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A Project of The Annenberg Public Policy Center

Rubio Inconsistent on Medicare

Sen. Marco Rubio of Florida offered a wildly inconsistent view of what constitutes a "cut" from Medicare. Rubio claimed that Rep. Paul Ryan’s budget plan "doesn’t cut Medicare" but that the federal health care law does.

Actually, Ryan’s plan leaves in place many of the Medicare "cuts" in the health care law. And over the long-term, Ryan’s plan would "cut" or "save" (we’ll leave the word choice to our readers) even more by requiring future beneficiaries to pay a higher percentage of health care costs.

Rubio made his remarks on NBC’s "Meet the Press" on May 1, saying:

Rubio: The Ryan plan doesn’t cut Medicare. Actually, it increases funding in it. And the only people in this town that have voted to cut Medicare are the people that supported Obamacare, that cut half a trillion dollars over the next 10 years out of Medicare and is using it to fund a healthcare experiment somewhere outside of Medicare. The only people in this town that have voted to cut Medicare spending are the people who voted in favor of Obamacare. That’s a fact.

It’s important to note that neither the federal law nor Ryan’s budget proposal aims to gut the current Medicare budget. Instead, they both call for reducing the future growth of spending in the program — spending would still go up every year. Rubio’s argument that one effort to rein in spending growth is a cut while another isn’t reminds us of familiar political semantics. One politician’s proposed "savings" from Medicare are often another’s "cuts" to the program for seniors. Back in the 2008 presidential campaign, for instance, then-Sen. Barack Obama criticized Sen. John McCain for calling for "cuts" to Medicare that were similar to the so-called "savings" Obama himself had proposed.

Ryan’s plan would eliminate some major aspects of the federal health care law, such as those setting up an exchange, requiring individuals to have insurance, expanding Medicaid eligibility, and penalizing and giving tax credits to employers. As for Medicare, Ryan’s proposal would get rid of the Independent Payment Advisory Board, which the federal law created to rein in Medicare spending. But it calls for using the remaining "current-law savings."

Ryan plan: Then, after ensuring that current-law savings go to shore up Medicare for those in and near retirement, this budget makes sure that the program is there for future generations by adopting a better way to control costs – through true choice and competition. …

The nonpartisan Congressional Budget Office said that the Ryan plan would repeal the advisory board and would repeal subsidies to cover a gap in prescription drug coverage under Medicare Part D. But, said CBO, "[m]ost of the other changes that PPACA and the Reconciliation Act made to the Medicare program would be retained.” Ryan’s proposal says it will save an additional $30 billion from Medicare spending under current law over 10 years through medical malpractice changes.

The federal health care law called for cutting the future growth of Medicare spending by about $555 billion over 10 years, and it was roundly criticized by Republicans in speeches and campaign ads for those measures. So, Ryan’s preservation of most of those "cuts" was duly noted in headlines — such, as "Ryan Budget Keeps Medicare Cuts GOP Once Criticized" (Wall Street Journal) and "House GOP Budget Retains Democratic Medicare Cuts" (Associated Press).

But Ryan’s major Medicare proposal isn’t about keeping or repealing elements of the health care law. Instead, his plan would make a wholesale change in Medicare starting with seniors who are 65 years old in 2022. At that time, beneficiaries would choose a private health insurance plan from a special "Medicare exchange." The government would contribute a certain amount — an average of $8,000 in 2022 — toward the annual premium. Over time, the federal Medicare spending would be lower than under the traditional Medicare system, while beneficiaries’ spending would go up.

The CBO said that by 2030, the federal government would bear a lower percentage of beneficiaries’ costs under the Ryan plan than it would under the current program. The government would spend less, and beneficiaries would spend more. That would be a "cut" in benefits by just about anybody’s definition — except perhaps Rubio’s.

CBO: In 2030, the government’s contribution under the proposal would be smaller than that under either of CBO’s long-term scenarios because the premium support payment would grow at a slower rate than is projected for Medicare spending under either scenario. …

To summarize, a typical beneficiary would spend more for health care under the proposal than under CBO’s long-term scenarios for several reasons. First, private plans would cost more than traditional Medicare because of the net effect of differences in payment rates for providers, administrative costs, and utilization of health care services, as described above. Second, the government’s contribution would grow more slowly than health care costs, leaving more for beneficiaries to pay.

CBO has not estimated specific costs for the Ryan plan, but it has said that gross Medicare spending as a share of gross domestic product would be lower in 2030, and in subsequent decades, than those in CBO’s long-term scenarios.

Rubio also made the misleading claim that "anywhere between five and the next 12 years, Medicare as we know it will go bankrupt." Ryan has made a similar claim, saying Medicare would be "bankrupt in nine years." But Medicare isn’t going out of business, as "bankrupt" implies. Instead, the trust fund for one of the four parts of Medicare — Part A — is expected to be depleted in 2020, according to the Congressional Budget Office, or 2029, according to the Social Security and Medicare Boards of Trustees. But Part A has faced such dire predictions "almost from its inception," says the Congressional Research Service. Congress keeps finding ways to extend it.