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Bill Clinton on Medicare

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Politics,Beltway Confidential,Philip Klein,Politics Digest

CHARLOTTE — Former President Bill Clinton delivered a well-received speech for President Obama here on Wednesday, but several claims he made about Medicare deserve closer scrutiny.

To start, Clinton claimed that the $716 billion in cuts to Medicare benefits within Obamacare would not affect benefits. “There were no cuts to benefits,” he emphatically said. “None. What the president did was to save money by taking the recommendations of a commission of professionals to cut unwarranted subsidies to providers and insurance companies that were not making people healthier and were not necessary to get the providers to provide the service.”

But the chief actuary for Medicare has predicted that the cuts to health care provider payments will force providers to drop out of the program, thus reducing access for seniors despite the benefits that they may have on paper. In the 2012 trustees’ report for the program, Richard Foster, wrote:  “Without unprecedented changes in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services. By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.”

Clinton also claimed that Obama “add(ed) eight years to the life of the Medicare trust fund so it is solvent till 2024.” The problem with this argument is that Democrats have already used the projected Medicare savings to help pay for the $1.7 trillion in new spending in Obamacare, and the government cannot spend the same money twice. As the Congressional Budget Office has put it, “To describe the full amount of (Medicare Health Insurance) trust fund savings as both improving the governments ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the governments fiscal position.” In a previous post I noted that if Democrats are now using the cuts to help extend the solvency of Medicare, then it means that Obamacare has increased the deficit by $600 billion.

Additionally, Clinton accused Ryan of hypocrisy for including the same Medicare cuts in his budget. As I have explained: “it’s true that Ryan included these Medicare cuts in the budget he authored for the House of Representatives. But it’s also true that he voted against them on several occasions when he voted to repeal all of Obamacare. So what gives? Ultimately, it comes down to a baseline accounting issue. Because Obamacare is the law of the land, the current baseline of the CBO (against which budget proposals are measured) assumes that it will be implemented. Under the CBO’s latest estimates, Obamacare cuts the deficit by about $100 billion from 2013 through 2022, because the Medicare cuts and tax increases exceed the $1.7 trillion increase in spending. But if you repeal all of the spending in Obamacare, but keep the Medicare cuts, it cuts the deficit by about $600 billion. Ryan’s primary Medicare reforms (which transition Medicare into a system in which individuals could choose to remain in the traditional program or use government subsidies toward the purchase of private plans), wouldn’t kick in for a decade. So, he maintained Obamacare cuts as part of his budget because it improved the numbers. Now, Ryan has joined the Romney ticket, and Romney has promised to restore all of the Medicare funding. So, he’ll have to find other ways to save money, or else his budget would have less deficit reduction than the Ryan plan.”

Policy aside, I think that Clinton’s speech was effective politically. One thing he did was to argue that even he couldn’t have revived the January 2009 economy in four years and in doing so, he urged voters to give Obama more time. That’s how the argument will have to be framed for Obama to win reelection in the face of an objectively weak economy. But I’ll pose several key questions as caveats because I don’t know the answers at this point: How many Americans choose to stay up until 11:23 p.m. for his nearly 50-minute speech, rather than watch the NFL’s opening game? Of those who tuned in, how many were swing voters rather than already committed Democrats eager to watch Clinton? Will the speech do more to convince swing voters that they miss Clinton rather than that they want four more years of Obama?

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