The fight over Medicare: Answers to 5 key questions

As campaign debate over Medicare intensifies, former Gov. Mitt Romney and President Obama have been accusing one another of threatening the future of the government health insurance program for the elderly and disabled.

Some background to the charges and countercharges:

Q – Romney accuses Obama of “raiding� Medicare of $716 billion to pay for his healthcare law. What’s that charge based on?

The Affordable Care Act that Obama signed in 2010 is expected to spend nearly $1.7 trillion over the next decade to provide health coverage to 30 million uninsured Americans.

To offset the cost of subsidizing coverage for most of these people, the law relies both on new taxes and cuts in federal spending. Among the spending cuts are some $700 billion over the next decade in future Medicare payments to private insurance companies that administer Medicare benefits and to hospitals, nursing homes and other providers that care for Medicare patients.

These offsets – less than 10% of the $7.5 trillion Medicare is expected to spend in the next decade -- are critical to ensuring the health reform law would not add to the federal deficit.

Q – How can Obama say that he has strengthened Medicare?

The reductions in future Medicare spending reduce Medicare’s future shortfalls.

Less spending extends the life of the Medicare trust fund that finances hospital care by eight years, according to the trustees overseeing the program. The fund is now projected to run a deficit starting in 2024.

Critics say this form of accounting effectively double-counts the savings generated by the new law, crediting it with both reducing the federal deficit and reducing the shortfall in the Medicare trust fund.

The new healthcare law includes other provisions that are widely seen as important to sustaining Medicare in the long run, including new initiatives designed to improve the quality and efficiency of the care that doctors and hospitals provide. It is unclear how much savings these will generate.

The law also provides new Medicare benefits to millions of beneficiaries, including free preventive care and new subsidies that eliminate the current gap in Part D prescription drug coverage known as the doughnut hole.

Q -- What has Romney proposed to do?

Romney said Wednesday that, if elected, he would seek to reverse the Medicare cuts along with repealing the rest of the health reform law.

Q – What has Romney’s new running mate Paul Ryan done about the Medicare spending cuts?

Ryan, who chairs the House Budget Committee, has voted to repeal the Obama healthcare law. But his budget plan would retain the $716 billion in Medicare cuts and use the money to offset major tax cuts that he has proposed.

Even with the Medicare cuts, Ryan’s plan would not balance the federal budget until at least 2040, according to the nonpartisan Congressional Budget Office. Without the Medicare cuts, the plan would not balance until much further into the future. Like Romney, Ryan now says he would restore the cuts.

Q – What impact would that have on Medicare?

If Medicare spending increases by more than $700 billion, the trust fund would run out of money in just four years, according to the trustees. That means the program would likely have to reduce payments to doctors, hospitals and other providers anyway.

Romney has not detailed how he would avoid this, short of saying he wants to overhaul Medicare by giving seniors vouchers to shop for private health plans. But Romney would not begin that “premium support� plan until people now 55 reach retirement age, which would be six years after the trust fund runs out. It is unclear what impact the “premium support� plan would have on federal finances because Romney has provided few details.

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