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Would McCain make 'drastic cuts' in Medicare?.

The Statement:
At a campaign stop Friday, October 17, in Roanoke, Virginia, Sen. Barack Obama took aim at Sen. John McCain's health care plan. "The Wall Street Journal recently reported that it was actually worse than we thought. It turns out Senator McCain would pay for part of his plan by making drastic cuts in
Medicare - $882 billion worth," Obama said, adding, "It would mean a cut of more than 20 percent in Medicare benefits next year."

Get the facts!

The Facts:
The Wall Street Journal article that Obama is referring to, published October 6, says McCain would reduce Medicare and Medicaid funding to help pay for his health care plan. The article does not say how much. It leads with this: "John McCain would pay for his health plan with major reductions to Medicare and Medicaid, a top aide said, in a move that independent analysts estimate could result in cuts of $1.3 trillion over 10 years to the government programs."

The $1.3 trillion figure comes from a study by the Tax Policy Center. That nonpartisan group, in an analysis of the candidates' tax plans published September 12, offered a "preliminary" look at both candidates' health plans. It says, "Under our assumptions, if the plans took effect in 2009, the McCain plan would cost about $1.3 trillion over ten years and the Obama plan would cost about $1.6 trillion."

The Wall Street Journal article cites McCain's senior policy adviser, Douglas Holtz-Eakin, saying McCain's plan is budget neutral because it assumes savings in Medicare and Medicaid. "He said the savings would come from eliminating Medicare fraud and by reforming payment policies to lower the overall cost of care," the article says. "He said the new tax credits (McCain is offering) will help some low-income people avoid joining Medicaid. The campaign also proposes increasing Medicare premiums for wealthier seniors."

An ad Obama released Friday, titled, "It Gets Worse," attributes the $882 billion assertion to the Center for American Progress Action Fund. The liberal group put out a news release on October 7 saying that, "assuming Sen. McCain's $1.3 trillion cut is taken proportionately from Medicare and Medicaid," McCain would "cut $882 billion from the Medicare program."

In his remarks on the stump, Obama did not cite the Center for American Progress Action Fund, and left the impression that the Wall Street Journal had reported the $882 billion figure. He did the same thing on his Web site, which read, "the Wall Street Journal now reports that McCain would pay for the rest of his plan by making 'major reductions to Medicare and Medicaid,' eight hundred and eighty two billion from Medicare alone."

The idea that McCain would look to save money in the Medicare and Medicaid systems as part of his health care plan is not new. The section of his Web site focusing on his health care plan includes this subtitle: "Medicaid and Medicare: Reforming The Payment System To Cut Costs." It says, "We must reform the payment systems in Medicaid and Medicare to compensate providers for diagnosis, prevention and care coordination. Medicaid and Medicare should not pay for preventable medical errors or mismanagement."

In response Friday, the McCain campaign issued a statement citing Obama's calls for saving billions of dollars in Medicare spending as well. On a phone call with reporters, Holtz-Eakin called Obama's attack "patently false." He disputed the idea that McCain's plan would cost more than a trillion dollars. And he argued that the reforms McCain seeks would cut costs without cutting the benefits people rely on. He estimated, for example, that eliminating Medicare fraud could save as much as $700 billion over 10 years.

To back up Obama's assertion about a "more than 20 percent" cut in benefits next year, the Obama campaign pointed to figures from the Congressional Budget Office showing spending projections for 2009 for Medicare and Medicaid. The campaign then calculated the percentage that $130 billion represents of that total - arguing that that is how much McCain would need to cut in order to achieve a savings of $1.3 trillion over 10 years. While the CBO says its figures generally do not include "administrative costs," they do include costs that the McCain campaign said it could cut without removing benefits from the people who rely on them.

The Verdict: Misleading. The figure Obama cites came from an analysis by a liberal group, not the Wall Street Journal. And the McCain campaign says the changes it is calling for would reduce costs, not cut benefits.