Obama's False Medicare Claim

In a TV ad and in speeches, Obama is making bogus claims that McCain plans to cut $880 billion from Medicare spending and to reduce benefits.

A TV spot says McCain's plan requires "cuts in benefits, eligibility or both."

Obama said in a speech that McCain plans "cuts" that would force seniors to "pay more for your drugs, receive fewer services, and get lower quality care."

These claims are false, and based on a single newspaper report that says no such thing. McCain's policy director states unequivocally that no benefit cuts are envisioned. McCain does propose substantial "savings" through such means as cutting fraud, increased use of information technology in medicine and better handling of expensive chronic diseases. Obama himself proposes some of the same cost-saving measures. We're skeptical that either candidate can deliver the savings they promise, but that's no basis for Obama to accuse McCain of planning huge benefit cuts.

The ad quotes the Wall Street Journal as saying McCain would pay for his health care plan with "major reductions to Medicare and Medicaid," which the ad says would total $882 billion from Medicare alone, "requiring cuts in benefits, eligibility, or both."

But in fact, McCain has never proposed to cut Medicare benefits, or Medicaid benefits either. Obama's claim is based on a false reading of a single Wall Street Journal story, amplified by a one-sided, partisan analysis that piles speculation atop misinterpretation. The Journal story in turn was based on an interview with McCain economic adviser Douglas Holtz-Eakin. He said flatly in a conference call with reporters after the ad was released, "No service is being reduced. Every beneficiary will in the future receive exactly the benefits that they have been promised from the beginning."

Twisting Facts to Scare Seniors

Here's how Democrats cooked up their bogus $882 billion claim.

On Oct. 6, the Journal ran a story saying that McCain planned to pay for his health care plan "in part" through reduced Medicare and Medicaid spending, quoting Holtz-Eakin as its authority. The Journal characterizes these reductions as both "cuts" and "savings." Importantly, Holtz-Eakin did not say that any benefits would be cut, and the one direct quote from him in the article makes clear that he's talking about economies:

Nevertheless, a Democratic-leaning group quickly twisted his quotes into a report with a headline stating that the McCain plan "requires deep benefit and eligibility cuts in Medicare and Medicaid" – the opposite of what the Journal quoted Holtz-Eakin as saying. The report was issued by the Center for American Progress Action Fund, headed by John D. Podesta, former chief of staff to Democratic President Bill Clinton. The report's authors are a former Clinton administration official, a former aid to Democratic Sen. Bob Kerrey and a former aid to Democratic Sen. Barbara Mikulski.

The first sentence said – quite incorrectly – that McCain "disclosed this week that he would cut $1.3 trillion from Medicare and Medicaid to pay for his health care plan." McCain said no such thing, and neither did Holtz-Eakin. The Journal reporter cited a $1.3 trillion estimate of the amount McCain would need to produce, over 10 years, to make his health care plan "budget neutral," as he promises to do. The estimate comes not from McCain, but from the Urban-Brookings Tax Policy Center. McCain and Holtz-Eakin haven't disputed that figure, but they haven't endorsed it either.

Interestingly, Obama proposes to pay for his own health care plan in part through some of the same measures, particularly expanded use of I.T. and better handling of chronic disease. Whether either candidate can achieve the huge savings they are promising is dubious at best. As regular readers of FactCheck.org are aware, we're skeptical of Obama's claim that he can achieve his promised $2,500 reduction in average health insurance premiums, for example.

But achievable or not, "savings" are what McCain is proposing. It's a rank distortion for Obama's ad to twist that into a plan for "cuts in benefits, eligibility or both," and for Obama to claim in a speech that seniors will "receive fewer services, and get lower quality care."

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