Published August 26, 2012
Last week I spoke with a journalist who covers health care who was marveling at the trouble the Democrats had allowed themselves to get into on Medicare—thanks to Obamacare on the one hand and the Romney-Ryan plan on the other, it’s suddenly Democrats who would cut the program for current seniors but would fail to save it from collapse and Republicans who would leave current seniors protected and stand a real chance of saving Medicare (and the federal budget) in the long run. In their attempt to run away from this new reality, the Democrats have found themselves pushed into a series of increasingly implausible and unserious defenses and seemed to be losing ground on Medicare, which they had hoped might be their strongest issue this year. “So what will they do?” I asked him. He didn’t hesitate: “They’ll just lie.” He thought they would revert to the same story they have told for years—Republicans will increase seniors’ costs and destroy Medicare and Democrats won’t—and assume that people will just believe it.
That certainly made sense, and we now know he was right. On Saturday, the Obama campaign released this ad attacking the Romney Medicare proposal. The ad doesn’t walk some sort of narrow line between misleading and deceiving, it’s just simply a pack of lies from top to bottom.
The ad’s most significant claim is that “instead of a guarantee, seniors could pay $6,400 more a year” under the Romney plan—a claim attributed on the screen to the Center on Budget and Policy Priorities. As the Obama campaign well knows, since it has been called on this particular deception before, this claim of $6,400 in cost shifting is from a 2011 CBPP analysis based on a 2011 CBO analysis of an older version of premium-support, and simply does not apply to Romney’s plan. A similar calculation applied to Romney’s plan would show cost shifting not of $6,400 but of zero dollars.
Here’s why: The CBO analysis in question involved the premium-support proposal in the original Ryan budget (released in the spring of 2011). That proposal would have started, in 2022, with a premium-support payment based on the average Medicare spending per beneficiary in the prior year, but CBO argued that while that amount would be enough to pay for what fee-for-service Medicare would cover in 2021, it would not be enough to pay for private coverage in 2022 because private insurers pay higher rates than Medicare. So by giving people the value of the benefit they would have gotten from Medicare but having them spend it in a different system, the Ryan proposal would be giving them less than it would cost them to buy coverage in that new system and so increasing their out of pocket costs by as much as $6,400 that year. The assumption at the heart of this analysis—that fee-for-service Medicare would pay far less per beneficiary than private insurance could—is very likely wrong, as evidence from the Medicare Advantage program has shown in recent years, and it also ignores (or treats as meaningless) the entire purpose of the premium-support reform, and assumes that competition has no potential to reduce costs whatsoever (an assumption other government health economists, like the actuary of Medicare, do not share). My colleague Jim Capretta took apart these assumptions behind the CBO figure last year here.
But even if we stipulated for the sake of argument that the analysis made sense and the $6,400 figure applied to the first Ryan proposal, it absolutely does not apply to either Ryan’s later proposal (in the spring of 2012) or to Romney’s proposal, which is what this ad purports to be talking about. Both of those proposals, which are very similar, were designed precisely to avoid this possibility. In both proposals, the level of the premium-support benefit is determined by a process in which insurers bid to offer comprehensive coverage at the lowest rates they’re able or willing to offer, and the second-lowest bid determines the Medicare payment. That means, by definition, that you have at least one (and generally at least two) comprehensive-coverage options for which the premium-support payment is sufficient to cover the premium to the same extent today’s Medicare does. This is so by definition, or by system design, precisely to avoid the problem of providing seniors with less than it would take to pay that premium. So this ad’s most significant claim, directed squarely at Romney’s proposed Medicare reform, is simply and completely false.
The ad’s lesser claims are also untrue—at least to the extent that they’re decipherable at all. It claims Romney would “replace your benefits with a voucher.” That claim is attributed on the screen to an Associated Press story from November of 2011, most likely this story, written before the campaign had unveiled any particulars of its proposal. That proposal, again because it provides a guaranteed benefit while having insurers compete to make it available most cheaply, does not “replace your benefits” but guarantees them.
The ad says that under the Romney proposal “insurance companies could just keep raising rates.” It’s hard to know quite what this means. Companies could, I suppose, keep raising rates, but they would be competing with other insurers who would have a huge incentive to undersell one another so just raising rates wouldn’t get them customers. And if they all kept raising rates, then the premium-support payment would rise to adjust—the government wouldn’t save money, but seniors would still have a comprehensive guaranteed benefit. This claim, by the way, is attributed to a Boston Globe story from August 18. It is presumably this story, which again compares Obama’s Medicare proposal with the older version of Ryan’s proposal—not the current version, and not Mitt Romney’s proposal.
Finally, the ad says that “AARP says the plan Mitt Romney supports undermines Medicare.” Here the ad cites this AARP letter to Congress from March of this year, showing a quote on the screen that says “would undermine . . . Medicare.” The words replaced by the ellipses are “the market power of.” The AARP letter argues that the Ryan budget’s Medicare reform proposal would undermine the negotiating leverage of Medicare and so would risk higher costs. That’s hardly the same as saying the proposal would undermine Medicare. If you think Medicare’s magical market power has done a great job of keeping costs down and making the system efficient to date, then I suppose you ought to oppose reforming the system. But if instead you think Medicare is woefully inefficient and its costs are out of control, you might want to inject some market pressures into the program to try to reduce costs without undermining benefits. Either way, the AARP letter doesn’t say the Ryan proposal, let alone the Romney proposal, undermines Medicare.
Those are all the claims in the ad, and they are all false. At least as striking, though, is what the ad doesn’t mention. It doesn’t mention that the Romney Medicare proposal would leave current seniors entirely unaffected or that it would provide a guaranteed comprehensive benefit to future seniors through a premium-support system. It doesn’t mention that the Democrats cut $716 billion from Medicare in this decade to spend on Obamacare, and did so largely through increased price controls, which are the most counterproductive way to reduce short-term costs since they tend to drive up long-term costs and undermine efficiency, quality, and access. It doesn’t say that Obamacare subjects Medicare to a board of 15 rationers who will decide which benefits are worthwhile and which are not—for both current and future seniors.
In other words, the ad pretends Obamacare does not exist, ignores the reality of the Romney Medicare proposal, and presents a series of flatly untrue claims in its place.
I suppose that, because it doesn’t directly accuse Mitt Romney of killing anyone’s wife, such an ad actually qualifies as an elevation of the Obama camp’s rhetoric. But it’s still a pack of lies.
Yuval Levin is Hertog fellow at the Ethics and Public Policy Center, and editor of National Affairs.