“Medicare is going broke. It’s not politics. It’s math.”
— Sen. Marco Rubio (R-Fla.) in a new Romney campaign ad titled “Least We Can Do.”
“What they didn’t tell you is what they’re [the Romney campaign] proposing would cause Medicare to go bankrupt by 2016.”
— Vice President Biden, at the Democratic convention, Sept. 6, 2012
Medicare “is going broke.”
— President Obama, Aug. 15, 2009
We have bipartisan agreement! Medicare is going broke, busted, bankrupt…or is it?
We have touched on this before but decided to take another stab after the new ad featuring Sen. Rubio was released by the Romney campaign. It’s actually a fairly effective ad, with the calm message that the GOP Medicare plan — so often inaccurately attacked by Democrats — is designed to “save” it for current retirees and be different for younger Americans, in what Rubio pitches as a bit of a gift from one generation to another.
But his line that Medicare is going “broke” — using simple “math” — repeats a bit of political hokum that both parties persist in repeating. For instance, here’s Obama in 2009:
“Broke,” the word Rubio and Obama used, is an informal way of saying “bankrupt.” Or, as the dictionary says, “penniless.”
First of all, there are four parts to Medicare: Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage — private plans for parts A and B), and Part D (prescription drug plans).
When asked for evidence of Medicare going broke, a Romney spokesman pointed us to news articles about the latest Medicare trustees report, showing that the Part A trust fund would be exhausted by 2024.
So, in other words, we are not talking about all of Medicare, just the part that covers hospital visits, hospice care, nursing facilities and the like. Part B, which involves seeing a doctor, is paid out of general funds and premiums.
Moreover, though the fund would be “depleted,” it would NOT be “penniless” or “broke.” That is because the government could still cover 87 percent of estimated expenses in 2024 — and 67 percent in 2050. So, yes, there would be a shortfall, but it doesn’t mean that the fund is bankrupt.
There are various ways that Congress could deal with this problem. Already, in the Obama health care law, a surtax was added that would hit wealthy Americans, which extended the “insolvency” date by 12 years. . (This is why Biden can claim that repeal of the health care law would make Medicare go “bankrupt” sooner.) Congress has also moved some functions from Part A to Part B to extend the life of the fund, in which was basically a book-keeping maneuver.
It’s also important to remember that the Part A fund has from its inception been on the brink of going “broke.” Page 4 of a useful report by the Congressional Research Service, titled “Medicare: History of Insolvency Projections,” shows that in 1970 it was due to go “broke” in 1972.
The Pinocchio Test
We do not mean to play down the serious financial challenges facing Medicare as the baby-boom generation begins to retire in full force, putting additional pressure on the federal budget. But the rhetoric on both sides needs to be toned down, without using nonsense words such as “broke.”
We’re not picking on Rubio but giving a bipartisan round of Pinocchios here.
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