Obama v. Romney Election 2012 Fact Check: Medicare and Medicaid

This election season has put a lot of focus on Medicare, the federal health insurance program for the elderly. There’s been less emphasis on Medicaid, the health program for low-income Americans, though both President Obama and Governor Romney would dramatically change Medicaid. Currently Medicaid serves mainly children, the disabled, and senior citizens, including those who require long-term care.


President Obama does not propose fundamental change to Medicare. He’s been attacked for cutting $716 billion from the program, though none of those savings come from reduced benefits for seniors. Instead, that number reflects changes to Medicare Advantage, reduced payments to hospitals, and fees on drug companies. Medicare Advantage is the part of Medicare that lets seniors enroll in private health insurance, and President Obama has proposed limits on those insurance companies’ profits and administrative costs. Such changes could result in fewer private health insurance companies participating in Medicare Advantage.


White House flickr

Governor Romney does not propose any major changes to Medicare for current retirees. Instead, he proposes a premium-support program for future retirees, meaning that seniors would receive a fixed sum of money from the federal government with which to purchase private insurance. Because Governor Romney’s proposal also includes repealing the Affordable Care Act – Obamacare – his plan would raise out-of-pocket costs for current seniors by ending the expanded prescription drug coverage that’s part of that legislation.


The candidates take opposite approaches to Medicaid. President Obama’s health reform law greatly expands the program to cover tens of millions of currently uninsured Americans. Since Medicaid is jointly funded by the federal government and the states, that expansion first would be funded largely by the feds and within a few years states would pick up more of the costs.

Governor Romney proposes substantially reducing the size of Medicaid. He would convert it into a block grant – a big change in at least two ways. Right now Medicaid guarantees health benefits to anyone who meets eligibility criteria and applies to the program, but as a block grant, the federal government would award fixed sums of money to the states, which would have broad discretion over if and how to implement the program. And since the proposal involves deeply reducing federal spending on Medicaid, the plan would necessarily end health coverage for millions of people who are currently enrolled in the program.

For more on how President Obama and Governor Romney compare on key election issues: