“I think there's no question if you take a snapshot, people will run out of money, very quickly [under the GOP Medicare plan if you have cancer]. And if you run out of the government voucher and then you run out of your own money, you're really left to scrape together charity care, go without care, die sooner. There aren't really a lot of options.”

— Health and Human Services Secretary Kathleen Sebelius, May 5, 2011

Secretary Sebelius made this eye-popping statement Thursday while testifying on Capitol Hill, after Rep. Rob Andrews (D-N.J) asked her a question about the Medicare plan advanced by House Republicans: “What might that cost shift and lack of guaranteed benefit mean for an oncology patient, a person with cancer? Give me an example, what it might do there.”

 Her answer was strong stuff, suggesting that the GOP plan could cause people to “die sooner” if they had cancer and ran out of money. We have been critical of some of the ways Republicans have described the plan, but is this even remotely possible?

The Facts

 The House Budget Committee proposal, which was developed by Rep. Paul Ryan (R-Wis.), would transform Medicare from a government-run health care program into a competitive market for people under the age of 55. (It would not change for people 55 and older.)

Retirees would get from the government what Ryan calls “premium support” — a set payment adjusted to inflation — and then use that money to pick from a range of plans offered by insurance companies through what is termed a Medicare exchange. (Democrats derisively term this payment “a voucher,” but the government would handle the funds.)

The Congressional Budget Office, the nonpartisan arm of Congress, analyzed Ryan’s plan. It estimated that by 2030, the government would pay just 32 percent of the health care costs, compared to 70 to 75 percent if traditional Medicare stayed in place. The other 68 percent of the plan would have to be shouldered by the retiree.

Ryan’s aides have disputed this conclusion, saying the CBO has underestimated the impact of competition on prices, and thus the government would end up with a larger share of the costs. But Democrats, such as Sebelius, have seized on it to make the case that too much of a burden would be placed on beneficiaries.

Sebelius’s statement sounded suspiciously like she was echoing a wrongheaded assertion by Bill Maher that the value of the premium support went for medical expenses, not an insurance policy. But her aides said that was not the case. They said she was referring to the increased out-of-pocket costs suggested by the CBO analysis, which could be a burden for seniors with little money.

But Conor Sweeney, a spokesman for Ryan, said, “There is nothing to substantiate her claims of lower life expectancies.” He pointed to other elements in the CBO’s analysis which he said undercut Sebelius’s statement, specifically that the plans would have to issue insurance to all people eligible for Medicare who applied, that plans cannot charge prohibitively high premiums and that low-income people would be provided with additional money to help with unaffordable out-of-pocket costs. Additional assistance also would be provided to beneficiaries if their health condition deteriorates.

“The premium support payments would vary with the health status of the beneficiary,” the CBO said. “In addition, the Centers for Medicare and Medicaid Services would collect fees from plans with healthier enrollees, on average, and convey the proceeds to plans with less healthy enrollees, on average, with the goal of appropriately compensating plans for the health risks of their insured population. This risk adjustment mechanism would be known as the risk review audit and would be budget-neutral.”

However, the Center for Budget and Policy Priorities, a liberal-leaning group admired for its research, has warned that the combination of Ryan's proposals could “substantially increase out-of-pocket costs for millions of low-income seniors and people with disabilities” who are eligible for both Medicare and Medicaid, the health care program for the poor.  “As a result, many dual eligibles, who have the most significant medical needs among both Medicare and Medicaid beneficiaries, would likely end up forgoing needed medical care,” the group has said.

We checked with the American Cancer Society to see if they had concerns about the Ryan plan and its possible impact on cancer patients. Alissa Havens, associate director of media advocacy, said that it was difficult to say how beneficial the aid for unhealthy people would be without seeing more details about what would be available and who would qualify. She provided a general statement in response to our questions that is worth quoting in full:

1. The majority of America’s cancer patients count on Medicare for services to treat their disease and alleviate their suffering. The House proposal would shift Medicare beneficiaries into private health plans, which are more expensive than traditional Medicare. Cancer patients, who already spend more on health care than beneficiaries without cancer, could be subject to even higher Medicare coinsurance and cost sharing requirements under the House Budget proposal.

2. The CBO estimates that spending on premiums and out-of-pocket costs for a typical Medicare beneficiary would increase from approximately 25 percent under current law to as much as 68 percent by 2030. With a stage II breast cancer case costing an estimated $111,000 over a year and a half and a stage III colorectal cancer case estimated to cost more than $250,000 over more than two years, shifting the bulk of the cost to seniors who are often on a fixed income could force them to make a tough choice between saving their life or their life savings.

3. In addition to premium costs, Medicare beneficiaries with cancer face an incredible burden in paying for lifesaving cancer medications. The Affordable Care Act [President Obama’s health-care law] took significant steps toward reducing this financial burden by phasing out the Part D coverage gap, which requires beneficiaries to pay the full cost of their medications until they reach a certain out-of-pocket maximum. The House budget proposal would repeal these subsidies by requiring that cancer patients and others with chronic illness continue to pay more for the cost of their medications.

The phrase about “a tough choice between saving their life or their life savings” certainly jumped out at us. But it’s still a far cry from saying there was “no question” that “people will run out of money” and “die sooner.” Incidentally, at least one academic study has indicated that Medicare had no discernible impact on elderly mortality in its first 10 years in operation.

Richard Sorian, a spokesman for Sebelius, issued the following statement after we indicated the secretary was in line for some Pinocchios:

“In response to a specific question about a person with a Medicare voucher who runs out of money while being treated for cancer, Secretary Sebelius indicated how limited that person’s options could be. She did not suggest that the House Republican plan would cause premature death. She was only describing what can happen to seniors when they run out of resources to pay for health care.”

The Pinocchio Test

There are a number of unanswered questions about the Ryan Medicare plan. It has not been fleshed out with legislative language, and that has allowed opponents to assume the worst about it. Certainly, serious questions have been raised about what the proposed changes would mean for people facing suddenly high health costs. But the budget debate in Washington is fierce enough that senior officials should avoid the temptation to make outrageous charges.

Sorian’s statement is clearly a pullback, and that earns the secretary some credit. But this is in some ways akin to the false claim that Obama wanted to create “death panels” in the health care law.

Sebelius could have chosen to highlight the trade-offs people might face, or questioned the vagueness of Ryan’s proposals to deal with people who can’t afford to pay their bills. Instead, she decided to present a highly inflammable comment as a statement of fact — that there was “no question” people would run out money “very quickly” and then they would “die sooner.” She should be ashamed.

Three Pinocchios

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