Critical Condition

Debunking Bill Clinton’s Medicare Claims

When former president Bill Clinton’s good, he’s very, very good. That formidable rhetorical skill was on display in his defense of Obama’s Medicare policy at the Democratic National Convention. Though Obama needs help, much of what Clinton said was flat out wrong. Consider just two examples.

1. On the ten-year $716 billion in “savings” from Obama’s Medicare payment cuts, Clinton insisted: “There were no cuts to benefits at all, none.” Very Clintonesque: technically correct, and thoroughly misleading. In fact, President Obama and his allies in Congress cut the funding for Medicare benefits, which directly affects Medicare patients dependent on the funding of those benefits. By 2019, the Medicare actuary estimates that 15 percent of the affected providers will become unprofitable, and that number reaches 40 percent by 2050. As Medicare payments dip below the cost of Medicare services, medical professionals and institutions will withdraw from or cut back on providing Medicare services, guaranteeing serious problems for seniors trying to access those benefits. The Medicare actuary says that the cuts will “jeopardize” seniors’ access to care.

2. On Obama’s alleged contribution to the solvency of the Medicare (HI) Trust Fund, Clinton said: “And instead of raiding Medicare, he used the savings to close the donut hole in the Medicare drug program.” Recall that President Obama said he would not sign a health bill adding a “dime” to the deficit. So, the “savings” from the big Medicare payment cuts could be used to either shore up the Medicare trust fund or finance other provisions of Obamacare, such as the new entitlement expansions, thus keeping the bill deficit-neutral. Not both. In a December 23, 2009, memo on the Senate version of the bill, which eventually became law, CBO clarified the situation: “The key point is that the savings to the HI Trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs.” 

So, what’s really happening? In a January 22, 2010, letter to Senator Jeff Sessions (R., Ala.), ranking member of the Senate Budget Committee, CBO Director Douglas Elmendorf reported that “The majority of the HI trust fund savings under PPACA would be used to pay for other spending and therefore would not enhance the ability of the government to pay for future Medicare benefits” (emphasis mine). Whatever else it does, that “other spending” doesn’t strengthen Medicare.

Oh, and about filling up that “donut hole. It is a congressionally created gap in drug coverage, where beneficiaries pay 100 percent of the costs up to a catastrophic threshold; a bizarre benefit designed to offset drug costs in Bush’s 2003 entitlement expansion. What Clinton did not say is that Obamacare reduces Medicare spending by $716 billion after taking into account the relatively few provisions of the law — like filling the “donut hole” — that increase Medicare spending. So, no; none of the $716 billion is used to close the “donut hole.”      

One more thing: Clinton noted that the $716 billion in “savings” is also assumed in Ryan’s proposed budget: “You got to give him one thing: It takes some brass to attack a guy for doing what you did.” But Ryan doesn’t propose to do what Obama did. Obama is just doing what Clinton tried and failed to do. In 1993, Clinton wanted to take $189 billion from Medicare and Medicaid (over the period 1994–2000) to finance the ill-fated Clinton Health Plan. Repealing Obamacare, as Ryan proposes, would end Obamacare’s spending and thus the use of Medicare “savings” to cover that spending. In Ryan’s plan, Medicare savings are for Medicare.  

Nobody beats Bill for brass.  

 — Robert Moffit is a Senior Fellow at the Heritage Foundation’s Center for Policy Innovation. 

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