The $6,400 Question

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The $6,400 Question You’ve likely heard that reforming Medicare would cost seniors $6,400 out of pocket. President Obama mentioned this claim last night during the first presidential debate at the University of Denver in Colorado (see full debate analysis here).  This charge is based on a Congressional Budget Office (CBO) analysis relating to an outdated version of Ryan’s budget proposal. This figure is meaningless and misleading for two reasons. Not only has Ryan’s proposal changed significantly since then, but the CBO has also admitted that its estimates would be limited—because it cannot account for the effects of competition on prices. As Heritage’s Rea Hederman reports, “CBO director Douglas Elmendorf has publicly acknowledged that his agency does not have the methodological tools to accurately model Medicare premium-support plans and the impact of market competition.” The most recent academic analysis indicates that introducing premium support into Medicare could save 9 percent in annual costs. In addition to reducing Medicare spending across the board, the more important effect would be the competition between plans—giving people options for their coverage plans and saving individuals money. Any claim, in the media or elsewhere, that uses the CBO evaluation of the 2011 Ryan plan is fundamentally flawed and erroneous. Furthermore, CBO’s estimates are fundamentally flawed because the agency is unable to model market competition, the driver of virtually every other sector of the American economy. Medicare premium support would save money, and competition would ensure even greater savings for beneficiaries. Read the full report >> Two Liberal Whoppers on Medicare Confronting the Problem of Long-term Care CHART: Obamacare’s Barrage of Tax Hikes Coming in 2013 Medicare Round Up: Setting the Record Straight COMMENTARY: There is No 'Conservative Case for Obamacare'   85 Million ENROLLED IN MEDICAID BY 2020 Obamacare is pushing America closer to government-run health care. Learn More >>     About The Heritage Foundation Founded in 1973, The Heritage Foundation is a research and educational institute — a think tank — whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. The Heritage Foundation | 214 Massachusetts Ave NE, Washington, DC 20002 | 202.546.4400 | heritage.org