preference for discussing other parts of the health law—reflects the difficulty of finding a politically acceptable way to overhaul Medicare." Peter Landers in The Wall Street Journal.

KLEIN: Time to clarify a persistent misunderstanding: Paul Ryan keeps Obama's Medicare cuts. "Since the Romney campaign wants to run against President Obama’s cuts to Medicare, it’s something of a problem for them that Paul Ryan’s budget includes those very same cuts to Medicare. And so they’ve come up with a somewhat confused and confusing argument to distinguish the two plans. Obama’s cuts to Medicare are different because Ryan 'keeps that money for Medicare to extend its solvency' while Obama uses it 'to pay for a new risky program of his own that we call Obamacare.' This is basically a misunderstanding of how budgeting works. Or, at the least, it’s predicated on the listener misunderstanding how budgeting works." Ezra Klein in The Washington Post.

@sahilkapur: The one part of Obamacare that Ryan's budget embraces is the Medicare cuts. This debate is bang-your-head-against-the-wall idiotic.

MARCUS: The Medicare conversation we should be having. "Aren’t [Republicans] the people who have been screaming about Medicare bankrupting the country? Shouldn’t they be praising cuts, not denouncing them? The on-the-merits response is that the cuts — more accurately, reductions in the rate of growth — involve lower reimbursements to hospitals and nursing homes, reduced payments to insurers, higher premiums for better-off beneficiaries, and savings from reforms such as lower hospital readmissions. In other words, Grandma might lose her free eyeglasses, but her basic benefits remain untouched. The fairer question is whether the savings should have been used to reduce the debt rather than underwrite low-income subsidies in Obamacare." Ruth Marcus in The Washington Post.

But Romney and Ryan's Medicaid cuts are larger, and happen sooner, than their Medicare cuts. "Over the next 10 years, the Ryan plan would cut Medicaid by $642 billion by repealing the Affordable Care Act and by $750 billion through new caps on federal spending—a 34 percent cut to Medicaid spending over the next decade...So all in all, Ryan’s cuts could mean as many as 30 million Medcaid beneficiaries lose their coverage." Suzy Khimm in the Washington Post.

Explainer: FAQs about how the Ryan plan would change Medicaid.

@ezraklein: I really want Paul Ryan to respond to a question about his 2011 budget by saying, "When I was young and reckless, I was young and reckless"

Top op-eds

GOODMAN: Health law will worsen doctor shortage. "Are you having trouble finding a doctor who will see you? If not, give it another year and a half. A doctor shortage is on its way...[A]n additional 30 million people are expected to acquire health plans—and if the economic studies are correct, they will try to double their use of the health-care system...The health-care system can't possibly deliver on the huge increase in demand for primary-care services. The original ObamaCare bill actually had a line item for increased doctor training. But this provision was zeroed out before passage, probably to keep down the cost of health reform. The result will be gridlock." John C. Goodman in The Wall Street Journal.

KLEIN: Romney's budget plan is a fantasy that will never, ever happen. "Consider what the Romney campaign, then, is saying: If Romney is elected, then by his third year in office, every single federal program that is not Medicare, Social Security, or defense, will be cut, on average, by 40 percent. That means Medicaid, infrastructure, education, food safety, road safety, the postal service, basic research, foreign aid, housing subsidies, food stamps, the Census, Pell grants, the Patent and Trademark Office, the FDA — all of it has to be cut by, on average, 40 percent. If Romney tried to protect any particular priority, it would mean all the others have to be cut by more than 40 percent." Ezra Klein in the Washington Post.

DUDLEY: Money market funds put financial system at risk. "[M]ore must be done to ensure that the financial system is robust enough to absorb shocks and still provide the credit needed for economic growth and job creation. A glaring vulnerability exists with money-market mutual funds...[M]oney funds should have capital buffers and modest limits on investor withdrawals. Such reforms are necessary to protect the economy from financial instability in the future. Let me explain why." William C. Dudley in Bloomberg.

@BCAppelbaum: When is the last time the financial industry and federal regulators clashed as fiercely and publicly as over money market mutual funds?

BARRO: Politicians misunderstand outsourcing. "The level of economic commentary during the presidential campaign has not been high. Democrats have accused Mitt Romney of the crime of shipping jobs abroad while at Bain Capital, and Mr. Romney has responded by denying the charge. No one takes the economically appropriate position for a job outsourcer: 'Yes, I shipped some jobs abroad to save money, and this choice was correct not only for my company but also for the U.S. economy.'" Robert J. Barro in The Wall Street Journal.

WILLIAMS: Online learning offers us a chance to reform public education. "Mooresville, N.C., is best known as 'Race City, U.S.A.,' home of Nascar. But these days Mooresville is leading the nation in a different way—by using digital technology to improve public education...The big change in Mooresville began when Superintendent Mark Edwards took the radical step of cutting back on teachers and using the money to give every student from third grade through high school a laptop computer...Thanks to the data system, Mr. Edwards says, 'our teachers are better informed, our parents are better informed, and our students are understanding what they're doing and why they're doing it.' He notes, by the way, that digital learning hasn't increased costs." Juan Williams in The Wall Street Journal.

@TheStalwart: Crazy that so much analysis about this election revolves around impact on the fiscal cliff, something that happens before new Pres sworn in.

DEUTCH: The profound implications of the natural gas boom. "Two summers ago, natural gas cost $4.50 per thousand cubic feet, which was less than half what it had cost two summers earlier. Today the price is under $2.50...A United States hopelessly dependent on imported oil and natural gas is a thing of the past. Most energy experts now project that North America will have the capacity to be a net exporter of oil and natural gas by the end of this decade." John Deutch in The Wall Street Journal.

Top long reads

Isaac Stone Fish tours China's "unlivable" cities:"As the traveler exits a train station, a woman hawks instant noodles and packaged chicken feet from a dingy metal cart, in front of concrete steps emptying out into a square flanked by ramshackle hotels and massed with peasants sitting on artificial cobblestones and chewing watermelon seeds. The air smells of coal. Then the buildings appear: Boxlike structures, so gray as to appear colorless, line the road. If the city is poor, the Bank of China tower will be made with hideous blue glass; if it's wealthy, our traveler will marvel at monstrous prestige projects of glass and copper...[Chinese c]ities weren't conceived of as places to live, but as building blocks needed to build a strong and prosperous nation; in other words, they were constructed for the benefit of the party and the country, not the people."

1985 rewind interlude: Billy Joel in the music video for "My Life".

Got tips, additions, or comments? E-mail me.

Still to come:The streetcar is making a comeback; a hospital giant is making equally large profits; the VA's backlog of claims is so massive that the weight of the files are compromising the structural integrity of VA offices; nuclear regulator worries about earthquake risks; and two very unusual moments in politics.

Economy

New data show euro zone heading towards a recessionary double dip. "The European economy shrank over the past three months as slowing German growth and moribund conditions in France pushed the struggling region to the doorstep of recession. The 0.2 percent slide from April through June included the 17-nation euro area, a currency union beset by twin government debt and banking crises, and the larger 27-nation European Union, a region at the core of the industrialized world and a key market for U.S. products and services...[T]the latest data from Europe appeared to confirm that the region — and particularly the euro zone — is entering a long-feared double-dip recession, a new downturn that is taking shape before the wounds from the 2008 crisis have fully healed." Howard Schneider in The Washington Post.

@SuzyKhimm: “I hope my grandchildren will never be born in Greece”--A 61-year-old electrician who hanged himself from a tree. http://wapo.st/TCP7jq

And Spanish banks are growing dependent on ECB backstopping. "Spanish banks borrowed a record amount from the European Central Bank in July, as other sources of funding evaporated further in the weeks following the announcement of a €100 billion ($123 billion) bailout for the country's financial industry. Bank of Spain data indicated that net ECB borrowing rose to €375.55 billion from €337.21 billion in June. It was the 10th straight month of increases, highlighting how the country's lenders are having more and more difficulty financing themselves through private investors." Christopher Bjork in The Wall Street Journal.

Several American cities are bringing back the streetcar as a plan to grow their urban economies. "Cities from Los Angeles to Atlanta are making big bets to revitalize their downtowns by bringing back a form of transportation many abandoned decades ago: the streetcar...Proponents say the streetcars would boost economic growth and catch the fancy of younger generations...But others see a waste of tax dollars on projects that, they say, offer little more than a way to move downtown workers from their offices to lunch...The revival in streetcar projects comes in part because of federal backing." Caroline Porter in The Wall Street Journal.

Karma interlude: A star politician in Jobbik, a major Hungarian anti-Semitic political party, has discovered he is Jewish.

Health Care

Private equity rakes in huge profits from giant hospital firm. "[P]rofits at the health care industry giant HCA, which controls 163 hospitals from New Hampshire to California, have soared, far outpacing those of most of its competitors. The big winners have been three private equity firms — including Bain Capital...HCA’s robust profit growth has raised the value of the firms’ holdings to nearly three and a half times their initial investment in the $33 billion deal. The financial performance has been so impressive that HCA has become a model for the industry...Among the secrets to HCA’s success: It figured out how to get more revenue from private insurance companies, patients and Medicare by billing much more aggressively for its services than ever before; it found ways to reduce emergency room overcrowding and expenses; and it experimented with new ways to reduce the cost of its medical staff." Julie Creswell and Reed Abelson in The New York Times.

Medicare is studying how to incentivize quality in nursing-home care. "The Affordable Care Act directs Medicare to create a national incentive pay program for nursing homes. But that appears to be several years away, according to a recent report to Congress...Initial results from the project's first year are being analyzed and appear mixed, with facilities in three states showing varying levels of performance, according to researchers...In the pilot, incentives were awarded to facilities based on two criteria: whether a nursing home improved its performance and whether it appeared in the top 20 percent of homes, based on a composite score. Those in the top 10 percent got a higher payment. " Judith Graham in Kaiser Health News.

HHS announced $68 million in HIV/AIDS care grants. "The disbursements will help 114 hospitals, health departments and community organizations care for HIV/AIDS patients with limited or no access to treatments, the department stated...Three HIV/AIDS populations are expected to benefit from the move — the newly diagnosed, the diagnosed who lack care and the diagnosed who have been absent from care for more than one year." Elise Viebeck in The Hill.

New study finds doctors overtreating for mild hypertension. "A new study is turning decades of medical dogma on its head. A panel of independent experts reports this week that drugs used to treat mild cases of high blood pressure have not been shown to reduce heart attacks, strokes, or overall deaths. Most of the 68 million patients in the United States with high blood pressure have mild, or Stage 1, hypertension." Jeanne Lenzer in Slate.

Domestic Policy

The VA faces an enormous backlog of claims. "The Department of Veterans Affairs has been dogged for years by complaints that the claims process is painfully slow. Now, a recent inspection by the VA Office of Inspector General shows exactly how difficult it can be to physically manage the volume of those cases. At the VA's Winston-Salem Regional Office in North Carolina, an estimated 37,000 claims folders had been stored on top of file cabinets, according to the Inspector General's report released last week. Those piles had been stacked two feet high and two rows deep. The file cabinets were so close to each other that drawers could not be opened completely. More files had been stored in boxes on the floor and stacked along the wall. A load-bearing study found that the weight of the files exceeded the floor's capacity by 39 pounds per square foot. 'The excess weight of the stored files has the potential to compromise the structural integrity of the sixth floor of the facility,' said the Inspector General report." Rebecca Ruiz in NBC News.

Strange attack ads interlude: One candidate goes on the offensive against driverless cars.

Energy

A major Chinese oil firm is planning a billion-dollar investment in a Texas clean tech project. "A Chinese group that includes major oil company Sinopec is in advanced talks to put up to $1 billion in a Texas clean-energy project, in what would mark one of the biggest investments by Chinese companies in the U.S. power sector. China Petrochemical Corp., known as Sinopec, together with Chinese banks are in talks to acquire an equity stake in and provide financing to the roughly $2.5 billion Texas Clean Energy Project, said people familiar with negotiations...The project would include a coal-gasification plant, which backers say will use coal more cleanly, and that would capture carbon dioxide for use in oil recovery." Brian Spegele and Rebecca Smith in The Wall Street Journal.

New chief of Nuclear Regulatory Commission is concerned about safety. "The new chairwoman of the Nuclear Regulatory Commission has good news and bad news for the nuclear power industry. The good news is that although an impasse over the storage of nuclear waste now threatens some of the industry’s routine activities, the chairwoman says she believes that a permanent repository can be set up eventually. he bad news is that she considers the industry’s evaluation of earthquake vulnerability — an issue that was once believed to be settled when a nuclear power plant was licensed — to be inadequate." Matthew L. Wald in The New York Times.

Wind power's growth is going at gale force. But will the wind change direction? "Last year, wind turbines represented one-third of all new generation capacity built in the country, behind only natural gas...In 2011, the United States had the second-fastest-growing wind industry in the world, behind only China...Right now the U.S. is on a path to get 20 percent of its electricity from wind. But that’s unlikely if a number of policy supports expire this year...Wind power’s short, brief surge in the United States will come to an end." Brad Plumer in The Washington Post.

@kdrum: In 2008, clean energy industry was all but dead. Obama stimulus made it what it is today. http://ow.ly/cYvBT

Fracking firms are being less than transparent in their disclosures. "Seeking to quell environmental concerns about the chemicals it shoots underground to extract oil and natural gas, Apache Corp. (APA) told shareholders in April that it disclosed information about “all the company’s U.S. hydraulic fracturing jobs” on a website last year. Actually, Apache’s transparency was shot through with cracks. In Texas and Oklahoma, the company reported chemicals it used on only about half its fracked wells via FracFocus.org, a voluntary website that oil and gas companies helped design amid calls for mandatory disclosure...45 percent of the fracks weren’t disclosed on the website." Benjamin Haas, Jim Polson, Phil Kuntz and Ben Elgin in Bloomberg.

Wonkbook is compiled and produced with help from Evan Soltas and Michelle Williams.

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Sarah Kliff · August 14, 2012