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The $700 Billion Medicare Smokescreen

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In posts about the Ryan pick, I've argued that if we in the commentariat and the media get this right, the American electorate could have a salutary debate on the role of government. But, I stressed, that's a big "if."

We particularly need an eagle-eyed media to cut through the inaccurate and misleading stances that show up with increasing frequency around this time.

A classic, for example, is the one I talked about with Rachel Maddow last night: the claim that President Obama is "destroying Medicare" by reducing its growth rate to the tune of $700 billion in the Affordable Care Act.

Rep. Ryan has precisely the same cut in his budget. The difference is what they do with the savings. As I noted on Rachel, the ACA uses those savings to cover the uninsured, along with these other services, noted by Jon Cohn:

Obamacare puts the money back into the pockets of people who need help with their medical bills. A portion of the money is earmarked for children and non-elderly Americans, who, starting in 2014, will become eligible for Medicaid or receive tax credits to offset the cost of private insurance. A smaller, but still significant, portion of the money is for seniors. It helps them pay for prescription drugs, by filling the "donut hole" in Medicare Par D coverage. It also eliminates out-of-pocket costs for annual wellness visits, some cancer screenings, and other preventative services. Those benefits have actually started already: In the first six months of this year, according to the Department of Health and Human Services, more than 16 million seniors took advantage of the free preventative care provision.

I also found this piece to be an excellent review of the issue, stressing a very important dimension of the ACA's Medicare savings:

None of these reductions were financed by cuts to Medicare enrollees' eligibility or benefits; benefits were improved in the ACA. Cuts were focused on hospitals, health insurers, home health, and other providers. Except for insurers, all the affected groups publicly supported the reductions to help finance the ACA's expansion in health insurance to about 32 million uninsured Americans.

This is in stark contrast to the Ryan proposed cuts, supported by House Republicans, which are largely used to lower taxes on the most affluent.

Finally, remember that these and other measures in the ACA actually extend the life of the Medicare HI trust fund and reduce its budget shortfall by a factor of five (see the last section of Paul's piece here, the part on Medicare not going bankrupt).

What we have here is stark proof that it's going to take real vigilance to have the discussion we need to have in this country about the role of government in our lives -- in this case, in the lives of retirees who depend on guaranteed benefits under Medicare.

This post originally appeared at Jared Bernstein's On The Economy blog.

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