Tiny Explainer: What's Up With the $716 Billion in Medicare Cuts?

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Paul Ryan addressed the AARP in Florida on Friday, where he assailed President Obama for slashing Medicare. Here's the story behind it.

Scaremongering over Medicare cuts used to be a Democratic game, but since 2010 it's become a bipartisan pursuit. A $716 billion reduction that's part of Obamacare has already become a central bone of contention in the presidential race, and both campaigns have pledged to continue talking about it.

Wait, Democrats cutting Medicare? It's true -- sort of. As part of the health-care overhaul, the government will pay $716 billion lessinto the program. The cuts break down into three roughly equal areas. First, payments into Medicare Advantage -- an alternative that uses private insurance -- will be cut. The program was supposed to cost less than traditional Medicare, but it hasn't panned out. Second, the growth of reimbursements that the government pays to hospitals for providing Medicare services will slow over time. The rest is made up of various smaller reductions in payments for various services. The administration says that actual benefits enjoyed won't, although quality may drop, given that there will be less money.

The Romney campaign has attacked Obama, accusing him of threatening seniors' Medicare, which isn't really true. An additional complication: Paul Ryan's "Roadmap" assumed that all of Obamacare would be repealed except the $716 billion reduction in Medicare costs, making him susceptible to charges of hypocrisy. But Ryan has now followed Mitt Romney's suit and says he does not support the cuts. Romney backs full repeal of Obamacare, which the nonpartisan Congressional Budget Office says would add $711 billion to the deficit. Romney has not explainedwhere that money would come from. The Center for Budget and Policy Priorities projects that to do that, while also achieving the budget reductions Romney seeks, all other federal programs except Social Security would have to be cut by an average of 40 percent over the next four years.

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David A. Graham

David Graham is a senior associate editor at The Atlantic, where he oversees the Politics Channel. He previously reported for Newsweek, The Wall Street Journal, and The National.

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