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Sunday, August 19, 2012 - Page updated at 06:30 p.m.
Q&A: Medicare a key election issue
By Noam N. Levey
Tribune Washington bureau
WASHINGTON — As campaign debate over Medicare intensifies, Mitt Romney and President Obama have been accusing each other of threatening the future of the government health-insurance program for the elderly and disabled.
There will be consequences for seniors and the nation's health-care industry no matter which way the debate is decided. Romney and Obama agree Medicare spending must be controlled, so Medicare likely will change no matter who wins the White House. Unless lawmakers cut spending or raise taxes, the program's giant trust fund is forecast to start running a deficit in 2024.
Some background questions and answers about the debate:
Q: Romney accuses Obama of "raiding" Medicare for $716 billion to pay for the new health-care law. What's that charge based on?
A: The Affordable Care Act that Obama signed in 2010 is expected to spend nearly $1.7 trillion in the next decade to provide health coverage to 30 million uninsured Americans.
To offset the cost of subsidizing coverage for most of these people, the law relies on new taxes and cuts in federal spending. Among the spending cuts are some $700 billion in the next decade in future Medicare payments to insurance companies that administer Medicare benefits and to hospitals, nursing homes and other providers that care for Medicare patients.
These offsets — less than 10 percent of the $7.5 trillion Medicare is expected to spend in the next decade — are critical to ensuring the new law would not add to the federal deficit.
Q: How can Obama say he has strengthened Medicare?
A: Reductions in future Medicare spending reduce Medicare's future shortfalls. Less spending extends by eight years the life of the Medicare trust fund that finances hospital care, according to the trustees overseeing the program. The fund is projected to run a deficit starting in 2024. Critics say this form of accounting double-counts the savings generated by the new law, crediting it with reducing the federal deficit and reducing the shortfall in the Medicare trust fund.
The new health-care law includes other provisions that are widely seen as important to sustaining Medicare in the long run, including initiatives designed to improve the quality and efficiency of care doctors and hospitals provide. It is unclear how much savings these will generate.
The law also provides new Medicare benefits to millions of beneficiaries, including free preventive care and new subsidies that eliminate the current gap in Part D prescription-drug coverage known as the doughnut hole.
Q: What has Romney proposed?
A: Romney said last week that, if elected, he would seek to reverse the Medicare cuts along with repealing the rest of the health-care law.
Q: What has Romney's running mate Rep. Paul Ryan done about the Medicare spending cuts?
A: Ryan, who chairs the House Budget Committee, has voted to repeal the health-care law. But his budget plan would retain the $716 billion in Medicare cuts to use in offsetting major tax cuts he has proposed.
Even with the Medicare cuts, Ryan's plan would not balance the federal budget until at least 2040, according to the nonpartisan Congressional Budget Office. Without the Medicare cuts, the plan would not balance until much further into the future.
Q: What impact would that have on Medicare?
A: If Medicare spending increases by more than $700 billion, the trust fund would run out of money in four years, according to the trustees. That means the program likely would have to reduce payments to doctors, hospitals and other providers anyway.
Romney has not detailed how he would avoid this, short of saying he wants to overhaul Medicare by giving seniors vouchers to shop for private health plans. But that "premium support" plan wouldn't start until people now 55 reach retirement age, which would be six years after the trust fund runs out. It is unclear how the "premium support" would impact federal finances because Romney has provided few details.
Material from The Associated Press is included in this report.
Copyright © The Seattle Times Company
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