Margot-Sanger Katz on Paul Ryan and PPACA’s Medicare Savings

by Reihan Salam

As we’ve discussed, Paul Ryan’s FY 2013 budget proposal retains current law Medicare savings.* Yet Ryan has voted to repeal PPACA, i.e., to change the current law baseline. Margot Sanger-Katz of National Journal reports that Ryan “renounced $716 billion in cuts to Medicare that were part of his fiscal 2013 budget,” but he renounced those cuts when he voted to repeal PPACA, not just in the Tuesday Fox News interview she cites.

Sanger-Katz offers context for the CBO process:

“Here’s the issue: What President Obama is trying to do with his Medicare plan is he’s trying to count a dollar twice,” Ryan said. “He’s trying to suggest that these Medicare cuts can help Medicare. It doesn’t, because he is taking those dollars from Medicare to spend on Obamacare.”

Ryan’s critique underlines a quirk in how the Congressional Budget Office considers cuts to future Medicare spending. Though the Medicare trustees and actuaries apply any future spending cuts to their projections for the Medicare trust fund, CBO also counts those cuts as savings against the current budget baseline. Those accounting rules expose both sides to critiques that any Medicare cuts will be used to fund other budget priorities. Obama’s campaign has been saying that Romney and Ryan want to cut Medicare in order to finance tax cuts for the rich, using similar logic.

The Obama administration has attacked those who argue that the “doc fix” should be accounted for in assessments of its health system overhaul, as the “doc fix” was not included in the PPACA legislation. If we accept this logic and consider the PPACA legislation as a coherent whole, it seems fair to interpret Medicare savings as having paid for coverage expansion, along with the CLASS premiums and other revenue measures in the law itself. But if this logic is not sound and it is fair to, for example, look at spending reductions in the context of tax cuts, etc., then what we really want to do is look at the larger spending trajectory. I’m more inclined to accept this latter view: rather than just look at PPACA, we’d look at how the Obama administration intends to alter the larger spending and tax trajectory over the long haul, and we’d do the same for Romney-Ryan. 

At the end of her article, Sanger-Katz quotes an Obama spokesperson who continues to claim that Wyden-Ryan does not preserve a Medicare defined benefit, which, as we’ve discussed, is false. The plan aims to preserve a defined benefit while using the same global growth cap used by the Obama White House to facilitate scoring. 

* Note: I removed the words “to strengthen the Medicare trust fund” from the end of this sentence because I’m trying to get a better handle on the likely impact.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.