Republicans often have accused Democrats of failing to confront the necessity of spending reductions, especially for Medicare and other entitlement programs. Thus, what gall Republicans showed two years ago in the congressional elections, hammering Democrats for proposing $500 billion in spending cuts from Medicare as part of the Affordable Care Act.
Now Mitt Romney has returned to the theme. The Republican presidential candidate has bashed President Obama for “raiding” $716 billion from Medicare (the larger amount reflecting the altered time frame). What happened to the argument about facing fiscal realities? About making tough choices? Romney shamelessly pledges to reverse the reduction, inviting the impression that he has more compassion for seniors.
Actually, Romney would add to Medicare’s financial challenges. The Medicare trustees found that health-care reform improves the program’s bottom line, extending its solvency to 2024. At that point, Medicare won’t be bankrupt. Its hospital insurance trust fund will face a shortfall, having 87 percent of the money required to cover hospital costs. So savings must be found. The Affordable Care Act takes aim through a range of initiatives, including the end of excess subsidies to Medicare Advantage plans and reduced payments to hospitals with high infection or readmission rates.
Reverse the savings, and Medicare beneficiaries would face picking up the difference. On Wednesday, the New York Times cited an American Institutes for Research projection putting the annual increase in premiums and co-payments at an average of $342 for the next decade. End the Affordable Care Act, another Romney idea, and seniors would lose, among other things, expanded coverage of prescription drugs and free preventive checkups.
What is the Romney alternative for reform? Worth stressing is that his running mate, Paul Ryan, included the savings of $716 billion in his own plan. Romney does share the Ryan view of changing Medicare from a guaranteed benefits program to one in which the federal government would give each senior a lump sum to help in purchasing insurance in the private market.
That is a vehicle for containing Medicare spending. The risk is, the size of the sum would not keep pace with the price of sufficient coverage. Telling is that Romney has yet to put forward a substantial proposal for containing overall health costs, Medicare just part of a larger system. He does allude to market forces. Still, Medicare already is more cost-effective than private insurers.
Which helps to explain why the Affordable Care Act takes the course it does, holding to the core principle of Medicare yet launching a series of initiatives, incentives, even experiments, to preserve quality while yielding savings, the $716 billion reflecting an initial and crucial down payment.