Friday, August 31, 2012

Paul Ryan is a liar -- BusinessWeek Edition

The Affordable Care Act doesn't steal from Medicare,
“The greatest threat to Medicare is Obamacare, and we’re going to stop it,” Ryan told the crowd. He went on: “Even with all the hidden taxes to pay for the health-care takeover, even with new taxes on nearly a million small businesses, the planners in Washington still didn’t have enough money. They needed more. They needed hundreds of billions more. So they just took it all away from Medicare. Seven hundred and sixteen billion dollars, funneled out of Medicare by President Obama....The problem is, the claim is flat-out wrong. “The Affordable Care Act doesn’t steal anything from Medicare,” Henry Aaron, a health-care expert at the Brookings Institution, tells me. “It actually improves Medicare’s finances. No matter how you slice it, the Affordable Care Act strengthens medical hospital insurance.” Here’s how:

 Money in the Medicare trust fund comes mostly from payroll taxes, premiums, and general revenue. The trust fund then pays that money out to health-care providers. Part of the trust fund was expected to go bankrupt by 2016. Obamacare actually saves it money in a variety of ways. From 2010 to 2019, Obamacare trims payments to providers by $196 billion. They agreed to take a cut because they will get so many new patients, thanks to the individual mandate. Another $210 billion will be generated by raising Medicare taxes on the wealthy (that’s households earning more than $250,000). Another $145 billion comes from phasing out overpayments to Medicare Advantage. About 25 percent of seniors use the program—in which private plans compete for Medicare dollars—instead of traditional fee-for-service Medicare. Under Obamacare, the government has to keep Medicare Advantage costs in line with those of traditional Medicare. More savings come from streamlining administrative costs.

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