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Democrats’ False Medicare Claims

September 05, 2012

Despite its expected bankruptcy in 2024, top Democrats continue to make false claims that the Medicare program seniors and those with disabilities rely on is doing fine and that inaction is the best course.  Additional claims that the “savings” and taxes contained in ObamaCare will only strengthen Medicare are completely misleading and ignore the fact that rather than use Medicare spending reductions to shore up the Medicare program, Democrats chose to use Medicare as its slush fund to fund a massive government takeover of health care.

Below is a list of some of the major myths being spread by Democrats:

MYTH: The Medicare guarantee is protected by doing nothing.

FACT: The only thing inaction guarantees is Medicare’s bankruptcy. The most recent Medicare Trustees Report indicates that the Medicare Hospital Insurance (HI) trust fund will be bankrupt in 2024.  The same Trustees also say the HI trust fund “is not adequately financed over the next 10 years.”  Failing to enact long-term solutions means current and future beneficiaries will be at risk of losing health coverage they depend on. 

MYTH: Not a dime of ObamaCare’s over $700 billion in Medicare cuts will affect Medicare beneficiaries.

FACT: The health care law will affect the benefits and out of pocket costs of tens of millions of beneficiaries, according to the Medicare trustees, Medicare actuaries, and Congressional Budget Office.  Higher-income beneficiaries will be charged higher Medicare Part B and Part D premiums, more than 11 million seniors enrolled in Medicare Advantage will see their average benefit cut by hundreds of dollars per year, seniors’ Part D premiums will be higher than they otherwise would have been, and nearly all retirees will lose their employer-based prescription drug coverage.

MYTH: Under ObamaCare, preventative care, such as wellness visits and cancer screenings, are free for Medicare beneficiaries.

FACT: While these services are available without a co-pay, they are not free.  In table 3 of the Medicare actuaries’ April 22, 2010 memorandum, they show an estimated net increase in Part B costs of $6.1 billion resulting from waiving copays for the annual wellness visits and preventive services from 2010-2019.  These net cost increases reflect the higher Part B expenditures less the higher beneficiary premium revenues that would, by law, be required to help finance the higher expenditures.  Because beneficiary premiums are required to finance 25 percent of Part B program spending, the increase in spending associated with “free” physicals and screenings will result in a Part B premium increase of more than $2 billion dollars over this period.  Beneficiaries will be charged this higher premium regardless of whether they receive the “free” wellness visits and screenings or not.

MYTH: ObamaCare also raised Medicare payroll taxes by $318 billion, which will further strengthen the program’s financial condition.

FACT: The health care law contains two specific tax increases that add up to $318 billion – a 0.9 percent payroll tax increase on high wage earners and 3.8 percent increase on investment income.  Roughly two-thirds of the $318 billion in new revenue is derived from the tax on investment income, but this revenue is not being deposited into the Medicare Hospital Insurance (HI) trust fund.  Instead, it’s going into general revenue to fund portions of the health care law that are both unrelated to Medicare and that do not benefit Medicare beneficiaries.  According to the Trustees report, “However, the revenues from this tax are not allocated to the Medicare trust funds.” Medicare will never see this increased revenue from the investment income “Medicare” tax.