McCain Medicare/Medicaid Changes Focus of Media Attention

The following blog is from the NAHC Report Article dated Tuesday, October 7, 2008.

WSJ Says Spending Reduction to Offset Tax Credit. Media reports in recent days have referenced comment by a “top aide” that Republican Presidential Candidate Sen. John McCain (R-AZ) would pay for his health care plan by making “major” reductions to Medicare and Medicaid. The Wall Street Journal carried the article Oct. 6. This cut, the Journal said, could amount to as much as $1.3 trillion over 10 years. The changes to health entitlement programs, according to the Journal, are needed to keep McCain’s health-care plan budget neutral as he has promised. The McCain campaign hasn't given a specific figure for the cuts, but didn't dispute the analysts' estimate, according to the Journal. Douglas Holtz-Eakin, McCain's senior policy adviser, was quoted as saying that the campaign has always planned to fund health care tax credits, in part, with savings from Medicare and Medicaid, and that the changes will improve the programs and eliminate fraud, but he didn't detail where the cuts would come from. “It's about giving them the benefit package that has been promised to them by law at lower cost,” he said. A Kaiser Family Foundation analysis of the candidates on Medicare provider payment reform indicates that McCain favors bundling of services related to a patient's disease instead of paying a separate fee for each service; Kaiser indicates that McCain’s contender for the presidency, Sen. Barack Obama (D-IL) supports bundling Medicare provider payments in certain circumstances but not as a requirement. McCain also believes Medicare should not pay for services resulting in, or related to, preventable errors or mismanagement. Both candidates support stepped-up prevention efforts. According to the Journal, in the months since Sen. McCain introduced his health plan, statements made by his campaign have implied that the new tax credits he is proposing to help Americans buy health insurance would be paid for with other tax increases. The nonpartisan Tax Policy Center, a Washington think tank, estimates that the McCain plan would cost the government $1.3 trillion over 10 years, the Journal reported. The plan would allow as many as five million more people to have insurance coverage, it estimates. The Journal quoted Holtz-Eakin as saying the plan is accurately described as budget neutral because it assumes enough savings in Medicare and Medicaid spending to make up the difference. He said the savings would come from eliminating Medicare fraud and by reforming payment policies to lower the overall cost of care. The new health insurance tax credits of $2,500 per person and $5,000 per family will help some low-income people avoid joining Medicaid and allow people to buy health coverage on the open market, where they may have more choices and might look for a better bargain. In exchange, the Journal explained, the government would begin taxing the value of health benefits people get through work. If an employer spends $10,000 to buy a worker health insurance, the worker would pay taxes on that money. The Journal noted that McCain's plan actually would lower taxes for most people. Obama also would rely on some Medicare savings to pay for his health care plan, which, according to the Journal, would offer subsidies to help consumers pay for premiums. The Tax Policy Center estimates that his plan would cost $1.6 trillion over 10 years and cover 34 million more people. The full Wall St. Journal story can be found here http://online.wsj.com/article/SB122315505846605217.html.

~Serena Brock