‘The Life of Julia,’ Corrected

Summary

The Obama campaign depends on some false or dubious assumptions in its “Life of Julia” slide show. The infographic depicts a fictional woman whose life from age 3 to 67 is better under the president’s policies than under those of Republican Mitt Romney. But in reality, the contrasts are not so stark or simple as the Obama team would have viewers believe.

For example:

  • The campaign falsely claims Romney would leave Julia with “nothing but a voucher” to buy health insurance at age 65. Actually, the plan Romney has endorsed would let her choose between traditional Medicare fee-for-service coverage, or a variety of private plans with premiums partially paid by the government.
  • The slide show also contends that Julia, as a senior citizen, will have to pay “$6,350 extra per year” for a health care plan similar to Medicare. But that’s an out-of-date cost estimate based on a year-old plan that since has been made substantially more generous.
  • At age 67, Julia can “retire comfortably” under Obama but, “Under Mitt Romney: Julia’s benefits could be cut by 40%.” But the fact is Obama has not proposed any plan to avoid a 25 percent cut in benefits for all Social Security beneficiaries, which the system’s trustees say is looming in 2033 unless changes are made.
  • As a 22-year-old college student, Julia needs surgery that is covered “due to a provision in health care reform” keeping her on her parents’ insurance. Fair enough. But she’d probably be covered anyway: Thirty-seven states already have similar mandates on the books.
  • As a 31-year-old expectant mother, Julia “benefits from maternal checkups” required under the new health care law. But she would probably get that care anyway; 85 percent of full-time workers have health insurance now, and a 1978 federal law already requires that employer-provided insurance generally must “cover expenses for pregnancy-related conditions.”

Analysis

The president’s opponents heaped ridicule on the (nearly) cradle-to-grave philosophy of government embodied in the “Julia” infographic. We’ll stay out of that debate, and just focus on the factual assumptions made or implied.

Julia on Medicare

Some of the more factually challenged claims in “The Life of Julia” involve Medicare — which has been a flashpoint for both parties ever since Rep. Paul Ryan a year ago released a budget document called “Path to Prosperity,” which included major changes to the government-run health care program for senior citizens.

The Obama campaign makes two false claims when it says Julia at 65 years old could be left “with nothing but a voucher to buy insurance coverage” and pay “$6,350 extra per year” for Medicare under Romney. Both claims are references to Romney’s support for Ryan’s Medicare proposal. But as we wrote in April, both claims are based on Ryan’s 2011 plan — not his current plan, which would in fact allow Julia to choose to be covered by traditional Medicare and may or may not cost her more money.

Under President Obama: Julia enrolls in Medicare, helping her to afford preventive care and the prescription drugs she needs.

Under Mitt Romney: Medicare could end as we know it, leaving Julia with nothing but a voucher to buy insurance coverage, which means $6,350 extra per year for a similar plan.

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.

The Times reported that the president had rejected Boehner’s proposal to raise the retirement age above 67, where it is now for all who were born after 1960. Instead, the Times reported: “Obama was willing to apply a new, less generous formula for calculating Social Security benefits, which would start in 2015.” In an interview in July 2011, ABC News’ Jake Tapper asked Obama twice if he would consider raising the retirement age, and the president responded the second time by saying, “I’m not going to get into specifics.”

So what about Romney? Would Julia’s benefits be 40 percent less under his proposals? Perhaps — if she turns out to be a high-income earner during her working years. And she might have to wait until after age 67, too.

Romney’s campaign website quotes him as saying “the retirement age for younger workers should be increased slowly to keep up with increases in longevity,” and that “[h]e proposed slowing the rate of growth in Social Security benefits for higher-income future retirees.”

The Social Security system’s chief actuary analyzed last year a Senate bill that would do both of those things, though not necessarily in the same way Romney might. That bill (sponsored by Republican Sens. Lindsey Graham, Rand Paul and Mike Lee) would gradually increase the age of normal retirement to 70, and also institute a form of “progressive indexing” to hold down the rate of benefit growth for higher-income retirees while leaving it unchanged for those at the bottom.

The actuary calculated that benefits for the top 5.4 percent of all earners (those making $106,800 or more in taxable wages in 2010) would indeed be cut by 36 percent compared with benefits scheduled (but not completely paid for) in current law. And the later retirement age — meaning fewer years of benefits — would mean a total reduction of 54.4 percent.

That’s for anyone who is born in 2015 and reaches age 65 in 2080. For younger workers, presumably including Julia, the reductions would be less, depending on the year they reach age 65. (See Table B2.)

And the benefit reductions would be much less for lower-income workers. There would be no reduction at all in monthly benefits for about 40 percent of the lowest-income workers (those making $19,388 or less for 2010), for example. For that group, the later retirement age would translate into as much as a 28.8 percent lower total benefit payment for the generation born in 2015, however.

The analysis also found that the current system falls $5.4 trillion short (over 75 years) of financing the scheduled benefit levels that Congress has promised. The bill would save a total of $6.6 trillion, and ensure that the reduced benefit levels are fully financed without a tax increase, the actuary found.

Julia’s Surgery

The slide show says Julia at age 22 needed surgery while at college. Luckily, it says, Julia was covered by her parents’ health insurance thanks to Obama’s new health care law — suggesting that Julia would be without coverage if Romney repealed the law. But Julia was in college when the surgery occurred and, like an overwhelmingly majority of college students, she would most likely have health insurance with or without the federal law.

Under President Obama: During college, Julia undergoes surgery. It is thankfully covered by her insurance due to a provision in health care reform that lets her stay on her parents’ coverage until she turns 26.

Under Mitt Romney: Health care reform would be repealed—Romney says he’d “kill it dead.”

Effective September 2010, insurers must cover adult children of policyholders up to age 26, regardless of whether the child attends college or even lives with his or her parents.

The fact is, though, Julia would probably be covered with or without the federal law because the surgery occurred “during college.” In a 2008 report on the high uninsured rate for young adults, Kaiser Family Foundation reported that only 18 percent of full-time students age 19 through 24 lack health insurance. So there is an 82 percent chance that Julia would be covered even without Obama’s health care law.

Even if the federal law is repealed, existing state laws would still apply. As of June 2010, which is before this particular federal provision took effect in September, 37 states already had a similar mandate on the books regarding dependent adult children, according to the National Conference of State Legislatures. Most of those states extended dependent coverage to ages 24 or 26, regardless of student status, so it wouldn’t even matter if Julia was in college or not. In New York and Pennsylvania, Julia could remain on her parents’ policy till she’s 30 — four years longer than the federal law. New Jersey’s law extends the age to 31.

Massachusetts is one of the 37 states. The health care law signed by then-Gov. Mitt Romney required that family policies include coverage for up to two years after loss of dependent status or age 26, whichever occurred first. In practical terms, the Massachusetts provision required some companies to cover a child up to age 24.

This is not to minimize the impact of the federal law. Kaiser says “an estimated 2.3 million adult children were enrolled in their parent’s employer sponsored health plan due to the Affordable Care Act.” But there’s a good chance Julia would not have been one of them.

Julia’s Pregnancy Care

At age 31, Julia learns that she is pregnant. The Obama campaign implies that Julia’s health care coverage would not provide “maternal checkups, prenatal care, and free screenings” during her pregnancy, because Romney would repeal Obama’s health care law. But it’s quite likely that she’d be covered anyway.

Under President Obama: Julia decides to have a child. Throughout her pregnancy, she benefits from maternal checkups, prenatal care, and free screenings under health care reform.

Under Mitt Romney: Health care reform would be repealed.

Obama’s health care law does require insurance plans sold on the new insurance exchanges to provide expanded pregnancy-related coverage. But, in this case, Julia might well receive the care she needs with or without the federal health care law. To start, she’s very likely to have health insurance coverage. The Obama campaign said Julia started work as a web designer at age 23 and was still working at age 27. And according to the most recent data from the Census Bureau, 85 percent of all full-time workers had coverage in 2010. So Julia is very likely to have coverage, either on her own or through a spouse.

Furthermore, the Pregnancy Discrimination Act requires employers with at least 15 employees to “cover expenses for pregnancy-related conditions on the same basis as costs for other medical conditions.” That’s been the law since 1978.

To be sure, there’s a chance she wouldn’t be covered. She might work for a small firm that doesn’t offer coverage for pregnancy. And the Obama campaign doesn’t say if Julia is married or having her child as a single mother. In an April 2012 report on the impact of Obama’s health care law on women, the Kaiser Family Foundation said “coverage for maternity care is not currently included in many individual insurance plans” — which is a problem.

Kaiser Family Foundation, April 2012: Childbirth and pregnancy-related conditions are leading causes of hospitalization in the U.S., accounting for nearly 25% of hospital stays. Although the Pregnancy Discrimination Act requires that employers with at least 15 employees offer plans that cover expenses for pregnancy-related conditions on the same basis as for other medical conditions, coverage for maternity care is not currently included in many individual insurance plans. In this market, women typically have had to purchase a separate rider to cover maternity care which can be extremely costly and often requires a waiting period before the benefits are covered.

So, the health care law does address a real problem facing some women — but chances are a full-time worker like Julia wouldn’t be one of them.

– by Eugene Kiely and Brooks Jackson

Sources

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