MYTHBUSTER - CMS Actuary Debunks GOP Talking Point on Health Reform and the Deficit

Jan 26, 2011 Issues:

MYTH: 

  • “Medicare Savings: Gimmicks” – House Budget Committee Republicans [LINK]
  • “I think what we do know is the health care bill costs over $1 trillion… And we know it was full of budget gimmickry. And it spends money we don't have in this country.” – Majority Leader Eric Cantor [CBS News, 01/06/2011]
  • “The authors of the overhauls before us have worked tirelessly to load the legislation with gimmicks and tricks to game the cost estimates and fulfill the President’s deficit pledge.” – Congressman Paul Ryan [American Spectator, 02/25/2010]

FACT:

We have heard this talking point time and time again – Washington Republicans have called the deficit reduction components of the health care reform law a “gimmick.”  But today, at a hearing of the House Budget Committee on the fiscal implications of the Affordable Care Act, Medicare’s independent chief actuary Rick Foster made news by testifying that the Medicare savings in the law contribute to deficit reduction, debunking those Republican claims.  A transcript of their exchange is below.

Van Hollen: Let’s take your example of another $100 coming in from the Medicare payroll tax.  That $100 comes to the U.S. government – that doesn’t make the Medicare system any worse off, does it?…It doesn’t do any harm to the Medicare payment system, correct?

Foster: That’s correct.

Van Hollen: That $100 does go in, as you said, as part of deficit reduction, does it not?

Foster: That’s correct.

Van Hollen: And so it’s not a gimmick, is it, to say that that $100 helps reduce the federal deficit?

Foster: No; by normal budget accounting practices it reduces the federal budget deficit, and in real life that’s exactly what would happen.

Despite Republican attempts to confuse the public about the budgetary effects of the Affordable Care Act, the facts clearly show that health reform reduces the deficit.  The concept of deficit reduction is really very simple: legislation estimated to narrow the gap between spending and revenues reduces the deficit.  The independent, non-partisan Congressional Budget Office looked at the net effect of the law’s numerous provisions affecting spending and revenues, including the Medicare provisions, and it concluded that the Affordable Care Act reduces the deficit by $230 billion over ten years, and by more than $1.2 trillion in the following decade.  Mr. Foster’s testimony today validates CBO’s finding.