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Katie Sanders
By Katie Sanders October 4, 2012

Obama said Romney's plan could cost future retirees $6,000

Viewers of the first presidential debate got a heavy dose of Mediscare politics.

Mitt Romney attacked President Barack Obama for"cutting $716 billion from the program," which mostly covers seniors’ health care expenses. Obama attacked Romney for supporting a "voucher"-like model to reform Medicare.

At one point, Obama stared straight into the camera and told certain viewers to listen up.

"If you're 54 or 55, you might want to listen 'cause this, this will affect you," he said during the Oct. 3, 2012, debate at the University of Denver. "The idea, which was originally presented by Congressman (Paul) Ryan, your running mate, is that we would give a voucher to seniors and they could go out in the private marketplace and buy their own health insurance.

"The problem is that because the voucher wouldn't necessarily keep up with health care inflation, it was estimated that this would cost the average senior about $6,000 a year."

Obama and other Democrats, including Health and Human Services Secretary Kathleen Sebelius, have invoked premium hikes somewhere in the neighborhood of $6,000 before. We’ve quibbled with it because the figure is rooted in a study of an outdated Medicare plan by Ryan, the House budget chairman from Wisconsin.

Ryan released his initial Medicare plan in early 2011, and Democrats have attacked it as harmful to seniors ever since. Under this first version of the plan, Medicare would have changed from a program that pays doctors and hospitals fees for particular services to one in which beneficiaries would be paid an amount by the government that they could use toward private insurance premiums. Critics said those who fell under the new rules would face an increasingly large gap between what the government paid for their benefits and what their health care services cost.

This plan passed the GOP-led House but died in the Senate. Ryan has offered updated versions of the plan, the most recent being part of his fiscal year 2013 budget proposal. It still offers seniors a defined amount toward private insurance rather than paying providers directly.

But there are two big differences between the new plan and the earliest one: The newer version allows beneficiaries under 55 a choice of using their payment to buy private insurance or a plan that acts like traditional Medicare. The amount of their payment would be set by the price of the second-cheapest plan. Romney indicated in an August interview that he supports Ryan’s most recent plan.

The Democrats have cited as evidence for their claims of the Romney-Ryan plan’s increased out-of-pocket costs a report by the Center on Budget and Policy Priorities, a liberal think tank. This 2011 report relied on analysis from the nonpartisan Congressional Budget Office that found the difference of out-of-pocket office costs between the Ryan plan ($12,500, in 2022) and traditional Medicare ($6,150) to be $6,350.

The problem with Obama using this estimate is simple: The CBO analysis was of the original Ryan plan, not the more recent one that Romney supports. Ryan has not yet asked for a more thorough analysis of his latest proposal.

Ryan’s current plan caps overall growth in Medicare spending, but it’s also a little more generous in how fast it allows subsidies to grow as health care costs increase. Ryan also made a number of other technical changes to address concerns that the credits wouldn’t keep up if medical costs kept going up and up. As we said earlier, the amount a beneficiary receives would be based on the second least-expensive plan available on a Medicare exchange.

The Obama campaign pointed us to an Oct. 2, 2012, memo from David Cutler, a Harvard economist who advised Obama’s 2008 campaign. Cutler’s memo summarizes an August 2012 analysis he co-authored for the liberal Center for American Progress regarding Romney-Ryan’s new Medicare plan.

"Overall, these results confirm the view that even under the revised voucher proposal, the
additional cost to enroll in Medicare for the vast bulk of people will be $6,000 annually or more," Cutler’s memo states.

Still, absent details from the Ryan camp and an updated CBO analysis, it’s not clear what would happen over time if the new, market-based payments grew faster than the Ryan plan’s cap on Medicare spending. Would savings still come from beneficiaries? Or providers? Or somewhere else? Competing claims about its financial impact on seniors remain speculative.

Obama is repeating a number about an old Republican plan because there isn’t an updated analysis of the new plan, which contains significant differences. We rate this claim Half True.

Featured Fact-check

Our Sources

PolitiFact, "Barack Obama ad says Paul Ryan’s Medicare plan could raise costs for Medicare beneficiaries by $6,000 each," Aug. 23, 2012

PolitiFact, "Barack Obama's 'Life of Julia' says Mitt Romney would replace Medicare with ‘nothing but a voucher,’" May 24, 2012

PolitiFact, "Do Mitt Romney and Paul Ryan want to turn Medicare into a voucher program?" Aug. 16, 2012

Mitt Romney’s website, "Policy memo: The $6,400 Medicare Question," Aug. 24, 2012

Congressional Budget Office, analysisof original Ryan plan, April 5, 2011
Congressional Budget Office, "The Long-Term Budgetary Impact of Paths for Federal Revenues and Spending Specified by Chairman Ryan," March 2012

Interview with Kara Carscaden, Obama campaign spokeswoman, Oct. 3, 2012

Interview with Robert Terra, Romney campaign spokesman, Oct. 3, 2012

Kaiser Family Foundation, "Proposed Changes to Medicare in the "Path to Prosperity: Overview and Key Questions," April 2011

Center on Budget and Policy Priorities, "CBO Report: Ryan Plan Specifies Spending Path That Would Nearly End Most of Government Other Than Social Security, Health Care, and Defense by 2050," April 7, 2011

Center on Budget and Policy Priorities, "Proposed Cap on Federal Spending Would Force Deep Cuts in Medicare, Medicaid, and Social Security," April 15, 2011

Memo from David Cutler, "A Follow-up on the Analysis of the Romney-Ryan Medicare Plan," accessed Oct. 3, 2012

Center for American Progress, "Increased costs during retirement under the Romney-Ryan Medicare Plan," Aug. 24, 2012

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Obama said Romney's plan could cost future retirees $6,000

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