Correcting Obama's Lies About the Ryan Budget

1. Obama Claim: “Instead of being enrolled in Medicare when they turn 65, seniors who retire a decade from now would get a voucher that equals the cost of the second cheapest health care plan in their area. If Medicare is more expensive than that private plan, they’ll have to pay more if they want to enroll in traditional Medicare.”
Ryan Reality: All plans offered in the new Medicare exchange would be required to cover at least the actuarial value of the benefits offered by traditional Medicare, meaning that if the second-lowest-cost private plan is cheaper than traditional Medicare it is providing the same benefits in a more cost-effective way. The whole point is that private plans should be allowed to compete with traditional Medicare to deliver the same benefits at a lower cost. The result? Seniors get better value as providers are forced to compete against each other to better serve the patient. The President fails to grasp the basic concept that choice and competition remain the best means to delivers higher quality care at a lower cost.
2. Obama Claim: “If health care costs rise faster than the amount of the voucher — as, by the way, they’ve been doing for decades — that’s too bad.”
Ryan Reality:  Under competitive bidding, there is no risk that any senior will be unable to afford his or her guaranteed Medicare benefits. There will always be one plan that is fully covered by the premium-support payment, and there will always be one plan that costs even less. Lower-income seniors and those with greater health risks receive extra protection – fully funded savings accounts to offset out-of-pocket costs and risk-adjusted payments to cover greater health care needs.
3. Obama Claim: “Seniors bear the risk. If the voucher isn’t enough to buy a private plan with the specific doctors and care that you need, that’s too bad.”
Ryan Reality: If Medicare spending grows faster than GDP + 0.5 percent – the same growth rate that the President has proposed for his board of 15 unaccountable bureaucrats (IPAB) to impose upon Medicare – then Congress would be required to intervene and could implement policies that change provider reimbursements, program overhead, and means-tested premiums. Under our plan, the entire risk would not fall on the beneficiary – Congress would be required to act. Under the President’s plan, the entire risk of IPAB’s cuts – which Medicare’s own chief actuary has said could “jeopardize access to care for beneficiaries” – would fall on the senior unless a supermajority of Congress voted to intervene.
4. Obama Claim: “So most experts will tell you the way this voucher plan encourages savings is not through better care atcheaper cost. The way these private insurance companies save money is by designing and marketing plans to attract the youngest and healthiest seniors — cherry-picking — leaving the older and sicker seniors in traditional Medicare, where they have access to a wide range of doctors and guaranteed care. But that, of course, makes the traditional Medicare program even more expensive, and raise premiums even further.”
Ryan Reality: Cherry-picking is prohibited under our reforms. The proposal requires all plans on the Exchange to include guaranteed issue (i.e., they cannot deny coverage based on pre‐existing conditions) and community rating (i.e., they cannot impose prohibitively disparate costs on seniors) to ensure that seniors are able to choose an affordable health plan that works best for them — without fear of denial or discrimination.”
Not only are all seniors guaranteed coverage regardless of health history, our plan includes risk-adjusting as an extra precaution against cherry-picking. On page 53-54: “The federal contribution to seniors’ health plans would be risk‐adjusted so that the sickest seniors are protected from high premiums as well as adverse selection from insurers. Building on the risk‐adjustment tools currently used by the Centers for Medicare and Medicaid Services (CMS), proper risk adjustment would ensure that seniors with the highest health costs would still be able to find an affordable plan. Federal contributions would be increased to account for a senior’s health status and age. CMS would also conduct an annual risk review audit of all insurance plans participating in the Medicare Exchange. Insurance plans covering a higher‐than‐average number of low‐risk seniors would pay a fee. Conversely, insurance plans covering a higher-than‐average number of high‐risk seniors would receive an incentive payment. The fees and incentive payments would flow internally through the same fund, so that payments to plans that cover high-cost patients would be funded wholly by the fees from plans that cover low-cost patients.”
The President is clearly, indisputably wrong.

In short, Obama attacked a Medicare plan that neither Ryan nor Romney are offering. The most charitable here explanation is that Obama and his speech writers were poorly briefed by his economic team. The other explanation is that Team Obama doesn’t much care about the facts. Either way, it will be up to Ryan and Romney to keep correcting them.