Furthermore, as we explained in detail in our story “Medicare’s ‘Piggy Bank,’ “ Medicare doesn’t have $716 billion sitting around that could be “raided.” The president can’t take money out of the trust fund — which had $244.2 billion at the end of 2011. Medicare holds its trust fund bonds and can cash them in as it needs to cover whatever isn’t paid by current payroll taxes. The health care law even increases the amount of tax revenue that will flow into the trust fund by imposing a 0.9 percent Medicare surcharge on certain high-income individuals.
If Part A doesn’t need to spend income it receives from payroll taxes immediately, Treasury issues Medicare a bond and the amount is credited to Medicare’s Part A trust fund. When Medicare wants to cash that bond, Treasury has to pay it, even if Treasury already spent the original money on something else.
And that’s where Romney has a point. The health care law counts those savings as money that can also cover other aspects of the law. But both the Congressional Budget Office and Medicare’s chief actuary have said that in practice, the $716 billion savings can’t cover two things at once.