Obama Whopper On McCain Health Care Plan

CBS News Correspondent Wyatt Andrews wrote this story for CBSNews.com.

Obama: "Senator McCain would pay for part of his plan by making drastic cuts in Medicare -$882 billion worth." Roanoke, VA., October, 17

Senator Barack Obama's newest claim (also made in a television ad) that Senator John McCain's health care plan will cut $882 billion in Medicare health care benefits for seniors, has to rank among the biggest whoppers of the whole campaign.

It's a poorly calculated estimate drawn from a suspect report, and the disputed figures in question don't represent benefit cuts.

Here are the basic facts. The essential math of McCain's health plan presumes it will raise at least $2.5 trillion over ten years, by removing the health care tax exclusion (this is what Obama calls taxing health benefits for the first time), but will distribute at least that much in rebates to taxpayers valued at $2500 for individuals and $5000 per family.

Independent analysts have long argued those rebates will cost the Treasury far more than what McCain raises, especially if the plan is accepted by the 24 million people the McCain camp claims. (The Tax Policy Center estimated a $1.3 trillion deficit over ten years.)

Clinging to the promise the plan will be "budget neutral," McCain's senior policy adviser, Douglas Holtz-Eakin has consistently said any deficit could be made up by savings from several areas of Medicare such as: ending the Medicare drug benefit for affluent seniors, reforming Medicare payments toward a disease management model and away from fee-for-service, adopting electronic health records and eliminating fraud, which by itself, Holtz-Eakin says optimistically, could total $ 600 billion over ten years. Very optimistically --Holtz Eakin claims that all these reforms put together could raise $2.5 trillion.

So here's where the whopper starts. Even if the McCain health plan digs a massive hole in the deficit, McCain has always argued he would make up the difference with savings. This is a whole different concept from what Obama is claiming: "drastic cuts" in actual health care benefits delivered to seniors. Not to mention that Obama himself proposes every single item from the list of Medicare savings above, with the exception of Medicare Part D reform.

The $882 billion dollar whopper itself was calculated by the Center for American Progress Action Fund, Center for American Progress Action Fund, October 2008] a left of center group inclined toward Obama. The group comes up with the $882 billion figure by taking the Tax Policy Center's estimate of a $ 1.3 trillion shortfall, and simply breaking it up into its Medicare ($882) and Medicaid ($419 billion) component parts.

Either way, even if you believe McCain's health plan is a train wreck and that none of his math adds up, he proposes to fix that with Medicare savings, not with $882 billion worth of "cuts."

This story was written by CBS News Correspondent Wyatt Andrews