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Obama's False Medicare Claim
October 20, 2008
Updated: October 21, 2008
He accuses McCain of proposing to cut benefits. Not true.
In a TV ad and in speeches, Obama is making bogus claims that McCain plans to cut $880 billion from Medicare spending and to reduce benefits.
* A TV spot says McCain's plan requires "cuts in benefits, eligibility or both."
* Obama said in a speech that McCain plans "cuts" that would force seniors to "pay more for your drugs, receive fewer services, and get lower quality care."
* Update, Oct. 21: A second Obama ad claims that McCainâ€™s plan would bring about a 22 percent cut in benefits, â€śhigher premiums and co-pays," and more expensive prescription drugs.
These claims are false, and based on a single newspaper report that says no such thing. McCain's policy director states unequivocally that no benefit cuts are envisioned. McCain does propose substantial "savings" through such means as cutting fraud, increased use of information technology in medicine and better handling of expensive chronic diseases. Obama himself proposes some of the same cost-saving measures. We're skeptical that either candidate can deliver the savings they promise, but that's no basis for Obama to accuse McCain of planning huge benefit cuts.
The Obama campaign began the Medicare assault with a 30-second TV ad released Oct. 17, which it said would run "across the country in key states."
"It Gets Worse"
Announcer: John McCainâ€™s health care plan â€¦ first we learned heâ€™s going to tax health care benefits to pay for part of it.
Now the Wall Street Journal reports John McCain would pay for the rest of his health care plan â€świth major reductions to Medicare and Medicaid.â€ť
Eight hundred and eighty-two billion from Medicare alone. â€śRequiring cuts in benefits, eligibility, or both.â€ť
John McCain â€¦ Taxing Health Benefits â€¦ Cutting Medicare. We Canâ€™t Afford John McCain.
Obama: Iâ€™m Barack Obama and I approved this message.
The ad quotes the Wall Street Journal as saying McCain would pay for his health care plan with "major reductions to Medicare and Medicaid," which the ad says would total $882 billion from Medicare alone, "requiring cuts in benefits, eligibility, or both."
Obama elaborated on the theme Oct. 18 in a stump speech in St. Louis, Mo., claiming flatly that seniors would face major medical hardships under McCain:
Obama, Oct. 18: But it turns out, Senator McCain would pay for part of his plan by making drastic cuts in Medicare -$882 billion worth. Under his plan, if you count on Medicare, you would have fewer places to get care, and less freedom to choose your doctors. You'll pay more for your drugs, receive fewer services, and get lower quality care.
Update, Oct. 21: A second and even more misleading Obama ad begins: â€śHow will your golden years turn out?â€ť It states flatly that McCainâ€™s plan would mean a 22 percent cut in benefits, higher premiums, higher co-pays, and more expensive prescription drugs, and claims that both nursing home care and a patientâ€™s choice of doctor could be affected.
As the narrator says that McCain's plan "means a 22 percent cut in benefits,â€ť the ad displays a footnote citing an Oct. 6 Wall Street Journal story as its authority.
But, in fact, the Journal story makes no mention of any 22 percent reduction, or any reduction at all. To the contrary, the storyâ€™s only mention of what might happen to benefits is a quote from McCain adviser Douglas Holtz-Eakin promising to maintain â€śthe benefit package that has been promised.â€ť The story quotes him as saying â€śsavingsâ€ť would come from eliminating Medicare fraud and by reforming payment policies to lower the overall cost of care.
Obama: Iâ€™m Barack Obama and I approve this message.
Announcer: How would your golden years turn out under John McCain? His health care plan would cut Medicare by $800 billion. That means a 22% cut in benefits. Higher premiums and co-pays. More expensive prescription drugs. Nursing home care could suffer and so could your choice of doctor. After a lifetime of work, seniors' health care shouldn't be a gamble. John McCain's plan, it's not the change we need.
The fact is that McCain has never proposed to cut Medicare benefits, or Medicaid benefits either. Obama's claim is based on a false reading of a single Wall Street Journal story, amplified by a one-sided, partisan analysis that piles speculation atop misinterpretation. The Journal story in turn was based on an interview with McCain adviser Holtz-Eakin. He said flatly in a conference call with reporters after the ad was released, "No service is being reduced. Every beneficiary will in the future receive exactly the benefits that they have been promised from the beginning."
Twisting Facts to Scare Seniors
Here's how Democrats cooked up their bogus $882 billion claim.
On Oct. 6, the Journal ran a story saying that McCain planned to pay for his health care plan "in part" through reduced Medicare and Medicaid spending, quoting Holtz-Eakin as its authority. The Journal characterizes these reductions as both "cuts" and "savings." Importantly, Holtz-Eakin did not say that any benefits would be cut, and the one direct quote from him in the article makes clear that he's talking about economies:
Wall Street Journal, Oct. 6: Mr. Holtz-Eakin said the Medicare and Medicaid changes would improve the programs and eliminate fraud, but he didn't detail where the cuts would come from. "It's about giving them the benefit package that has been promised to them by law at lower cost," he said.
Holtz-Eakin complains that the Journal story was "a terrible characterization" of McCain's intentions, but even so it clearly quoted him as saying McCain planned on "giving [Medicare and Medicaid beneficiaries] the benefit package that has been promised."
Nevertheless, a Democratic-leaning group quickly twisted his quotes into a report with a headline stating that the McCain plan "requires deep benefit and eligibility cuts in Medicare and Medicaid" â€“ the opposite of what the Journal quoted Holtz-Eakin as saying. The report was issued by the Center for American Progress Action Fund, headed by John D. Podesta, former chief of staff to Democratic President Bill Clinton. The report's authors are a former Clinton administration official, a former aid to Democratic Sen. Bob Kerrey and a former aid to Democratic Sen. Barbara Mikulski.
The first sentence said â€“ quite incorrectly â€“ that McCain "disclosed this week that he would cut $1.3 trillion from Medicare and Medicaid to pay for his health care plan." McCain said no such thing, and neither did Holtz-Eakin. The Journal reporter cited a $1.3 trillion estimate of the amount McCain would need to produce, over 10 years, to make his health care plan "budget neutral," as he promises to do. The estimate comes not from McCain, but from the Urban-Brookings Tax Policy Center. McCain and Holtz-Eakin haven't disputed that figure, but they haven't endorsed it either.
Nevertheless, the report assumes McCain would divide $1.3 trillion in "cuts" proportionately between the two programs, and comes up with this: "The McCain plan will cut $882 billion from the Medicare program, roughly 13 percent of Medicareâ€™s projected spending over a 10-year period." And with such a cut, the report concludes, Medicare spending "will not keep pace with inflation and enrollment growthâ€”thereby requiring cuts in benefits, eligibility, or both."
"Savings" vs. "Cuts"
For the record, Holtz-Eakin said in a telephone conference call with reporters Oct. 17, after the ad was released, that any shortfall in McCain's health care plan could be covered, without cutting benefits, by such measures as reducing "Medicare fraud and abuse," employing "a new generation of treatment models" for expensive chronic diseases, speeding adoption of low-cost generic drugs, and expanding the use of information technology in medicine.
Interestingly, Obama proposes to pay for his own health care plan in part through some of the same measures, particularly expanded use of I.T. and better handling of chronic disease. Whether either candidate can achieve the huge savings they are promising is dubious at best. As regular readers of FactCheck.org are aware, we're skeptical of Obama's claim that he can achieve his promised $2,500 reduction in average health insurance premiums, for example.
But achievable or not, "savings" are what McCain is proposing. It's a rank distortion for Obama's ad to twist that into a plan for "cuts in benefits, eligibility or both," and for Obama to claim in a speech that seniors will "receive fewer services, and get lower quality care."
Update, Oct. 21: The Center for American Progress Action Fund issued a rebuttal to this article, claiming our analysis is â€śflawed,â€ť that this article â€śrelies solely on the denials of McCain senior policy adviser Douglas Holtz-Eakinâ€ť and that we failed to conduct a â€śthorough analysis of the implicationsâ€ť of McCainâ€™s health care proposals.
We disagree. Our criticism of both Obama and American Progress is that they themselves misinterpret and misrepresent what Holtz-Eakin said to the Wall Street Journal in the first place. He was quoted in the Journal, and stated again to reporters in a conference call, that what McCain is proposing is to reduce the costs borne by Medicare and Medicaid, and that benefits will not be reduced. American Progress simply ignores that clear statement in its analysis, and the Obama ads take the extra step of telling seniors that McCain plans to cut benefits, when McCain says the opposite.
The American Progress argument rests on the idea that because McCain has also promised to make his health care plan budget neutral â€“ neither raising nor cutting total federal spending â€“ and that because American Progress' analysis concludes that he cannot achieve the savings that he claims, that McCain therefore must be forced to break his promise not to cut benefits.
We are also skeptical that McCain can achieve such savings, and we said so at the outset of our article. And we've twice called into question the campaign's claim that its plan is budget neutral. But it is false logic to conclude that Medicare benefit cuts would be McCainâ€™s only option should his promised savings fail to materialize. McCain could simply run up the deficit. Or he could choose to water down his health care plan to make it less expensive.
It is certainly possible that McCain will break his promise not to cut benefits, just as it is possible that Obama will break his promise to raise taxes only on families making over $250,000 a year. We have no crystal ball, and we don't pretend we can predict the future. But for Obama or American Progress to state as a matter of fact that McCain will be forced to cut benefits, or that he is proposing any such thing, is simply a falsehood designed to frighten elderly voters.
â€“by Brooks Jackson
Meckler, Laura "McCain Plans Federal Health Cuts: Medicare, Medicaid Spending Would Be Reduced to Offset Proposed Tax Credit" Wall Street Journal 6 Oct 2008.
Harbage, Peter; Davenport, Karen and Whelan, Ellen-Marie "McCainâ€™s Latest Health Care Strategy; Now his health plan requires deep benefit and eligibility cuts in Medicare and Medicaid" Center for American Progress Action Fund 7 Oct 2008.
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