Nancy Pelosi's Weak, Cynical Defense of ObamaCare's Medicare Changes


To hear Nancy Pelosi tell it, when Republicans propose reducing planned future spending by almost a trillion bucks in return for increasing the federal debt limit, it's time to stock up on canned food and collecting newspapers to insulate the refrigerator box. But when Democrats do roughly the same thing to pay for a new health care entitlement, it's a good government plan to promote efficiency in the medical system.

Here's the backstory: In summer 2011, when Republicans put forward a deal to cut spending by a little over $900 billion during the next decade in exchange for raising the federal debt limit, Pelosi, the Democratic House Minority Leader, framed her party's opposition in apocalyptic terms. "What we're trying to do is save the world from the Republican budget," she said. "We're trying to save life on this planet as we know it today."

During debate over the deal, Pelosi singled out cuts to old age entitlements as particularly unacceptable. In a speech on the House floor opposing GOP Speaker John Boehner's debt limit plan, she warned of the Republican party's "assault on Medicare."

Needless to say, Pelosi's reaction was more than a little bit overblown. The cuts Pelosi warned of — including any potenital cuts to entitlements like Medicare — were not actually cuts at all. As The New York Times made clear, the deal did "not actually reduce federal spending," and would leave the federal debt larger than when the plan was passed.

Instead of cutting spending from today's levels, the deal proposed something more modest: It was designed to allow spending to grow more slowly than it would have otherwise, reducing planned spending from a projected future baseline that assumed increased spending growth. Moreover, the reductions themselves were subject to substantial uncertainty as future Congresses could always alter or reverse them.

Did Rep. Pelosi know this at the time? Probably. She certainly understands the concept now. Responding to GOP charges that Democrats cuts Medicare by $716 billion as part of ObamaCare, Pelosi is now insisting that those cuts aren't really cuts. Instead, they are just reductions to planned future increases.

At CNN today, Pelosi writes

Romney repeated the standard Republican falsehood that the Affordable Care Act cut $716 billion for Medicare beneficiaries. That is not true, and they know it. Here are the facts, supported by independent critics, and they are indisputable: The Affordable Care Act extends the life of Medicare by nearly a decade by reducing the rate of increase in payments to health care providers, by reducing costly taxpayer subsidies to insurance companies, and by reducing waste, fraud and abuse.

No doubt everyone supports reducing government spending by eliminating those three great evils: waste, fraud, and abuse, but the Obama administration's efforts to fight fraud in the program account for very little of ObamaCare's Medicare cuts. The administration has delayed some of its own vaunted fraud protection efforts, and according to an October report by the Government Accountability Office (GAO), the program remains at high-risk of fraud and abuse — just as it has for at least a decade.

The real money comes from the first two categories: Reductions to provider payments and health insurer fees. By describing the second category as "reducing costly taxpayer subsidies" to insurers, Pelosi makes it sound like some sort of righteous justice. But it's justice that will have to wait: Pelosi fails to note that the administration has delayed about 70 percent of the proposed payment reductions to those insurers.

Which leaves us with the payment reductions to providers. Which may not pay off in the long term, the program's own actuary has said. And if they do, he's warned, it will be at the expense of seniors' access to care.

Elsewhere in the piece, Pelosi offers another scare stat: "Medicare will be bankrupt by 2016 under the Romney-Ryan plan." But as one of the program's public trustees has noted, the Obama administration's Medicare plan only extends the program's trust fund by double counting, using ObamaCare's spending reductions to pay for both extending Medicare and new insurance coverage. And even if you ignore the double counting, Pelosi's bankruptcy charge still boils down to this: You can trust Democrats with Medicare because Team Blue has a plan to let the program go insolvent by 2024.

It's a weak, cynical defense that fails almost entirely to grapple with the program's real flaws or fiscal problems. But given that some members of Pelosi's party have candidly admitted that they don't want to reform Medicare because doing so would take a potent political issue off the table, maybe that's not surprising.

(Democrats obviously aren't the only party to duck and dissemble when it comes to Medicare. Republicans have used and abused the program for their own ends—witness, among many examples, Mitt Romney's many declarations that it was "wrong" for Obama to cut Medicare.)