President Bill Clinton’s lengthy remarks Wednesday night—48 minutes and 5,896 words— included one of the longest, most detailed defenses of the Affordable Care Act’s Medicare cuts that we’ve seen so far in the campaign. Let’s see how that 549-word section checks out.
FALSE: “Both Governor Romney and Congressman Ryan attacked the president for allegedly robbing Medicare of $716 billion. That’s the same attack they leveled against the Congress in 2010, and they got a lot of votes on it. But it’s not true.”
The Affordable Care Act did indeed cut Medicare spending by $716 billion, as the Congressional Budget Office wrote in a July 24 report. It does that by reducing payments to Medicare hospitals and doctors, essentially ratcheting down the amount they receive when they see a patient. Here’s how those cuts break down, in graph form:
Clinton later goes on to discuss where these cuts come from – we’ll get there next – underscoring that yes, these Medicare cuts do indeed exist.
TRUE: “There were no cuts to benefits at all. None.”
As I’ve written before, this is pretty much how the Affordable Care Act’s Medicare cuts work. You can scour the Affordable Care Act, and you won’t find a single benefit that has been cut out of the program. There is the chance that the cuts to providers could lead to some deterioration in access, but in most cases, it’s remote. The hospital cuts, for instance, were agreed to by the hospital industry.
On the other side of the ledger, the Affordable Care Act actually adds benefits to Medicare: It increases the preventive care available to seniors by adding an annual wellness visit without co-pay as a new service the program covers.
TRUE: “What the president did was to save money by taking the recommendations of a commission of professionals to cut unwarranted subsidies to providers and insurance companies that were not making people healthier and were not necessary to get the providers to provide the service.”
Clinton appears to be referring to the Medicare Payment Advisory Commission, an independent body that advises Congress on the program and the changes they have recommended for the program. MedPAC has, for example, repeatedly recommended that private Medicare Advantage plans should not be paid more than the traditional fee for service program. That, among other changes, was incorporated into the Affordable Care Act’s changes.
DOUBLE COUNTED: “Instead of raiding Medicare, he used the savings to close the doughnut hole in the Medicare drug program…and to add eight years to the life of the Medicare trust fund so it is solvent till 2024.”
Both of these facts are, independently, true. The health care law did indeed use some of the revenue it generated to pay for seniors who land in the “donut hole,” the gap after normal drug coverage ends and catastrophic coverage kicks in. And it did extend the solvency of the Medicare trust fund by eight more years, until 2024, per a report earlier this year.
But this represents some of the least-liked math in Washington, because it uses a sort of “double counting” of Medicare savings. The Medicare Trust Fund counts the health law’s $716 billion in savings as going back into its coffers. The Congressional Budget Office counts them as paying for provisions in the Affordable Care Act, like closing the donut hole. In reality, it would be very, very hard for a Medicare dollar saved to achieve both these purposes. In fact, it would be impossible.
This accounting isn’t unique to the Affordable Care Act. Budget wonks have regularly used this double counting for Medicare savings generated by Congress. There are some defenders of this accounting method. But it is one of the points that the Affordable Care Act’s Medicare savings regularly gets attacked.
TRUE: “I didn’t know whether to laugh or cry because that $716 billion is exactly, to the dollar, the same amount of Medicare savings that [Ryan] has in his own budget.”
Rep. Paul Ryan’s most recent budget does indeed include the Affordable Care Act’s $716 billion in Medicare savings. Mitt Romney has, however, disavowed those cuts and promised to restore insurers’ and hospitals’ reimbursement rates as part of his plan to repeal the Affordable Care Act.
FALSE: “So if [Romney is] elected, and if he does what he promised to do, Medicare will now go broke in 2016.”
Here, Bill Clinton is referring to the Medicare Trustees’ 2012 report, which estimated that the Medicare Trust Fund would be exhausted in 2016 without the Affordable Care Act’s changes.
There’s a huge difference, however, between exhausting the Medicare Trust Fund and the program going broke. The trust fund is essentially an accounting mechanism, a balance sheet for what the Medicare program takes in (via taxes and premiums) and what it spends out on benefits. If Medicare were running short on cash, there’s nothing to stop Congress from chipping in with extra dollars.
To that point, the Congressional Research Service once rounded up previous Medicare Trustees Reports. In 1970, the Medicare Trustees Report predicted that the fund would be insolvent just two years later, in 1972. Pretty much every year after that, the Trust Funds’ insolvency has never seemed that far off, as the following chart shows.
The bottom line is that there’s a big difference between the Trust Fund running out of money and the death of the Medicare. In fact, no one quite knows what would happen if the Trust Fund actually ran out of money, whether the government would still be on the hook for seniors’ health care. “There are no provisions in the Social Security Act governing what would happen in such an event,” the Congressional Research Service report concluded.
FALSE BUT: “Lot of folks don’t know it, but nearly two-thirds of Medicaid is spent on nursing home care for Medicare seniors who are eligible for Medicaid.”
Lots of folks don’t know this fact…because it’s not true. Clinton here is referring to the 9.1 million seniors who are low-income or disabled, making them eligible for both entitlement programs. In health wonk terminology, they’re referred to as the “dual eligibles.”
Dual eligibles certainly cost more than other Medicaid enrollees, like children and pregnant women. But there’s no evidence to support that these patients eat up two-thirds of the Medicaid budget. Kaiser Family Foundation looked at this issue in an April 2012 brief. It found that, “Although these ‘dual eligibles’ accounted for only 15 percent of Medicaid enrollment in 2008, 39 percent of all Medicaid expenditures for medical services were made on their behalf.”
Clinton’s prepared remarks on this point, however, were quite different. Here’s how those went: “Almost two-thirds of Medicaid is spent on nursing home care for seniors and on people with disabilities, including kids from middle class families, with special needs like, Downs syndrome or Autism.” That checks out: the Congressional Budget Office estimates that 63.5 percent – or $148 billion – of federal Medicaid spending ($251 billion in total) goes towards the elderly, blind and disabled.
Correction: An earlier version of this post described one of President Clinton’s remarks are referring to the Independent Payment Advisory Board. He appears to have referred to a separate federal body, the Medicare Payment Advisory Commission.