After Passing Debt Deal, Sen. McConnell Returns To Bunk Social Security, Medicare Talking Points
Last night on Fox News' On the Record with Greta Van Susteren, Sen. Mitch McConnell (R-KY) — fresh off avoiding government default — took the opportunity to return to familiar and incorrect talking points about Medicare and Social Security. After repeating his previously debunked claim that the Affordable Care Act cut "Medicare by half a trillion dollars," he then claimed that Medicare would be insolvent in five years, with Social Security following soon after. Both programs, however, will be solvent for far longer than five years, and in the case of Medicare, the Affordable Care Act is partially responsible for extending solvency.
CLAIM: Sen. McConnell Claimed "Obamacare Cut Medicare By Half A Trillion Dollars"
GRETA VAN SUSTEREN (HOST): How do we fix Medicare, though? And wasn't the national health bill sort of, you know, an attempt to sort of address our national health care? Now we hear about fixing Medicare.
SEN. MITCH MCCONNELL: Well, the Obamacare bill only raided Medicare. It took half a trillion dollars out of Medicare to pay for a brand-new entitlement program for a whole different set of Americans. That didn't help. It made it worse. [Fox News, On The Record With Greta Van Susteren, 8/2/11, Via Nexis]
FACT: Affordable Care Act's Medicare Savings Come From Eliminating Wasteful Overpayments To Medicare Advantage
FactCheck.org: Cost Saving Provisions "Not A Slashing Of The Current Medicare Budget Or Benefits." According to FactCheck.org: "Whatever you want to call them, it's a $500 billion reduction in the growth of future spending over 10 years, not a slashing of the current Medicare budget or benefits. It's true that those who get their coverage through Medicare Advantage's private plans (about 22 percent of Medicare enrollees) would see fewer add-on benefits; the bill aims to reduce the heftier payments made by the government to Medicare Advantage plans, compared with regular fee-for-service Medicare. The Democrats' bill also boosts certain benefits: It makes preventive care free and closes the 'doughnut hole,' a current gap in prescription drug coverage for seniors." [FactCheck.org, 3/19/10]
New England Journal Of Medicine: The Affordable Care Act Phases Out "Substantial Overpayments" To Medicare Advantage Plans. From the New England Journal of Medicine:
A phased elimination of the substantial overpayments to Medicare Advantage plans, which now enroll nearly 25% of Medicare beneficiaries, will produce an estimated $132 billion in savings over 10 years. [...]
The ACA also produces nearly $200 billion in savings by assuming that providers can improve their productivity as firms in other industries have done. On the basis of this presumed improvement, the law reduces Medicare's annual "market basket" updates for most types of providers - a provision that has generated controversy. [New England Journal of Medicine, 7/8/10]
Health Care Reform "Will Keep Paying Medical Bills For Seniors." According to PolitiFact.com: "The government-run Medicare program will keep paying medical bills for seniors, but it will begin implementing cost controls on health care providers, mostly through penalties and incentives. The legislation would reduce payments for hospital-acquired infections or preventable hospital admissions. For Medicare Advantage, the federal government intends to reduce extra payments, taking away subsidies to private insurance companies. Insurers will likely cut benefits in order to not lose profits. The bill does not address the 'doctor's fix,' an expected proposal that Congress usually passes to prevent doctors' Medicare payments from severe cuts." [PolitiFact.com, 3/18/10, emphasis in original]
CLAIM: Sen. McConnell Claimed That Medicare "Goes Broke" In Five Years In Part Because Of Reform, Social Security "A Little Longer"
SEN. MITCH MCCONNELL: The joint committee is also going to focus on entitlements. The trustees of the Social Security and Medicare system appointed by the president himself have said Medicare's got about five years before it goes broke, Social Security a little longer. We need to be looking at entitlement reform if it's even going to be there for the next generation. [Fox News, On The Record With Greta Van Susteren, 8/2/11, Via Nexis]
SEN. MITCH MCCONNELL: Medicare is even in deeper trouble as a result of "Obamacare" than it was before. It was already in trouble. It got turned into a piggy bank to finance half of the trillion dollars of new spending in "Obamacare." We think that was a mistake. It only exacerbated the Medicare problem and made it even more urgent that we deal with trying to save Medicare. [Fox News, On The Record With Greta Van Susteren, 8/2/11, Via Nexis]
FACT: Affordable Care Act's Medicare Savings Extend The Life Of The Program By 8 Years — Now Projected To Last Through 2024
Medicare Trustees Report Shows Affordable Care Act Extends The Life Of Medicare. According to the Huffington Post:
The Medicare trust fund will last eight years longer than it would have without the passage of last year's health care law, the program's trustees announced Friday in a report.
The nonpartisan lead actuary for Medicare, Rick Foster, estimated that without the health care overhaul, the program's trust fund would have run dry by 2016. With the law in effect, Foster projected, the trust fund will last through 2024. [...]
Health and Human Services Secretary Kathleen Sebelius highlighted the boost reform gave to Medicare. "Over the next 75 years, Medicare's Hospital Insurance costs are projected to be about 25 percent lower due to the new law," she said in a statement. "And without the historic deficit reduction in the Affordable Care Act, Medicare would have gone bankrupt in 2016 -- only five years from now." [Huffington Post, 5/13/11]
Foster: Affordable Care Act Extends The Life Of Medicare By Eight Years. In an interview with Slate's David Weigel, Richard Foster, the chief actuary of the Centers for Medicare & Medicaid, said: "Under current law...including the Affordable Care Act, we're estimating that the trust fund would be exhausted in 2024. In the absence of the savings under the Affordable Care Act, a corresponding date of exhaustion would be 2016. So the Affordable Care Act, in the new projection, postpones the exhaustion by eight years. That's down from 12 years in last year's projection." [Slate, 5/16/11]
FACT: Social Security Is Solvent For Over 25 Years Despite Economic Downturn
Social Security Trust Fund Is Big Enough To Finance Benefits For Baby Boomers. According to the Economic Policy Institute:
The retirement of the large Baby Boomer generation will cause Social Security spending to increase from 4.8% of GDP in 2010 to 6.1% of GDP in 2035. The Baby Boomer retirement was fully anticipated by Social Security's actuaries and the members of the National Commission on Social Security Reform ("the Greenspan Commission") appointed by President Reagan. As a result of reforms enacted by Congress in 1983 following the commission's report, Social Security is in the process of building up a trust fund that will be large enough to cover benefits through the peak Baby Boomer retirement years.
Though the oldest Baby Boomers became eligible for retirement benefits in 2008, most Baby Boomers are still in the workforce. Around 2025, when the younger Baby Boomers reach retirement age, Social Security will begin drawing down the trust fund. At that point, Social Security's outlays will start to exceed its tax revenues and interest from the trust fund, though the balance of the trust fund will ensure that full benefits can be paid through 2036 or so.
The Social Security trust fund will run out of assets around 2037. If Congress does not act before then to shore up the program's finances, Social Security benefits would have to be cut by an estimated 22% to allow revenues to fully cover benefits. Though such an abrupt cut in benefits should certainly be avoided, the inflation-adjusted value of these benefits would still be larger than current benefits due to economic growth, though they would replace a smaller share of pre-retirement earnings (CBO 2009).
[EPI.org, 8/6/10, parentheses original, emphasis added]
Social Security Trustees: Trust Fund Sufficient To Pay Full Benefits Through 2036, 78 Percent Of Benefits Thereafter. According to the Social Security Board of Trustees: "The projected point at which the combined Trust Funds will be exhausted comes in 2037 - the same as the estimate in last year's report. At that time, there will be sufficient tax revenue coming in to pay about 78 percent of benefits." [SSA.gov, 8/5/10]