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So Obama Didn't "Lie," He Was Just Wrong

Anthony Randazzo
September 23, 2009, 10:52am

Perhaps Joe Wilson should have yelled, "You wrong!" I think the improper English would have been overlooked (he is from South Carolina after all.) He would have also need to yell that at a different part of the speech for it to make the point. Yesterday, the CBO pointed out that the president's frequent talking point on seniors and their benefits is, ahem, a bit off the mark.

The White House has consistently claimed that it would be be able to slash around $500 billion from Medicare without cutting any benefits. And it is of course possible in theory, given the massive waste of Medicare. As I wrote about last month, there are very specific cuts planned for the Medicare Advantage program that will slash benefits from seniors. (The Advantage plan is disliked by the White House because it is run by private companies.) The CBO confirmed these cuts yesterday:

Congress' chief budget officer is contradicting President Barack Obama's oft-stated claim that seniors wouldn't see their Medicare benefits cut under a health care overhaul. The head of the nonpartisan Congressional Budget Office, Douglas Elmendorf, told senators Tuesday that seniors in Medicare's managed care plans would see reduced benefits under a bill in the Finance Committee. The bill would cut payments to the Medicare Advantage plans by more than $100 billion over 10 years. Elmendorf said the changes would reduce the extra benefits that would be made available to beneficiaries.

So the question is, why is the president claiming that benefits won't be lost? Is he lying? No, he is just wrong. And politicians are frequently wrong. Whether it's misinterpreting data or being blinded by ideology, the simple fact is nearly every major government program goes over budget. The odds are that the cost savings projected here won't be realized, so if the projects are already looking at benefits being slashed then its a near certainty.

With that being said, it makes the recent HHS attack on Humana, Inc., a medical service provider, even more dastardly. HHS is claiming Humana misled its customers by sending them a letter claiming ObamaCare would cut benefits from the Advantage plan. In Wilsonian form, HHS has yelled back (through lawyers), "you lie!" But they are not lying. And HHS is threatening Humana's freedom of speech. (Ironic, since Humana supports pretty much every aspect of ObamaCare except the cuts and the public option.)

In the end, cutting benefits from Advantage isn't a bad thing. The president should claim it. Humana likes ObamaCare because the mandate will force more people into its businesses. Seniors are complaining because cuts would mean they can't free ride on younger Americans for their health care. Ultimately, the best thing to do would be to dump the whole Medicare program (over time, in a structured way, to avoid transitional trap issues, of course.) And we should realize through all of this, what the simple reality is on government programs.

(Also my apologies to South Carolina.)


Anthony Randazzo is Director of Economic Research


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