In a letter sent to the White House on Tuesday, 22 Republican senators are demanding that President Obama propose Medicare cuts before the chamber considers Treasury Secretary nominee Jack Lew.
The letter is part of an ongoing GOP smear campaign against Lew alleging that, during his tenure as director of the Office of Management and Budget (OMB), Lew and the Obama Administration failed to comply with a law requiring the White House to submit Medicare cost-cutting proposals “whenever the program’s trustees express concerns about its solvency in their annual report.” The senators suggest that Lew should have known about that legal requirement and spurred the Administration to take action by formally proposing Medicare cuts:
“We find it stunning and noteworthy that so far Mr. Lew has not provided adequate responses to congressional inquiries on the matter,” the senators wrote to Obama Tuesday.
“Congress needs a clearer understanding about his role in the violation of this law, including exactly when Mr. Lew first became aware of this legal requirement and what counsel, if any, he provided the administration on whether it should comply with this law.”
But there are some glaring falsehoods in the senators’ claims and their subsequent demand for an Administration plan to curb Medicare cost growth.
First, calling for Medicare cuts to ensure the program’s long-term solvency is based on the assumption that inflation in medical services — and, consequently, spending on health care entitlements like Medicare — will continue to balloon at staggering rates indefinitely. But the key to reducing national health expenditures is to reduce the actual price of consuming care — so if forces in the health care market facilitate cost reductions in medical technology and services, then entitlement spending will drop accordingly. Recent evidence shows that that is exactly what is happening, as the recent slowdown in health care cost growth has reduced Medicare’s future projected spending by over half a trillion dollars, all without a single policy change. Furthermore, a just-released GAO report found that if Obamacare and its cost-containment mechanisms are fully implemented, then future spending on Medicare would decrease “from 6.2 percent of GDP in 2035 in the simulations run before [Obamacare] was enacted to 4.7 percent in the simulations run immediately after enactment.”
President Obama also directly cut Medicare spending to the tune of $716 billion over the next decade by signing Obamacare, which reduces overpayments to providers servicing private Medicare Advantage plans. In fact, the GOP — led by their presidential nominee, Mitt Romney — hammered the president mercilessly over these cuts during the 2012 election cycle, claiming that the provider payment reductions amounted to “robbing Medicare.” And the president has proposed further cuts to entitlement programs — including Medicare — on multiple occasions, including his proposed budget and this month’s State of the Union address.
The only way that the senators’ claims bear credence is if they are hewing to an absurdly narrow, literal interpretation of the law in question, and want the Administration to submit a single specific bill addressing Medicare cuts. But the more likely explanation is that the senators are engaging in a bit of political grandstanding that affords them an opportunity to attack both the president’s entitlement policies as well as one of his highest-profile cabinet nominees.