A Kentucky shootout over stale Medicare claims
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Version 0 of 1. “Senator, I’m a retired coal miner and I want to know how you could have voted to raise my Medicare costs by $6,000.” – Don Disney of Cloverlick, Ky., in an ad for Alison Lundergan Grimes, Democratic candidate for U.S. Senate “Obamacare cuts $700 billion from seniors’ Medicare. Obama and Grimes will pay for Obamacare on the backs of Kentucky seniors” – response ad from Sen. Mitch McConnell (R-Ky.) This pair of ads, which can be viewed with Truth Teller commentary above, hauls out each side’s favorite Medicare attack lines. How many times have The Fact Checker, PolitiFact and FactCheck.org explained that these claims are wrong? Too many times to count; sometimes it simply feels like whack-a-mole. That said, there is a distinction between the two claims. The Democrats’ $6,000 figure is outdated and discredited (note the small type in the ad with citations from 2011). It’s worthy of Four Pinocchios. The Republicans’ $700 billion is a stretch, but at least it’s based on real numbers — and The Washington Post has reported that the reductions in spending for Medicare Advantage have led to thousands of doctors being terminated from the program. We have been monitoring the impact of the cuts but have generally awarded this claim Two Pinocchios. We should note that’s a bit more generous than our fact checker colleagues. Time for a refresher course! Grimes goes for a folksy approach in her advertising, but that belies a tough message — one that is amplified by having the attack delivered by an ordinary citizen. That gives it an illusion of reality, but it’s as phony as a three-dollar bill. The Grimes campaign did not respond to a query about Disney’s age, but the McConnell campaign says that voting records show he was born 75 years ago. Technically, he lives in the town of Cumberland, in Harlan County; Cloverlick is a subdivision bounded by Cloverlick Creek on the other side of Highway 119 from the center of town. At issue is the GOP budget plan drafted by Rep. Paul Ryan of Wisconsin. The plan includes an overhaul of Medicare, but it has gone through several revisions since 2011, which is why Democrats keep reaching back to the 2011 version. Moreover, the $6,000 number is derived from a Congressional Budget Office analysis of the 2011 plan that has since been withdrawn. Under the 2011 version of the plan, the traditional fee-for service Medicare plan would have been changed to a “premium support” model, under which Medicare beneficiaries would instead receive help in buying private insurance. (For a neutral description of the concept, read this Health Affairs article.) But as we have repeatedly noted, Ryan substantially changed the plan in 2012 and now offers traditional Medicare as an option. Let’s look more closely at Disney’s sentence: “Senator, I’m a retired coal miner and I want to know how you could have voted to raise my Medicare costs by $6,000.” 1. As a retiree, Disney is already on Medicare, and thus would not be covered under any the versions of the Ryan plan. The plan would phase in for people who are currently younger than 55, as they reached retirement age. (The Grimes campaign has tried to dodge this by claiming that the Ryan’s budget’s repeal of the Affordable Care Act would affect current seniors, but that doesn’t add up to $6,000.) 2. The vote in question was on a motion to proceed on a nonbinding budget blueprint, which failed. So there was actually no vote on the budget plan itself, let alone on the legislation that would be needed to overhaul the program. This is a bit of technical issue, as McConnell made clear at the time he supported the Ryan budget and the concept of premium support. 3. That $6,000 claim is based on a 2011 analysis by the left-leaning Center on Budget and Policy Priorities (CBPP), using data from the Congressional Budget Office, regarding Ryan’s original 2011 plan. The report said that in 2022, when the premium support system then was expected to go into effect, a beneficiary’s out-of-pocket expenses would double, from $6,000 to $12,000. But when Ryan’s plan changed, so did the numbers, in part because Ryan allowed Medicare spending to grow slightly faster than the nation’s economy (+0.5 percent), the same growth rate as President Obama’s budget. (The first version had capped growth at the rate of inflation.) Under Ryan’s 2012 revision, the premium support payment would be based on the cost of the second least-expensive private plan or traditional Medicare, whichever was lower. Any difference in costs would have to be made up by the beneficiary. Then, in 2014, Ryan moved to an “average-bid” plan — meaning the average of all bids submitted by private insurers and traditional Medicare. In a September 2013 report, CBO found that the “average-bid” option would actually provide savings for beneficiaries; the same report essentially retracted the 2011 analysis that formed the basis of CBPP’s $6,000 projection. The nonpartisan agency said the 2011 report was a “rough analysis” and that the results are now “substantially different,” in part because of “substantial improvements in CBO’s modeling of the behavior of beneficiaries and insurers.” The earlier report also assumed that health-care spending covered by private plans would be much higher at first and then grow faster than currently estimated — in part because Ryan’s 2011 version did not include traditional Medicare as a bidding option. Premium support was a relatively new concept for Medicare when Ryan embraced it, and one can see the give-and-take of policymaking here. He’s responding to CBO’s analysis; CBO is responding to his changes and improving its own understanding of the concept. Interestingly, as Ryan has fiddled with the plan, the CBO’s estimate of the possible budget savings has also shrunk. Saving money was originally a major impetus for Republicans to overhaul Medicare. In any case, there is no excuse for Democrats to keep hauling out this $6,000 figure. It is derived from an analysis that has been withdrawn of a plan that no longer exists.
This ad was quickly released in response to Grimes’s attack ad. It starts by quoting fact checkers criticizing the ad, including The Fact Checker (of another ad that had used the $6,000 figure). But then it veers off course when it claims it will offer “the truth” — and cites another debunked claim. As we have repeatedly noted, the $700 billion figure comes from the difference over 10 years (2013-2022) between anticipated Medicare spending (what is known as “the baseline”) and the changes that the law makes to reduce spending. The savings mostly are wrung from health-care providers, not Medicare beneficiaries — who, as a result of the health-care law, ended up with new benefits for preventive care and prescription drugs. (It is worth noting that, given past practices, the Medicare actuary has doubted whether all of the planned cuts actually will come to pass.) While it is correct that anticipated savings from Medicare were used to help offset some of the anticipated costs of expanding health care for all Americans, it does not affect the Medicare trust fund. In fact, the Obama health-care law also raised Medicare payroll taxes by $318 billion over the new 10-year time frame, further strengthening the program’s financial condition. Under the health-care law, spending does not decrease in Medicare year after year; the reduction is from anticipated levels of spending in future years. Still, a good chunk of the spending reductions — $156 billion — would come at the expense of Medicare Advantage programs, used by nearly 30 percent of Medicare beneficiaries and often favored by Republicans. The goal of the reduction is to put payments on a par with traditional fee-for-service Medicare, as Medicare Advantage now costs the government more. But there have been some documented shifts in the Medicare Advantage market that have impacted seniors. The Washington Post has reported that “thousands of primary-care doctors and specialists across the country have been terminated” from Medicare Advantage as insurance companies try to streamline operations and reduce costs. An analysis by health-care consultants Avalere also found a shift from preferred provider plans to HMO plans as a result of spending reductions. The administration counters that since 2010, Medicare Advantage premiums have fallen by 10 percent and enrollment has increased by nearly 33 percent. But in February, 19 Senate Democrats joined 21 Republicans in signing a letter warning the administration against cuts to Medicare Advantage. “Cutting $700 billion from a system that was already facing tough financial sledding was in our view very unwise and has had a negative impact on seniors, including fewer doctors, decreased quality of care, disruption of care and in some cases actually decreased benefits,” said McConnell campaign manager Jesse Benton. Yet here’s an irony: the Ryan budget — clearly supported by McConnell — retains virtually all of the Medicare “cuts” contained in the health-care law, but diverts them instead to the Medicare overhaul. Republicans argue that that is a more effective use of the savings, but it suggests that the actual cuts are not as horrific as claimed. The McConnell ad also tries to tie Grimes to the health-care law, but she has been very cagey on her support for it. She obviously has never voted for it. Thus the ad veers toward Three Pinocchios, but in the end we think we will stick with the Two Pinocchios we have given this $700 billion claim in the past. The $700 billion figure by itself is misleading, but the spending reductions have begun to have some impact on seniors in the Medicare Advantage programs, and that impact cannot be easily dismissed.
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