August 25th, 2009
10:27 AM ET
5 years ago

CNN Truth Squad: Will Medicare be cut a half-trillion dollars?


The Statement: The Obama administration's revamp of the U.S. health-care system will require $500 billion in cuts in Medicare, the federal health program that now covers Americans over 65. The claim is now a cornerstone of Republican efforts to resist the administration's plans, with GOP chief Michael Steele vowing in a Washington Post opinion piece to defend Medicare from cuts.

(Get the facts and verdict after the jump.)

The Facts:The AARP, which supports an overhaul of health care but has not endorsed a specific bill, calls the claim of a $500 billion cut to Medicare a "myth."

"None of the health-care reform proposals being considered by Congress would cut Medicare benefits or increase your out-of-pocket costs for Medicare services," the AARP says.

According to the nonpartisan Congressional Budget Office, the health-care bill now moving through the House of Representatives would trim $500 billion from Medicare's projected costs over the next 10 years. The bulk of the savings would be generated by reining in the growth of payments to doctors and hospitals and by cutting subsidies to the Medicare Advantage program, which pays private insurers to provide Medicare benefits which are sometimes more generous, the CBO found.

Republicans argue that there's no way to cut future costs that much without reducing services - effectively cutting the program. They've found themselves on the business end of that claim before, most notably with a 1995 plan to cut projected Medicare spending by more than $250 billion over seven years.

That triggered a budget confrontation with then-President Bill Clinton that led to a partial shutdown of the federal government. In vetoing the plan, Clinton said it would let Medicare "wither on the vine."

Then-House Speaker Newt Gingrich blasted Clinton for what he called "a phony argument about fantasy cuts that do not exist in order to frighten people about problems that aren't real." But the GOP eventually relented and agreed to considerably smaller goals for reducing costs.

The Verdict: Misleading. At least as currently planned, the proposal would not cut Medicare benefits - but legislation is still working its way through Congress, and the impact of any bill may not be known for years.

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