Senator Obama has charged that Senator John McCain's health care proposal would cut Medicare by $882 billion dollars. McCain' s campain is angrily disputing it.
20 10 08 - 13:10
Campaigns Tangle Over Health Care
By KEVIN SACK
In a coordinated air and ground attack, Senator Barack Obama has charged that his Republican rival for the presidency, Senator John McCain, would make $882 billion in “drastic cuts to Medicare” to pay for his health care proposal.
That assertion, which could resonate among elderly voters in crucial swing states like Florida, is being angrily disputed by the McCain campaign. Mr. McCain’s top domestic policy adviser, Douglas Holtz-Eakin, said Friday that the Democrat’s latest assault on the McCain health plan constituted the “worst and most sustained distortion of policy in this entire campaign.”
In fact, the Obama campaign’s new television advertisement, which Mr. Obama reinforced on the stump in Roanoke, Va., does mischaracterize Mr. McCain’s plan by stitching together vague language from a news report with back-of-the envelope calculations by a partisan policy group.
The Obama Medicare ad asserts that the McCain plan would require “cuts in benefits, eligibility or both.” In his speech, Mr. Obama added that “it would mean a cut of more than 20 percent in Medicare benefits next year.”
“If you count on Medicare,” he said, “it would mean fewer places to get care, and less freedom to choose your own doctors. You’ll pay more for your drugs, receive fewer services, and get lower quality care.”
But Mr. McCain has not suggested cutting Medicare benefits, though it is always possible he might find it necessary to make his plan pay for itself. Rather, Mr. Holtz-Eakin said Friday that Mr. McCain would fill any budget hole in the plan through a variety of changes that would largely leave benefit levels untouched. And he pointed out that Mr. Obama supports many of the same changes.
Among the cost-saving measures listed by Mr. Holtz-Eakin in a conference call with reporters Friday were accelerating the computerization of health records, eliminating fraudulent Medicare claims, requiring high-income beneficiaries to pay more for pharmaceuticals, speeding the use of generic drugs, and eliminating government subsidies for private Medicare Advantage plans. He also spoke, as Mr. Obama often does, of saving money through more effective treatment of chronic diseases and reconfiguring the Medicare payment system to emphasize prevention and primary care.
Economists agree that many of those initiatives should save money over the long term, but estimates of how much and how fast are varied and totally speculative. Nonetheless, both candidates rely on such guesswork to present plans that appear fiscally balanced.
The centerpiece of Mr. McCain’s plan, which is intended to make the insurance markets more equitable and competitive, is the elimination of the provision that allows workers to exclude the value of employer-sponsored health benefits from taxable income. That tax advantage, often worth thousands of dollars a year, is not available to those who buy insurance individually. In exchange, Mr. McCain would offer all consumers tax credits of $2,500 per individual or $5,000 per family to purchase health coverage.
Mr. McCain’s aides have long asserted that their plan would not add to net government spending. But in July, the Tax Policy Center, a group of analysts from the Urban Institute and Brookings Institution, estimated that the change in tax treatment would cost the government $1.3 trillion over 10 years. Mr. Obama’s plan to subsidize coverage for low-income workers was estimated to cost $1.6 trillion.
The Tax Policy Center analysts wrote that they had not evaluated whether the health care savings proposed by either candidate would be sufficient to fill the gaps in their plans.
Last week, an article in The Wall Street Journal reported that Mr. Holtz-Eakin said any budgetary hole would be filled with reductions to Medicare and Medicaid, without providing much detail. The next day, the Center for American Progress Action Fund, which is led by John D. Podesta, former chief of staff to President Bill Clinton, issued a report asserting that a proportional cut would mean eliminating $882 billion from Medicare and $419 billion from Medicaid.
The Obama ad released Friday cites both the Journal article and the Center for American Progress study. Mr. Obama used the $882 billion figure in his speech without attributing it to the center, which primarily advocates for Democratic positions.
Mr. Holtz-Eakin declined Friday to either accept or reject the Tax Policy Center estimate of the McCain plan’s cost. “We believe and have believed from the day we rolled out our health care plan that the comprehensive reforms are budget-neutral,” he said.
He emphasized, however, that any reductions would not touch benefits. “No service is being reduced,” he said. Every beneficiary, now and in the future, will see exactly the same benefits they have been promised.”
As for Mr. Obama’s assertions, he said, “It’s an attempt to simply scare America’s seniors.”