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The president’s health care law cut $716 billion from Medicare.

Welcome to VoteFacts.  We are again focusing on some statements from the Daily Beast.  Their statement:

"Romney... alleging in a hastily edited spot that the president “cut $716 billion from Medicare…[t]o pay for Obamacare.” the accurate figure for the savings is $500 billion; Politifact was moved to ask where Romney the vaunted numbers man found Obama cutting another “$200 billion while no one was looking."

When you read the Daily Beast article, and if you do not look into the facts for yourself, you could walk away believing that the Medicare savings for current generation seniors and the new health care law are $500 billion dollars, not the $716 billion claim by Romney.

So let's focus on the facts:

In the original estimate for Medicare savings and the new health care law by the Center for Medicare and Medicaid Services (CMS), they estimated, "Net Medicare savings are estimated to total $575 billion for fiscal years 2010-2019.CMS, Page 8   The Daily Beast was only off by $75 billion, but it is always good to know the facts.

Unfortunately, the Beast article does not discuss the facts behind the $716 billion dollar claim, it merely asks readers to wonder, "where Romney the vaunted numbers man found Obama cutting another $200 billion while no one was looking."  Well, today we are bringing you the Congressional Budget Office (CBO) report where Romney found the number.  Here is what they said would happen to spending if the savings from the new health care law did not exist:

If the PPACA were repealed... Spending for Medicare would increase by an estimated $716 billion over that 2013 - 2022 period.  CBO, Page 13

In other words, the Medicare reductions during the 2013-2022 period add up to $716 billion dollars.  The reason for the difference is because of the time periods involved.  The first estimate was for the 10 year time frame of 2010-2019, while the second was for 2013-2022.  This is an example of what the Republicans described as "budget gimmicks" because both the CBO and CMS do the majority of their estimates in 10 year time spans.  Since the bulk of the laws provisions did not begin until 2014, then the first 4 years of their estimates did not include either costs or Medicare reductions.  Next year, when they assess the law from a 10 year time frame of 2014-2023, it will include a full 10 years of costs and reductions.

But where are the reductions in Medicare spending coming from?  Here are bullet points and the links to their documents to help you answer those questions with a focus on facts:

Substantial savings are attributable to provisions that would, among other changes:

• Reduce Part A and Part B payment levels and adjust future "market basket" payment updates for productivity improvements ($233 billion);

• Reduce Medicare Advantage payment benchmarks and permanently extend the authority to adjust for coding intensity ($145 billion);

• Reduce disproportionate share hospital (DSH) payments ($50 billion);

• Eliminate the Medicare Improvement Fund ($27 billion);

• Implement an Independent Payment Advisory Board together with strict Medicare expenditure growth rate targets ($24 billion);

• Freeze the income thresholds for the Part B income-related premium for 9 years ($8 billion).

Other provisions would generate relatively smaller amounts of savings, through such means as:

• Reporting physician quality measures,

• Reducing payments in cases involving hospital-acquired infections,

• Reducing readmissions,

• Refining imaging payments,

• Increasing Part D premiums for higher-income beneficiaries, and

• Implementing evidence-based coverage of preventive services.

We have noticed that the President often declares that Medicare is more solvent under his law because it saves money by reducing admissions, physician quality measures, and cutting down and waste, fraud, and abuse.  We don't see those being the difference making cost savings in the CMS report.

If you would like to vote on use of the word "cut" when it comes to Medicare, you can check out our previous post on that.  But for today, let us know about the Obama Medicare cuts and cast your vote.



The Daily Beast is a registered trademark of The Newsweek/Daily Beast Company, LLC, New York, NY 10004

VoteFacts original post date:  September 4, 2012

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Did the president's health care law cut $716 billion from Medicare for current generation seniors?
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Voting Key


Fact = 100% - 92% True
Mostly Fact = 91% - 75% True
Slightly Fact = 74% - 60% True
Split = 59% - 50% True
Slightly Fiction = 49% - 30% True
Mostly Fiction = 29% - 10% True
Fiction = 9% - 0% True