Fact Check: Obama's claim of benefit cuts suspect

[October 18, 2008]  WASHINGTON (AP) -- Medicare has become a new focal point in the presidential campaign, with Democratic nominee Barack Obama accusing Republican John McCain of seeking "cuts in benefits, eligibility, or both."

Elderly voters are sure to take notice of such statements being made in a 30-second television ad that the Obama campaign will air in some crucial swing states. Obama hit the same theme in a campaign appearance Friday in Virginia.

But Obama's charge is built on a shaky foundation. The campaign's evidence that McCain would make such cuts relies on a Wall Street Journal article where no specific cuts were mentioned.

In what little detail McCain discusses Medicaid and Medicare on his campaign Web site, he makes no mention of cutting benefits. He says this about the two health programs, the first for the poor, the second for the elderly and disabled: "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."

McCain wants to provide tax credits to encourage Americans to purchase private health insurance. To pay for it, he has proposed requiring workers to pay income taxes on the health benefits they now receive tax-free from their employers. The Tax Policy Center has projected that the change would actually be a tax cut for most people and would reduce federal revenues by an estimated $1.3 trillion over 10 years.

McCain's campaign has said the goal is for the program to be revenue-neutral, so he would find savings through Medicare and Medicaid.

And that's where the allegation about benefit and eligibility cuts comes into play. Obama's ad cites a Wall Street Journal article from Oct. 6 that began: "John McCain would pay for his health plan with major reductions to Medicare and Medicaid, a top aide said." That very day, Democratic lawmakers and the advocacy group "Americans United for Change" held an "emergency press conference call" to react to McCain's health care proposal "that would gut Medicare and Medicaid by $1.3 trillion."

But McCain's focus on Medicare has been on overhauling the way it pays providers. McCain has taken up the mantra that the government's payments should be based more on the quality of care that patients get rather than on quantity, which is how the current fee-for-service-system operates.

An advisory commission to Congress, the Medicare Payment Advisory Commission, has long recommended that paying providers based on quality "is an important first step towards purchasing the best care for beneficiaries and assuring the future of the program."

In comparing the two candidates' health care plans, the Kaiser Family Foundation, which conducts health research, also makes no mention of McCain calling for benefit cuts to reduce Medicare costs. It does say that he would support the establishment of a commission to make recommendations on how to sustain the program for the future.

McCain's economic policy adviser, Douglas Holtz-Eakin, said in an interview this week that allegations McCain would cut Medicare benefits are "just false."

"There are many opportunities to deliver the same benefits in Medicare for lower costs and thus take pressure off premiums for the beneficiaries," Holtz-Eakin said. "That's a very different thing than the idea you would be cutting Medicare."

In the end, the Medicare program faces a difficult future with promised benefits far exceeding the program's projected revenue. Both candidates have been very careful to leave hard decisions about Medicare's future solvency for another day.

[Associated Press; By KEVIN FREKING]

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