FactCheck Examines ‘The Life of Julia,’ Corrected

These talking points are about a year out of date. In his fiscal year 2012 budget plan, “Path to Prosperity,” Ryan proposed changing Medicare to provide “premium-support” subsidies to help seniors purchase private insurance offered by carriers on a new Medicare exchange, beginning with new beneficiaries in 2022. Seniors had no choice but to accept the vouchers, as the Democrats called them. A fair reading of a Congressional Budget Office analysis of Ryan’s original plan shows that someone — in this case Julia — would have to pay about $6,400 to keep the same level of coverage previously enjoyed by Medicare recipients. The Obama campaign points to the CBO’s April 5, 2011, analysis to support its claim.

However, Ryan made his Medicare proposal considerably more generous when he unveiled a new budget plan in March for fiscal year 2013. A key difference is that the new Ryan plan wouldn’t force Julia and other future seniors to accept subsidized private insurance. The current plan allows her to choose “a traditional Medicare fee‐for‐service plan” if she prefers.

Also, the subsidies in Ryan’s new plan would be tied to the second-cheapest plan and the growth rate of that plan would be capped at gross domestic product plus 0.5 percentage points. That’s a much more liberal formula than Ryan’s 2011 plan, which pegged the cap to inflation, which normally rises more slowly.

And if health care costs exceed the cap, the plan requires Congress to take some unspecified actions to reduce Medicare costs. But what those might be can’t be known.

It’s possible that Julia and other future Medicare beneficiaries could pay more for the equivalent of today’s traditional Medicare plan. Or maybe not. We don’t know. But we do know that the Obama campaign is relying on a specific cost estimate that is no longer valid.

Julia on Social Security

We also take issue with the claim that at age 67 the fictional Julia can “retire comfortably” under Obama but, “Under Mitt Romney: Julia’s benefits could be cut by 40%.”

We’ll start with the fact that Obama has not proposed any measures to address the sorry state of Social Security’s finances, which (according to the most recent report of the system’s trustees) will be unable to pay currently promised benefits beyond 2033. After that — unless Congress acts — “tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2086,” the trustees state.

Under intermediate assumptions, considered the most likely, scheduled benefits would have to be cut 25 percent in 2033, and a bit more in later years, reaching a 27 percent cut in 2086. (See bottom of Table IV.B3.) Therefore, Julia’s benefits would be cut automatically under what Obama has proposed so far, which is nothing. So would benefits for everybody already on Social Security now and in the future.

Interestingly, the White House chose its words carefully here, and didn’t really promise that Julia actually would get benefits as generous as those in current law. It just said that at age 67 “she receives monthly benefits that help her retire comfortably.” That leaves open the possibility that Obama might accept a change in the benefit formula to slow the future growth in the system’s cost. And indeed, a recent story in the New York Times Magazine says that Obama was prepared to make some cuts in the future growth of benefits to get a “grand bargain” with House Speaker John Boehner last year.

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FactCheck Examines ‘The Life of Julia,’ Corrected

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