Our report showing that McCain’s health care plan would lead to Medicare and Medicaid cuts has come under criticism. Our defense of the paper’s methodology and conclusions can be found here, here and here. Below is our response to the McCain campaign.

The McCain campaign is playing a shell game, and we are surprised at how uncritically it has been treated by the media. The onus is on the McCain campaign to make its policies square with the facts. That a discrepancy exists between the two reveals a problem with their policy positions, not our analysis.

Here are the facts: accounting for the tax exclusion rollback McCain has proposed, his health care plan has a budget hole of $1.3 trillion over ten years, according to highly-regarded independent analysts. McCain’s plan will be budget-neutral, according to the McCain campaign, and McCain will balance the budget in his first term, according to McCain’s own statements and his campaign’s website.

On October 6, the Wall Street Journal reported: “John McCain would pay for his health plan with major reductions to Medicare and Medicaid, a top aide said, in a move that independent analysts estimate could result in cuts of $1.3 trillion over 10 years to the government programs.” In fact, the cuts could be much larger if they are used to help pay for McCain’s corporate tax cuts, as a McCain aide told the Washington Post they would be back in July.
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When Congress voted to make “cuts to the private Medicare Advantage program” in order to finance the deferment of a 10.6% physician fee cut for doctors who treat Medicare patients, McCain claimed that bringing Medicare Advantage reimbursements in line with traditional Medicare “places 2.3 million seniors at risk of losing the private health care coverage of their choice.”

But last week, when questioned about how to plug the budget hole in his health care plan, McCain reversed course and came out in support of parity. During a conference call with reporters, Holtz-Eakin said that cutting subsidies to insurers through Medicare Advantage would save $1 trillion over 10 years:

And in the context of a comprehensive reform of this type, where insurance is reformed, the subsidy to private insurance is reformed, Medicare payment polices are reform, we see no reason why the Medicare Advantage plans should continue to get a $15-billion-a-year subsidy. We’ll put them on a level playing field and save some money there….Equalizing M.A. payments: $150 billion. Over 10 years, that’s a trillion dollars.

Here, the campaign flipped and inflated, overstating the actual savings by billions and billions of dollars. According to the Congressional Budget Office, reducing payments to Medicare Advantage plans “would save $54 billion over the 2009-2012 period and $149 billion over the 2009-2017 period” — a far cry from Holtz-Eakin’s ‘trillion dollar’ estimate.

McCain has acted “mavericky” with numbers before. In April, after CAPAF Senior Fellow Elizabeth Edwards suggested that neither she nor McCain would find coverage under his individual-market-centric health proposal, the campaign unveiled their Guaranteed Access Plan to offer so-called uninsurables government subsidized insurance though state-run high risk pools.

The campaign’s initial funding estimates of $7-10 billion elicited laughter from serious analysts who claimed that McCain would have to allocate approximately $100 billion to cover everyone his plan leaves behind. Holtz-Eakin responded by claiming that budget hawk McCain would actually allocate as much as necessary to “get the job done“:

So his 7 to 10 estimate, it was a ballpark estimate. It could be higher. The commitment is to get the job done…It could be $20 billion and you could make it work if you do the rest of the reforms in the McCain plan.

True to form, with just fourteen days until the election, the McCain campaign is throwing out a plethora of contradictory ideas and hoping something sticks. Unfortunately, their patchwork proposal won’t benefit the majority of Americans.