Medicare: How Paul Ryan's budget would change it
| Washington
The long-term budget plan released Tuesday by House Republicans would fundamentally transform Medicare, the huge program upon which US seniors rely for health-care coverage.
Right now Medicare is a fee-for-service program which itself pays for health care procedures for most beneficiaries. Under the GOP plan, drafted largely by Budget Committee chairman Rep. Paul Ryan of Wisconsin, it would be changed into a program which subsidizes the purchase of health insurance by individuals.
Medicare鈥檚 spiraling costs make it the biggest driver of the nation鈥檚 long-term government debt, said Congressman Ryan Tuesday during an appearance at the American Enterprise Institute. That means the status quo for the program is unlikely to continue, he said.
鈥淭丑别 question is not if we reform Medicare. The question is when and how we reform Medicare,鈥� said Ryan.
Current Medicare beneficiaries, and those approaching retirement age, would not be affected by the GOP鈥檚 proposed changes. Instead they would apply to people currently 54 years of age and younger.
This cohort, when it enrolls in Medicare, would receive a fixed annual payment for insurance from Uncle Sam. This payment would be higher for those with greater health-care needs and would be adjusted for the cost of health care in particular areas.
Beneficiaries would then purchase insurance from private providers on a health exchange, a sort of supermarket where plans compete for customers. It is a structure derived from a plan drawn up previously by Ryan and Alice Rivlin, a Brookings Institution economist and former budget director under President Bill Clinton.
It is also similar to the health-exchange plan contained in President Obama鈥檚 health-care reform law. The GOP proposal released Tuesday calls for that law鈥檚 repeal.
This Medicare exchange would be 鈥渢ightly regulated,鈥� according to the Republican . Insurers would have to promise to insure all Medicare beneficiaries, even the least healthy.
Ryan on Tuesday stressed that the plan is not a voucher system, which would send subsidy checks to beneficiaries. It is a 鈥減ayment support鈥� plan, he said, under which the government would pay an individual鈥檚 subsidy directly to insurers.
Medicare鈥檚 prescription-drug benefit now works this way, Ryan pointed out.
鈥淭丑别 whole point is that it works more like things people are already familiar with,鈥� he said.
Making health care something seniors purchase from their own pockets would unleash the power of free market competition, according to Ryan. Customers would gravitate to programs that offered higher value or greater quality, he said.
Critics counter that the Medicare subsidy inevitably would shrink relative to health-care costs due to the high rate of medical inflation.
鈥淭丑别 House Republican budget proposal should be accompanied by a 鈥楪randma Beware!鈥� sign,鈥� said Ron Pollack, executive director of Families USA, a health-care advocacy group which supported President Obama鈥檚 health-care legislation.
