8.21.2012

Obama, Romney and the Medicare cuts

Recently Obama accused Romney of “ending Medicare as we know it”. The Romney camp fired back saying “it is Obama who is endangering Medicare by already cutting billions from it” and that it is the Republicans who are trying to save it. So who is right?



Fact Checking

Well as it turns out neither of them are right or wrong. The Romney camp wants to slow down Medicare spending by giving money to seniors and letting them buy the insurance for themselves; The Obama camp wants to control Medicare costs by reducing payments to the care providers. There will be changes to Medicare regardless of who wins our votes in November.


Truth behind the “Romney ending the Medicare as we know it”

The basis on which Democrats are accusing Republicans of “ending Medicare” stems from Romney’s Medicare premium support plan. Romney wants to slow down the Medicare spending because [sic] “we simply cannot continue to pretend that a Medicare on track to become bankrupt at some point is acceptable”.

What is the Medicare Premium Support Plan?
Romney plans to control Medicare spending by replacing the traditional Medicare insurance with premium support. So instead of providing seniors with health insurance, the Govt. would give them money to buy insurance from either the private insurance companies or from the regular Medicare plans providers.

Romney thinks the Medicare Premium Support Plan is good because..…
  • It empowers seniors to purchase their own health insurance.
  • A good mix of private and traditional Medicare plans will breed competition among companies.
  • The free-market competition will help bring the premium costs down.

Obama thinks the Medicare Premium Support Plan is bad because..…
  • Obama calls Romney’s plan a voucher program.
  • Seniors would have to pay the difference if the premium is higher than what Govt. is paying them.
  • It will result in healthier seniors buying low cost plans from private insurers while the remaining sickest will have to go to traditional Medicare plans.
  • A chronically sick majority in Medicare plans will over-burden the plans and will result in higher costs and hence slowly ending the Medicare program.


Truth behind “Obama has already cut $700 billion from Medicare”

Republicans accuse Obama of Medicare cuts because of trimming payments to the hospitals and providers. Obama wants to trim the payments to the hospitals and doctors for Medicare patients. The spending cuts would increase continuously up to 2016.

What is Obama’s Medicare Cut Plan?
Currently, each year there is an increase in payments (like a salary raise) for providers and hospitals from Medicare. Under Obama’s cuts their Medicare payments will not increase over the next decade. The payment increase freeze will save approximately $68 billion from Medicate Advantage private plans by 2016. Since the business costs for providers will increase over time regardless of the payment increase freeze, the Republicans call the increase halt a payment cut.

Besides freezing the payment increases, Obama also plans to raise payroll taxes on seniors making more than $200,000 annually and requiring affluent seniors to pay higher Medicare premiums.

Obama thinks that his Medicare cuts are good because…..
  • This is not a cut; it is a way to slow Medicare spending over the next decade.
  • Obama’s plan will not take money away from seniors; instead it will affect the pockets of the providers and hospitals.

Romney thinks that Obama’s Medicare cuts are bad because…..
  • Romney calls Obama plan a rationing of care.
  • Obama is not reducing Medicare costs; instead, he is simply taking money away from the Medicare only to fund ObamaCare.

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