Medicare for Dummies

The thing about the bully pulpit is that Presidents can make the most fantastic claims and it takes days to sort the reality from the myths. So as a public service, let's try to navigate the, er, remarkable Medicare discussion that President Obama delivered on Wednesday. It isn't easy.

Mr. Obama began by depicting a crisis in the entitlement state, noting that "our health-care system is placing an unsustainable burden on taxpayers," especially Medicare. Unless we find a way to cauterize this fiscal hemorrhage, "we will eventually be spending more on Medicare than every other government program combined. Put simply, our health-care program is our deficit problem. Nothing else even comes close."

On this score he's right. Medicare's unfunded liability—the gap between revenues and promised benefits—is currently some $37 trillion over the next 75 years. Yet the President uses this insolvency as an argument to justify the creation of another health-care entitlement, this time for most everyone under age 65. It's like a variation on the old Marx Brothers routine: "The soup is terrible and the portions are too small."

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Medicare
Associated Press

President Barack Obama addresses a joint session of Congress on Wednesday, Sept. 9, 2009.
Medicare
Medicare

As astonishing, Mr. Obama claimed he can finance universal health care without adding "one dime to the deficit, now or in the future, period," in large part by pumping money out of Medicare. The $880 billion Senate plan he all but blessed this week would cut Medicare by as much as $500 billion, mainly by cutting what Mr. Obama called "waste and abuse." Perhaps this is related to the "waste and abuse" that Congresses of both parties have targeted dozens of times without ever cutting it.

Apparently this time Mr. Obama means it, though he said this doesn't mean seniors should listen to "demagoguery and distortion" about Medicare cuts. That's because Medicare is a "sacred trust," and the President swore to "ensure that you—America's seniors—get the benefits you've been promised."

So no cuts, for anyone—except, that is, for the 24% of senior beneficiaries who are enrolled in the Medicare Advantage program, which Democrats want to slash by $177 billion or more because it is run by private companies. Mr. Obama called that money "unwarranted subsidies in Medicare that go to insurance companies—subsidies that do everything to pad their profits but don't improve the care of seniors."

In fact, Advantage does provide better care, which is one reason that enrollment has doubled since 2003. It's true that the program could be better designed, with more competitive bidding and quality bonuses. But Advantage's private insurers today provide the kind of care that Mr. Obama said he would mandate that private insurers provide for the nonelderly—"to cover, with no extra charge, routine checkups and preventative care."

Advantage plans have excelled at filling in the gaps of the a la carte medicine of traditional Medicare, contracting with doctors and hospitals to coordinate care and improve quality and covering items such as vision, hearing and management of chronic illness. If seniors in Advantage lose this coverage because of the 14% or 15% budget cut that Mr. Obama favors, well, that's "waste and abuse."

Mr. Obama did also promise to create "an independent commission of doctors and medical experts charged with identifying more waste in the years ahead." That kind of board is precisely what has many of the elderly worried about government rationing of treatment: As ever-more health costs are financed by taxpayers, something will eventually have to give on care the way it has in every other state-run system.

But Mr. Obama told seniors not to pay attention to "those scary stories about how your benefits will be cut, especially since some of the folks who are spreading these tall tales have fought against Medicare in the past and just this year supported a budget that would essentially have turned Medicare into a privatized voucher program."

This is a partisan swipe at one of the best GOP ideas to rationalize the federal budget, despite Mr. Obama's accusations that his opponents want to do "nothing." This reform would get Medicare out of the business of spending one out of five U.S. health dollars, and instead give the money directly to seniors to buy insurance to encourage them to be more conscious of cost and value within a limited budget. Democrats would rather have seniors dance to decisions made by his unelected "commission of doctors and medical experts."

Mr. Obama also called for "civility" in debate even as he calls the arguments of his critics "lies." So in the spirit of civility, we won't accuse the President of lying about Medicare. We'll just say his claims bear little relation to anything true.