Romney Medicare Plan Would Hasten Insolvency

A blog about business and economics.
Aug. 22 2012 9:50 AM

Reversing Obama's Medicare Cuts Makes Medicare Go Bust Faster

150523362
Mitt Romney and Paul Ryan

Photo by John Moore/Getty Images.

One key argument Mitt Romney has been advancing about Medicare is that the Obama administration "raided" the program in order to pay for the Affordable Care Act. Since political journalism tends to exist in a plane of pure rhetoric, a lot of the Democratic pushback on this has focused on the fact that Paul Ryan and other congressional Republicans are banking on these very same cuts in order to make their own budget math add up. But Jackie Calmes' piece in today's NYT makes the more important point that Obama's alleged raid increases the life of the Medicare trust fund, and if Romney reverses the "cuts" the program actually goes bust sooner.

That's because what Obama cut wasn't the flow of revenue into the Medicare piggy bank, it was the reimbursement rate Medicare pays out of the piggy bank.

Advertisement

If Medicare were a discretionary program funded through the standard authorization/appropriation process, there'd be no distinction between cutting the appropriation for program purchases and cutting the program's funding. But Medicare isn't a discretionary program, so what Obama did was decrease the pace at which the trust fund spends down. At earlier stages in the ACA debate, this was the focus of the great "double counting" debate since the Obama administration likes to say that the cuts both reduce the budget deficit (by reducing federal spending inside a 10-year scoring window) and increase the projected lifespan of the trust fund (because the unspent money is in some sense "in" the trust fund), which is really more a quirk of trust fund accounting than a real feature of the law. But whether one likes trust fund accounting or doesn't, if you're going to run around the country alleging that money is being taken from a Medicare piggy bank then you're necessarily working from within the trust fund accounting framework. And the way it works is that Obama's reductions of reimbursement rates keeps the piggy bank full longer, while if Romney repeals them the piggy bank will expire sooner.

Incidentally, I'm not sure conservatives care what I think, but it seems to me there's a simple way for them to register their fiscal objections to the Affordable Care Act without doing this thing where they constantly get wrapped up in contradictions and misleading rhetoric: Just say the problem with Obamacare is that it increases federal spending a lot. It definitely does that. And everyone understands that conservatives object to high levels of federal spending on social services and why. There's no need to pile on bogus allegations about the deficit and Medicare and CBO scores. It's a big ol' program that spends a ton of money on subsidizing health care for people in the bottom half of the income distribution.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Frame Game

Hard Knocks

I was hit by a teacher in an East Texas public school. It taught me nothing.

Chief Justice John Roberts Says $1,000 Can’t Buy Influence in Congress. Looks Like He’s Wrong.

After This Merger, One Company Could Control One-Third of the Planet's Beer Sales

Hidden Messages in Corporate Logos

If You’re Outraged by the NFL, Follow This Satirical Blowhard on Twitter

Sports Nut

Giving Up on Goodell

How the NFL lost the trust of its most loyal reporters.

How Can We Investigate Potential Dangers of Fracking Without Being Alarmist?

My Year as an Abortion Doula       

  News & Politics
Weigel
Sept. 16 2014 9:22 AM The Most Populist Campaign of 2014
  Business
Business Insider
Sept. 16 2014 10:17 AM How Jack Ma Founded Alibaba
  Life
Atlas Obscura
Sept. 16 2014 8:00 AM The Wall Street Bombing: Low-Tech Terrorism in Prohibition-era New York
  Double X
The XX Factor
Sept. 15 2014 3:31 PM My Year As an Abortion Doula
  Slate Plus
Tv Club
Sept. 15 2014 11:38 AM The Slate Doctor Who Podcast: Episode 4  A spoiler-filled discussion of "Listen."
  Arts
Brow Beat
Sept. 16 2014 9:13 AM Clive James, Terminally Ill, Has Written an Exquisitely Resigned Farewell Poem
  Technology
Future Tense
Sept. 16 2014 7:36 AM The Inspiration Drought Why our science fiction needs new dreams.
  Health & Science
Bad Astronomy
Sept. 16 2014 7:30 AM A Galaxy of Tatooines
  Sports
Sports Nut
Sept. 15 2014 9:05 PM Giving Up on Goodell How the NFL lost the trust of its most loyal reporters.