Both the Centers for Medicare and Medicaid Services and the
Congressional Budget Office have said that the Obama
administration cannot claim that the Medicare cuts they are
enacting will simultaneously finance the new health care law,
which is supposed to cover 30 million uninsured, and
extend the solvency of the existing Medicare program.
But that hasn’t stopped the administration from continuing to
make both claims anyway. And when I asked about this on a Monday
conference call held to tout Medicare savings, Health and Human
Services Secretary Kathleen Sebelius dismissed the conclusion of
the CMS actuary, and falsely claimed that the CBO had taken a
different view.
In her opening remarks, Sebelius promoted a new report that said
the changes made to Medicare would save $8 billion over the next
two years, and $575 billion over 10. The report also says
that, “Implementing these changes extends the life of the
Medicare Trust Fund by 12 years from 2017 to 2029, more than
doubling the time before the exhaustion of the Trust Fund.” (See
PDF of report at the bottom of this post.)
During the question and answer session, I asked how the
administration could claim the same money could be used to pay
for two different things. At first, Jonathan Blum, the director
of the Center for Medicare Management for CMS, sought to answer
the question.
“I think it’s been a consistent budget convention to use
Medicare, which as you know is a pay as you go program, that is
all paid with a unified budget,” Blum explained. “And when you
have few outlays in place of the Medicare trust fund that it both
extends the life of the trust fund, because you’re paying less in
benefits, but it also produces surplus to the overall federal
budget. This is a convention that was used back in 1997, when the
Republican Congress passed the balanced budget act…”
At that point, I interjected and quoted a passage, taken directly
from an April report by CMS, where Blum works. It
read:
“In practice the improved (Medicare hospital insurance) financing
cannot be simultaneously used to finance other Federal outlays
(such as the coverage expansions) and to extend the trust fund,
despite the appearance of this result from the respective
accounting conventions.”
In response to my reading this, Blum said, “Yeah, I think it’s
been a historical, and longstanding budget convention that when
you have less dollars paid to the Medicare program to pay for
benefits, there are dollars that accrue to the overall federal
treasury, that can be spent for other purposes. And this is an
OMB, CBO budget convention…”
I then followed up by asking: “It’s a budget convention, but in
reality, the $575 billion can’t be used to extend the trust fund
for 12 years and simultaneously used to finance coverage for 30
million people. Is that correct?”
At this point, Sebelius jumped in to say I was wrong.
“Actually, that is not correct,” she said. “There are two
different operating methods of looking at this, and the CMS
actuary in the report that you cite differs in his strategic
opinion from every accounting methodology that’s used for every
other program in the federal budget, that has traditionally used
for Medicare. And he has a different interpretation that is not
agreed upon by either the Congressional Budget Office or the OMB
or traditionally in Congress.”
Set aside the irony that in a conference call held to highlight
CMS estimates on Medicare, Sebelius was questioning CMS
methodology. Her statement that the CBO had taken a different
view on this is demonstrably false. On several occasions, the CBO
has determined that you can’t double-count Medicare savings.
In a March letter to Paul Ryan, the CBO
wrote that a majority of the Medicare savings from the health
care law “would be used to pay for other spending and therefore
would not enhance the ability of the government to pay for future
Medicare benefits.”
Last December, in a letter to Sen. Jeff Sessions, the CBO
explained this in further detail. That letter concluded that:
“To describe the full amount of (Medicare hospital insurance)
trust fund savings as both improving the government’s ability to
pay future Medicare benefits and financing new spending outside
of Medicare would essentially double-count a large share of those
savings and thus overstate the improvement in the government’s
fiscal position.”
The moderator on the conference call cut me off so they could
move to the next question before I was able to follow-up by
asking Sebelius about these CBO conclusions.
