The $6,400 Myth

by alexvanbuskirk

The $6,400 Myth: Breaking down a false Obama Medicare claim

Review & Outlook @ WSJ (August 19, 2012)

One of President Obama’s regular attacks on Paul Ryan’s Medicare reform is that it would force seniors to pay $6,400 a year more for health care. But merely because he keeps repeating this doesn’t mean it’s in the same area code of accurate.

The claim is based on a now out-of-date Congressional Budget Office estimate of the gap between the cost of health care a decade from now, in 2022, and the size of the House budget’s premium-support subsidy for a typical 65-year-old in 2022.

In other words, the $6,400 has no relevance for any senior today. None. But it also is unlikely to have any relevance for any senior ever because CBO concedes that its number is highly uncertain and “will depend on the evolution of the health care and health insurance systems over time, which is hard to predict.” That’s for sure.

The more fundamental problem is that the CBO analysis has nothing to do with the current Mitt Romney-Paul Ryan plan. Nada. Over the last year Mr. Ryan has made major adjustments to his original proposal as he sought a compromise with Democrats. In its most up-to-date analysis, CBO admits that it “does not have the capability at this time to estimate such effects” in the new version. That is, it does not have the tools to make its $6,400 exaggeration again.

The reason CBO can’t model the 2013 House budget and the Romney-Ryan plan is that they harness markets with competitive bidding. Congress’s budget gnomes can’t handle these dynamic forces.

None of these facts are likely to deter Democrats from their distorted claims. But the truth is that the Ryan-Romney reform isn’t anywhere close to Mr. Obama’s cartoon version.