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Home Publications Blogs Beat the Press Is the Washington Post Too Pinocchio Happy When It Comes to Ads Criticizing Republicans Over Medicare?

Is the Washington Post Too Pinocchio Happy When It Comes to Ads Criticizing Republicans Over Medicare?

Sunday, 30 June 2013 13:55

Glenn Kessler, the Washington Post's fact checker, dished out the maximum four pinocchios in reference to ads by Democratic pacs criticizing Arkansas Representative Tom Cotton over his support of the Republican Medicare plan. This is not the first time such ads have drawn four pinocchios from Kessler or comparable criticism from PolitiFact and FactCheck.Org, the other major media political fact checking sites. 

The essence of the criticism is that the ad cites complaints against an earlier Medicare plan that was passed by Congress in 2011. The specific allegations in the ad, that the plan "essentially ends Medicare and costs seniors $6,000 a year," are not accurate in describing the revised plan supported Cotton.

Kessler is correct on this point, but is carrying his case too far. The revised plan would allow seniors to continue to buy into a Medicare-type program, but it provides no guarantee that the size of the voucher (Republicans prefer the term "premium support," but readers are more likely to know what a "voucher" is, hence my use of the word) would be sufficient to pay for the cost of the Medicare plan. The gap could easily be many thousands of dollars a year.

Furthermore, as Kessler notes, depending on the rules set up for structuring enrollment in the various plans, the Medicare option could easily be the victim of adverse selection. This would  mean that only sicker beneficiaries sign up for the Medicare plan, which would raise average costs. This would force the plan to charge a higher premium, which would in turn chase out the more healthy beneficiaries, meaning that the average remaining Medicare enrollee is even sicker. This raises the cost of the plan even further.

This process ends with a collapse of the market for traditional Medicare since no one will be able to afford the plan. While this outcome is certainly not a guaranteed outcome of the Republican plan it is a very real possibility, especially if the program was administered by Republicans who are quite openly hostile to the traditional Medicare plan.

Given that this sort of collapse of Medicare is a very plausible outcome of the Republican plan (if any fact checkers care to dispute this claim, I promise a blogpost of whatever length you like), are Democratic politicians wrong to warn of this risk to one of the country's most important and popular social programs?

Since there is a long lead time between the passage of the plan and the implementation of the new program, voters could find themselves locking in a program in the next few years that they find very much to their disliking 10 years or so down the road. In this context, it seems entirely appropriate that opponents of the plan should warn of the possible outcomes in as clear terms as possible.

Ideally, they would be careful to focus on the latest plan that the Republicans are now touting and not the prior version, but that seems the less important point. There is a very real risk that Republican plan will end Medicare as we know it. It might be worth a pinocchio or two that these ads get some important facts wrong, but on the big point that would likely get everyone's attention, they are largely on the mark.



Politifact and Factcheck.com also criticized the ad.

Comments (8)Add Comment
a waste of time
written by Jennifer, June 30, 2013 4:32
Really, just for fun, could the mainstream media start running stories on the real debates in healthcare and the ACA. These fall outside of the Democrat versus Republican narrative so I guess that's not likely.
For Economics, Visit CounterfactualDotCom, Where What Could Have Been Probably Is
written by Last Mover, June 30, 2013 5:54
It might be worth a pinocchio or two that these ads get some important facts wrong, but on the big point that would likely get everyone's attention, they are largely on the mark.

An example of media obsession with "facts" over pragmatic interpretation of the relevant issue is the current Martin-Zimmerman trial on stand-your-ground laws and gun rights. Much hype has been made on whether it was Martin or Zimmerman who yelled for help and was on top or bottom when they scuffled before the fatal shot was fired.

Yet those particular "facts" may not make any difference, for example, if other "facts" proved that Zimmerman was stalking Martin with a gun in the first place and Martin reacted by attacking Zimmerman first.

Either one could easily be interpreted as defensely "standing his ground" or proactively "attacking the other" depending on a myriad of "facts" that set the stage from the time the two were aware of each other until the fatal shot was fired.

The "fact checkers" can pick this case apart with as many dots as they want to create and connect whatever they choose to advance as "fact", but will never get anywhere in regard to whether stand-your-ground laws can work because like Medicare vouchers as explained by Dean Baker, it requires much more than just a current collection of "facts".

In other words, parading around "facts" implies they have trumped the "counterfactual collection of opposing "facts" that could have ruled as truth, when in fact the counterfactual can have as good a chance as being correct as the "facts" put forth, especially when it comes to economics.
Truth in attribution, not truth in conclusion
written by AndrewDover, June 30, 2013 6:48
Well, I would expect complaints if you are going to claim that Tom Cotton supports "a plan the Wall Street Journal said essentially ends Medicare" and the actual quote says:

“The plan would essentially end Medicare, which now pays most of the health-care bills for 48 million elderly and disabled Americans, as a program that directly pays those bills.”

The adverse selection scenario might work as a defense if the WSJ had that in mind.

written by Aaron, June 30, 2013 10:14
Although somewhat tangential to your point, I think that you can look at other Republican efforts as evidence of their concern for Medicare "as we know it". If we are to believe the likes of Paul Ryan, the Medicare vouchers would not represent a cut - they would be maintained at their present level (at least for the next decade) adjusted upward for inflation. Given that the rationale is that the voucher plan would save money, it seems odd that somebody like Ryan would make it a central part of his revised proposal that the Republicans wouldn't cut Medicare spending. Whence the savings>

You can next look to Medicare Advantage, the experiment in free market competition that demonstrated that to create a popular alternative to Medicare, private insurers require subsidies. People like Paul Ryan and Tom Cotton, and one would hope Glenn Kessler, know that history. So you have to ask, why double down on a failed strategy? How will vouchers that eliminate the subsidy make private insurance companies better able to compete with Medicare?

Then there's the Republican opposition to the Medicare buy-in - see, e.g., David Frum's follow-up to his "Waterloo" column in which he opines that Joe Lieberman's last second flip-flop on the buy-in, and refusal to support the PPACA unless it were eliminated, saved the Republican Party from disaster. If Medicare is so horrible and inefficient, why are Republicans afraid of allowing people who are approaching retirement age to buy in at full-cost, as just one of their health insurance options?

If you want to know why some newspapers are so fast and furious with the Pinocchios (or equivalent), perhaps the explanation can be found in their overall editorial stance on programs like Medicare and Social Security.
Fact Checking Your Article About WaPo Fact Checking Medicare Reform
written by Dennis Byron, July 01, 2013 8:24
(The following is my dispute with your claims. I expect you to keep your word and post it separately rather than just a comment. I have included one relevant link (because your site says only one is allowed?) but I can provide a link for just about every sentence.)

You get three Pinocchios for form and four for substance.

On form, you say:

"Republicans prefer the term "premium support," but readers are more likely to know what a "voucher" is, hence my use of the word."

Republicans may prefer the term "premium support" but the term seems to have started almost 20 years ago at the far-far-left-wing Urban Institute and/or far-left-wing Brookings. One of the guys who apparently first started using the term is now the Democratic designee as Medicare Trustee. So to say that "Republicans prefer" it may be accurate but the way you say it is at least first-degree intellectual deceit worth one Pinocchio.

However, it is three-Pinocchio intellectual deceit to use the term "voucher' in that sentence. These two lefty Democratic-Party camp followers that seemed to have invented the term "premium support" don't use the word voucher in their 1995 article (see http://content.healthaffairs.o...8.abstract). But now you and the two inventors of the premium support term can't sneer the word "voucher" fast enough. Voucher is simply a Democratic-Party dirty trick to scare senior citizens into thinking they are going to get coupons to buy Medicare the way welfare recipients get food stamps.

The proposal Kessler is reviewing in his fact check is not at all related to vouchers. There is no bond, certificate, affidavit, form, check, coupon or any other kind of piece of paper involved in the Wyden-Ryan proposal. To the best I can find no one has ever proposed such a food-stamp-like process for Medicare reform but certainly no one has proposed one this century.

[You claim you use the word voucher because you are concerned that your readers are somehow cognitively impaired and cannot fathom a complex two-word concept like "premium support." If you feel the need to use just one word, "subsidy," as in the way the premium-support concept is expressed in Obamacare (the insurance not the law) would be the appropriate word. In terms of voucher vs. premium-support usage, you should at least get on the same page as the New York Times. Realizing the intellectually deceitful corner it had painted itself into by calling the Wyden-Ryan proposal a "voucher" program, in August 2012 the NYT also started calling Obamacare a voucher program. Is that the way your readers are "likely" to think of Obamacare?]

(to be continued)
Fact Checking your Article on WaPo's Fact Check on Medicare Reform Ad -- Part 2
written by Dennis Byron, July 01, 2013 8:30
(Second half of dispute to your claims concerning Medicare reform:)

As for the substance of your article (which I am sure you care nothing about because you are more interested in Democratic Party dirty tricks), there is simply no basis in history or current usage to claim

"This process ends with a collapse of the market for traditional Medicare since no one will be able to afford the plan."

Apparently you are again parroting Democratic-Party dirty tricks about a subject you do not understand well. Today, there is no "traditional Medicare" market to collapse (see June 2012 MedPAC data book, chart 2-5.

Today, the way the inefficient "real" Medicare insurance market ("real Medicare" is another Urban-Institute/Brookings term circa 1995) works, under 5% of Medicare beneficiaries depend on what you call "traditional Medicare." (The correct term is Original Medicare so I will use it so as not to confuse some other stray senior citizen in the very unlikely case another one wanders across this blog the way I did.) That relatively very small group of around 2,000,000 that use only Original Medicare today -- mostly made up of seniors but some disabled beneficiaries -- is very diverse in terms of net worth, income, employment status, retirement benefits, age and other demographics.

There are certain situations among each of those demographic traits (e.g., very rich, still working, on VA, etc.) that make the use of "Original Medicare only" the sensible thing to do for those in this small group. Since its members are so diverse and since one has to almost proactively put oneself into this relatively small group, there is no way this group is forming due to any health-related, insurance-induced adverse selection.

(to be continued)

Fact Checking your Article on WaPo's Fact Check on Medicare Reform Ad -- Part 3
written by Dennis Byron, July 01, 2013 8:35
(continued from previous comments:)

In fact, just the opposite -- those of poorer health would choose insurance other than Original Medicare because Original Medicare is so bad -- would likely happen based on the Wyden/Ryan proposal and the real Medicare market today.

A plurality of us on Medicare today (about 40%, although the percent is decreasing rapidly) depend on healthcare insurance from a former employer rather than Original Medicare. There is no selection, adverse or otherwise, for this, the largest share of the real Medicare market. If we want our former employer's plan, we take it or leave it. (Some very large former employers -- such as the Federal government -- offer a choice of indemnity insurance or one of the options listed below.) There is no proposal to change this market dynamic (although it will change itself in a way having nothing to do with Wyden/Ryan as benefits offered by employers to former employees diminish).

Among the Medicare beneficiaries that buy their real healthcare insurance individually, far and away the most popular choice is the public Part C Medicare health plan option. Its overwhelming popularity (around 30% of the entire Medicare universe) might have been slightly increased by the subsidies granted to entice the rural and urban poor into the Part C program during 2005-2011. But now that those subsidies have been removed by the Patient Protection and Affordable Care Act (NOTE: The Obama administration inexplicably continued them at a lower level for 2013 but the market has already factored them out long term; they are effectively gone), there is no indication that the popularity of Part C among middle income seniors will drop much if at all. (The trustees estimate a small market-share percent drop for a few years before the public Part C program resumes its continued trendline up. I believe that any decrease is unlikely.) Unfortunately the poor will have to go back to Medicaid (which is the way the Democratic-Party wants poor people treated).

The public Part C Medicare health plan option already works on a premium support concept so the second largest group of beneficiaries will not be affected by the Wyden-Ryan proposal. (Wyden/Ryan would affect how the amount of premium support is determined but that is not visible to the beneficiary.)

Fact Checking your Article on WaPo's Fact Check on Medicare Reform Ad -- Part 4
written by Dennis Byron, July 01, 2013 8:40
(continued from earlier posts despite the author's promise that he would accept fact checking of his claims of any length:)

As for the relationship of Original Medicare to most proposed Medicare reform mechanisms, no one specifically talks about how this would work but presumably Original Medicare would effectively become just one of the public Part C Medicare health plans. This would be a great advantage to those relatively few 2,000,000 people who choose to be totally dependent only on Original Medicare. Among its many substantial deficiencies, Original Medicare today lacks the most definitive benefit that insurance of any kind should have, catastrophic coverage. All public Part C health plans have such coverage by law today. If for no other reason than that, Original Medicare beneficiaries would be better off.

As for the cost of Original Medicare as it stands today were it a public Part C option as Part C works today, extensive research by Song and others -- using the Wyden/Ryan proposal and 2009 Medicare data -- published in JAMA and other publications in August/September 2012 found that Original Medicare would cost around 10% less on average than it costs today. It would cost even less if the eventual reform law or regulations specified the lowest bid rather than the second lowest bid as proposed by Wyden/Ryan. There is no math by which Original Medicare under Wyden/Ryan could cost "many thousands of dollars" above the premium support as you state.

(As an aside, Song also found no adverse selection in Part C in 2009. Why would there be since there are risk adjustment payments.)

Going back to analyzing the real Medicare market as it exists today and has existed over the almost 50-year history of the program, in addition to the about 40% of us on retiree insurance and 30% of us on a public Part C health plan, about 20% of Medicare beneficiaries today depend on a private Medigap supplement. It is the third most popular real Medicare insurance on which beneficiaries depend. Every indication is that seniors will still have this option. At least under today's rules there are some very good reasons for choosing private Medigap over public Part C. If those rules don't change, a person dependent on Medigap would still get a vastly improved Original Medicare with catastrophic coverage underlying his or her gap insurance, a benefit that is not otherwise available in some states today.

About 10%-15% of Medicare beneficiaries are also on Medicaid. Most in this group are on Medicaid in name only in that Medicaid pays their monthly Medicare premium. (And many in this "group of most" use their premium savings to buy private Medigap insurance or a public Part C health plan.) But a large number are totally dependent on Medicaid. There is nothing in the Wyden/Ryan proposal that would change the nature of this help for either the near poor or the truly destitute among the Medicare beneficiary population.

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.