Yes, Obamacare Cuts Medicare More Than President Romney Would

You wouldn’t know it from listening to the Obama campaign, but there’s only one Presidential candidate in 2012 who has cut Medicare: Barack Obama, whose Affordable Care Act cuts Medicare by $716 billion from 2013-2022. Today, the Romney campaign reiterated its pledge to repeal Obamacare, and promised to “restore the funding to Medicare [and] ensure that no changes are made to the program for those 55 and older.”

(DISCLOSURE: I am an outside adviser to the Romney campaign on health care issues, but the opinions in this post are mine, and do not necessarily correspond to those of the campaign.)

It’s an important point of policy clarity. Left-of-center writers, such as Ezra Klein of the Washington Post, accurately point out that Paul Ryan’s 2011 and 2012 budgets repeal Obamacare while preserving Obama’s cuts to Medicare. “The difference between the two campaigns is not in how much they cut Medicare,” he writes, “but in how they cut Medicare.”

When it comes to comparing Obamacare to the Ryan plans, Ezra is right. I’ve long argued the same thing: that the way to understand the difference between Ryancare and Obamacare is not in the scale of the cuts to Medicare, which are roughly similar, but in the competing mechanisms used in reform.

Obamacare emphasizes government control and central planning. The law empowers a panel of 15 unelected government officials, called the Independent Payment Advisory Board, to make changes to the Medicare program that will reduce Medicare spending: primarily paying doctors and hospitals less, as is done with the Medicaid program. Over time, liberal health-policy types hope that IPAB can be used to introduce rationing into Medicare, using the panel to determine what types of procedures and treatments that Medicare will and will not pay for.

The Wyden-Ryan plan, co-authored by liberal Sen. Ron Wyden (D., Ore.) and Paul Ryan, preserves the Obamacare targets for future Medicare spending, but employs an entirely different mechanism: premium support and competitive bidding. Seniors would enjoy exactly the same benefits that they do now, but along with the traditional Medicare program, they would enjoy the option of choosing among a selection of government-approved private insurance plans.

House Republicans, led by Paul Ryan, passed something very similar to Wyden-Ryan in their 2012 budget. One notable difference are that the GOP budget targets Medicare growth of GDP plus 0.5 percent, just as the FY 2013 Obama budget does. (Wyden-Ryan targeted GDP plus 1 percent.) Importantly, as I noted above, the GOP budget repeals Obamacare, but preserves that law’s Medicare cuts.

However, as Romney noted in his 60 Minutes interview over the weekend, his plan and Ryan’s plan are not identical. In response to a question about the Ryan budget, Romney responded, “I have my budget plan, as you know, that I’ve put out. And that’s the budget plan we’re going to run on.”

And the Romney campaign has explicitly stated that it will not preserve Obamacare’s cuts to Medicare. “Mitt Romney and Paul Ryan have always been fully committed to repealing Obamacare, ending President Obama’s $716 billion raid on Medicare, and tackling the serious fiscal challenges our country faces,” said Romney policy director Lanhee Chen in a Monday statement. “A Romney-Ryan Administration will restore the funding to Medicare, ensure that no changes are made to the program for those 55 or older, and implement the reforms that they have proposed to strengthen it for future generations.”

Democrats will, of course, try to blur the distinction between Ryan’s budgets and Romney’s proposal. And there may be a sound policy case for substantially cutting Medicare for current retirees, as Obamacare does. But whatever you think of Obamacare's cuts to Medicare, the fact is that a Romney administration would repeal them, and replace them with a different set of reforms, reforms that would reduce Medicare spending by a lesser amount.

Follow Avik on Twitter at @aviksaroy. 

UPDATE 1: Aaron Carroll says that I'm trying to have it both ways. "One of the key messages of the Romney/Ryan campaign is that they are serious about saving Medicare, and the Obama administration isn’t," he writes. "They are willing to make the hard choices, and the Obama administration isn’t. They want to reduce spending, and the Obama adminstration just wants to raise taxes on the rich."

There is a substantial difference between the Romney/Ryan approach—which attempts to reform Medicare in order to preserve the program's own solvency for future beneficiaries—and the Obamacare approach, which draws $716 billion out of Medicare in order to fund a large expansion of government-subsidized health insurance.

The Obama approach involves (at best) doing nothing to change our long-term fiscal problems, because it cuts Medicare by $716 billion in order to fund $1.9 trillion in new health care spending. The Romney and Ryan approaches involve resolving our long-term fiscal problems, by stabilizing entitlements and reducing the deficit.

If we are going to have a demagogic debate in which leading Democrats allege that Paul Ryan wants to kill granny and "end" Medicare—Exhibit A is below—then somebody has to point out that Obama cuts Medicare more. I would much rather have the debate that Ezra and Aaron want to have. It's up to them, and us, to persuade Democrats to have it.

UPDATE 2: The Romney campaign is out with this 30-second ad on the Medicare issue. The script reads:

You paid into Medicare for years. Every paycheck. Now, when you need it, Obama has cut $716 billion from Medicare. Why? To pay for Obamacare. So now the money you paid for your guaranteed healthcare is going into a massive new government program that's not for you. The Romney-Ryan plan protects Medicare benefits for today's seniors and strengthens the plan for the next generation.