No, Obama Didn’t Steal Money From the Medicare Trust Fund

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.

Bob Somerby says I’ve failed him. Yesterday I wrote about Mitt Romney’s claim that Obamacare had cut Medicare spending by $716 billion over the next decade, but I failed to answer these two questions:

  1. Did Obama steal, rob, siphon, take or remove $716 billion from the Medicare trust fund?
  2. After stealing that money, did he spend it on Obamacare?

Question #1 is pretty easy: No he didn’t. Mitt Romney has been peddling this wacky charge for the past week, and it’s a strikingly ignorant claim.

Slightly longer answer: Money that’s paid into the Medicare system — which comes mainly from payroll taxes, premiums, and general revenue — goes into Medicare’s two trust funds. Money that’s paid out to doctors and hospitals comes out of the trust funds. So there are only two ways you could “rob” money from the trust funds: you could reduce taxes going in or you could increase money being paid out. Obamacare does neither of these things. In fact, it reduces reimbursement rates to hospitals, which means that it improves the financial health of the trust funds because less money is flowing out. In particular, after Obamacare was signed into law in 2010, the Medicare trustees estimated that it had extended the life of the HI trust fund by 12 years.

So why is Romney saying this? Beats me. I guess his team decided that “taking money from the Medicare trust fund” sounded more heinous than “reducing spending on Medicare.” The latter actually has the virtue of being true, but that doesn’t count for much these days.

Question #2 is actually a little trickier. It’s unquestionably true that Obamacare reduces spending on Medicare, which allows us to spend more on Obamacare without changing our overall budget level. But does that mean we’re taking money from Medicare to spend on Obamacare?

Here’s an analogy. Suppose I have income of $100 per month, and I normally spend $50 on rent and $50 on food. Then I negotiate a lower rent with my landlord. Now I spend $45 on rent and $55 on food. Did I take money from the rent to spend on food?

I’d say no: I still have the same apartment, after all, and it’s not as if I’m going to be short when the rent comes due this month. On the other hand, I’m definitely not using my newfound savings on my apartment. I’m using it to buy bananas and ham sandwiches. I guess you can make up your own mind what you’d call that.

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate