Think Progress

October 9, 2008
by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, Ryan Powers, and Igor Volsky
HEALTH CARE

Withering On The Vine

Earlier this week, Sen. John McCain (R-AZ) admitted he would cut $1.3 trillion from Medicare and Medicaid over the next ten years to finance his health care plan. McCain's proposed cuts echo former House Speaker Newt Gingrich's 1995 effort to cut $270 billion, or 14 percent, from projected Medicare spending over seven years and force millions of elderly recipients into managed health care programs or HMOs. As Gingrich admitted, "We don't want to get rid of it [traditional Medicare] in round one because we don't think it's politically smart." "But we believe that it's going to wither on the vine because we think [seniors] are going to leave it voluntarily," he added. Despite McCain's career-long support for limiting Medicare benefits and eligibility, the campaign, is denying that its financing mechanism would undermine benefits. Appearing on CNN, McCain senior policy adviser Douglas Holtz-Eakin implied that "McCain would save money in the federal health programs" by focusing on preventive care and weeding out $1.3 trillion worth of inefficiency and fraud. Nonetheless, a Center for American Progress Action Fund (CAPAF) analysis of the senator's proposed cuts finds that McCain but also undermine Medicare and Medicaid benefits and eligibility and would force those with private insurance plans to pay more for health coverage out of pocket.

CUTS IN MEDICARE: To achieve his goal of cutting Medicare by 13 percent over 10 years, McCain will have to limit growth in enrollment and medical price inflation to 4.5 percent annually. To maintain the current operations of the existing Medicare program, however, a growth rate of at least 7.1 percent is needed over the next 10 years to cover the 2.7 percent average annual growth in enrollment and a projected rate of medical price inflation of 4.4 percent. Absent another change in his plan, McCain would have to reduce Medicare eligibility, reduce benefits, and/or increase cost-sharing. Either approach would jeopardize the benefits of existing beneficiaries and severely limit the program from accepting new enrollees.

CUTS IN MEDICAID: Assuming McCain's proposed cuts are proportionally divided between the two programs, McCain would also slash Medicaid spending by 13 percent over 10 years. McCain's cuts would limit Medicaid growth to 5.5 percent annually -- a six percent growth rate barely keeps up with medical inflation and enrollment growth -- and would likely yield a parallel cut in state funding. As a result, McCain's plan would result in a total reduction in Medicaid spending of $738 billion over 10 years, more than the cost of providing benefits for all Medicaid beneficiaries for two years. These cuts will likely cascade into the State Children's Health Insurance Program the federal program that covers millions of children who otherwise would not have access to health insurance.

COSTS SHIFT TO PRIVATE INSURANCE: If the government's support of public programs fall, those with private insurance will end up paying more as health care providers shift costs to private payers. Low payment rates in the public market will lead health care providers to pursue higher payments from the private market. As CAPAF Senior Fellow Peter Harbage points out, this cost shift represents a "hidden tax" on Americans with private insurance. Private payers will pay higher premiums and deductibles in order to make-up for McCain's radical cuts to public programs and would also finance more expensive emergency room care for individuals who are no longer covered by Medicaid. A 2005 study by Professor Ken Thorpe of Emory University concluded that cost-shifting nationally accounts for 8.5 percent of premiums. Unfortunately, McCain's proposed cuts to Medicare and Medicaid will only increase the "hidden tax" on millions of Americans.

UNDER THE RADAR

ECONOMY --  PERINO CONFIRMS WHITE HOUSE WON'T EXTEND JOBLESS BENEFITS, SAYS PEOPLE SHOULD JUST FIND A JOB: During a White House press briefing yesterday, Press Secretary Dana Perino suggested that the Bush administration would oppose any effort to extend jobless benefits, a stance that the White House has taken before. She explained this position by saying, "[W]e want people to be able to return to the workplace as soon as possible" and concluded that "the best way to help" the economy and unemployed people is for the unemployed to start "getting back to work." However, eight years of Bushonomics has resulted in significant job loss and the slashing of safety nets for laid-off workers. The Department of Labor reported last week that the country shed 159,000 jobs in September, and the unemployment rate has increased to its highest level in five years. The Washington Post reported that "unemployment claims are at a seven-year high, and factory orders are sharply down." And while the federal government is refusing to extend benefits, state unemployment funds are drying up, with "such funds in at least 10 states facing insolvency in 2009."

POVERTY --
STUDY: MORE THAN HALF OF AMERICANS LIVING IN POVERTY ARE WOMEN: A study released by the Center for American Progress (CAP) yesterday, "The Straight Facts on Women in Poverty," has found that in every racial and ethnic group, women in America are more likely to be poor than men. "Over half of the 37 million Americans living in poverty today are women," and "the gap in poverty rates between men and women is wider in America than anywhere else in the Western world," the brief states. There are a number of factors contributing to the high proportion of women living in poverty. Women are paid less than men, segregated into low paying jobs, and are more likely to bear child care costs. Moreover, pregnancy affects women's work and educational opportunities more than men's and domestic and sexual violence can push women into a cycle of poverty. The report recommends "a range of decent employment opportunities with a network of social services that support healthy families, such as quality health care, child care, and housing support."

INTERNATIONAL RELATIONS -- GEN. PETRAEUS SAYS 'YOU HAVE TO TALK TO ENEMIES': The Bush administration has long scorned talking to geopolitical enemies, notoriously referring to such diplomatic engagement as "appeasement." But speaking yesterday at the Heritage Foundation, CentCom chief Gen. David Petraeus, encouraged diplomacy. Citing his Iraq experience, Petraeus said, "You have to talk to enemies." "He added that it was necessary to have a particular goal for discussion and to perform advance work to understand the motivations of his interlocutors," according to the Washington Independent. A draft version of the new National Intelligence Estimate concludes that Afghanistan is in a "downward spiral" and casts serious doubt on the ability of the Afghan government to stem the rise in the Taliban's influence there. Petraeus encouraged diplomacy to tackle the violence. "Negotiations with some members of the Taliban could provide a way to reduce violence in sections of Afghanistan gripped by an intensifying insurgency," he said. He noted how Britain had helped reduce violence in Iraq through negotiations, stating, "They've sat down with thugs throughout their history, including us in our early days."


THINK FAST

A draft version of the new National Intelligence Estimate "concludes that Afghanistan is in a 'downward spiral' and casts serious doubt on the ability of the Afghan government to stem the rise in the Taliban’s influence there." The CIA has documented the worsening violence for nearly 2 years and “some in the agency say they believe that it has taken the White House too long to respond to the warnings."

63.2 million: Number of U.S. viewers who watched the second presidential debate, easily surpassing the audience of the first debate (52.4 million). Forty-two percent of households in the top U.S. television markets tuned in to Tuesday's match-up.

House Speaker Nancy Pelosi (D-CA) yesterday recommended a new $150 billion economic stimulus plan and said "she may call the House into session after the election to pass it." Pelosi said "the stock market meltdown...was a factor in her recommendation."

After already doling out an $85 billion bridge loan in September, the Federal Reserve Board announced yesterday "that it would provide up to $37.8 billion to the embattled insurer the American International Group to help it deal with a rapidly dwindling supply of cash." A Fed spokesman said "the new assistance was intended to keep the company from having to draw down the Fed loan so quickly."

"A federal appeals court panel on Wednesday issued a temporary stay of a federal judge's order that had directed the Bush administration to free 17 Guantanamo detainees by releasing them in the United States on Friday.” The court will review arguments by the Justice Department, which opposes freeing the detainees.

Delivering "a sharp blow" to the prosecution's case against Sen. Ted Stevens (R-AK), a judge threw out two key pieces of evidence against Stevens yesterday. The judge presiding over the case faulted prosecutors for knowingly introducing false documents relating to work done on Stevens home. "There’s just no excuse for that whatsoever," he said.

“Tens of thousands of eligible voters in at least six swing states have been removed from the rolls or have been blocked from registering in ways that appear to violate federal law," the New York Times reports today. The blocked voters "are apparently the result of mistakes in the handling of the registrations and voter files as the states tried to comply with a 2002 federal law."

And finally: Congress is all a-Twitter. More than three dozen federal lawmakers now use the micro-blogging site, writing on everything from what press conferences they're holding to more mundane topics, such as Rep. Chris Shays's (R-CT) tale of getting stuck in traffic. The Sunlight Foundation has created a tool to track all of Congress's tweets, and Congresspedia has a full list of twittering lawmakers here.



GOOD NEWS

"A group of bipartisan senators proposed legislation Tuesday that would compel employers to tell employees what their health insurance costs," a step "toward getting a handle on the spiraling cost of medical care," CQ reports.

BLOG WATCH

THINK PROGRESS: Fox News' Steve Doocy: "Being a coach for girls is like herding cats."

WONK ROOM: Rep. John Dingell (D-MI) offers climate change draft with options: polluter bailout or green recovery.

YGLESIAS: Bicycle bailout.

FEMINISTING: Speaking out from South Dakota: Keep families' health care decisions in families' hands.

STATE WATCH

CALIFORNIA"Over the last decade, California has become the nation's leader in providing legal protections to gays and lesbians."

NEVADA: "Nevada's economy has seen the worst economic decline among states since January 2007."

TEXAS: University of Texas students refuse to take down political signs, protesting a policy that bans any type of signs from dorm windows and doors.

DAILY GRILL

"I'm not sure if I were in the Congress I could vote against it."
-- Former House Speaker Newt Gingrich, 9/29/08, on the bailout

VERSUS

"If Senator McCain is not prepared to separate himself from the Bush-Paulson economic program, he has no opportunity to win."
-- Gingrich, 10/8/08
INTERNSHIPS

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