Memo To McCain: Your Medicare Numbers Still Don’t Add Up

Last week, the Wall Street Journal reported that Sen. John McCain (R-AZ) would cut $1.3 trillion from Medicare and Medicaid over the next ten years to finance his health care plan.

In response to this story, the Center for American Progress Action Fund conducted an analysis of the senator’s proposed cuts and concluded that to plug the funding gap in his health care plan, McCain would have to slash both Medicare and Medicaid by 13 percent (cutting Medicare by $882 billion) over 10 years, limit benefits and eligibility and force those with private insurance plans to pay more for health coverage.

Today, during a conference call for the McCain campaign, Holtz-Eakin attacked CAPAF’s analysis:

The method of doing this analysis is just stunning. It says, let’s assert that the McCain plan has a $1.2 trillion cost, something that is false. And then divide that proportionately between Medicare and Medicaid to assert that we will lose $882 billion from Medicare and the remainder from Medicaid.

But our claim that McCain’s plan would leave a $1.3 trillion funding gap is supported by independent analysts and the McCain campaign. In fact, the campaign has admitted that McCain’s proposed health care tax credits ($2,500 for individuals and $5,000 for families) would cost an estimated $3.6 trillion over ten years and has promised to pay for the credits by exposing workers’ health benefits to income — but not payroll — taxes. As Jonathan Cohn points out, by choosing to isolate health care benefits from payroll taxes, the McCain campaign “changed the math”:

Instead of being revenue neutral, the McCain health plan would cost the government money. A lot of money. According to the non-partisan Tax Policy Center, it would add $1.3 trillion to the deficit over ten years.

Holtz-Eakin argues that McCain would make up the funding gap by adopting a number of vague cost-containment measures that would not undermine Medicare and Medicaid benefits. But unfortunately, since McCain is more interested in containing health care costs than expanding access to affordable health insurance, his cost-containment measures will not pay for his tax credits.


As numerous studies have shown, improving access to health care is “a precondition for effective measures to limit overall health care spending.” On-again-off-again health insurance means that diabetics and asthmatics aren’t getting the treatment they need, and people end up back in the ER.

McCain’s health plan, however, increases administrative costs by an additional $20 billion in paper work alone, and does not offer a specific plan to reduce spending by implementing health information technology, does not address the racial disparities in our health care system and offers no details of how to promote effective care.

Even if McCain had an effective cost-containment policy, it is simply not possible for McCain to get the savings needed from Medicare through cost-containment alone. As shown in our earlier paper, it would take restraining Medicare spending to below the rate of medical inflation and population growth achieve $882 billion in savings. Therefore, the only way for the McCain campaign to get the needed savings is to cut beneficiaries, cut services, or both. Any assertion to the contrary is simply false.