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Kaiser Health News
It may come as a surprise that President Barack Obama and Rep. Paul Ryan, the Wisconsin Republican who chairs the House Budget Committee, are pushing the same target rate for curbing annual federal spending on Medicare. Each would set it at half a percentage point higher than the growth rate of the economy -- the gross domestic product.
Looking at their plans in more detail, however, the practical effects are likely to be very different when it comes to restraining federal spending and impact on seniors.
“There is a consensus, an agreement that Medicare is unsustainable,” said Ryan spokesman Conor Sweeney. “That’s where the agreement is, and it’s where the agreement ends.”
Here are some questions and answers about the Democratic and Republican approaches to moderating spending on the popular program, which covers 47 million seniors and disabled people.
Q. If both Obama and Ryan are proposing a target growth rate of GDP plus half a percentage point for Medicare, shouldn’t federal spending be the same under both scenarios?
There are important differences. Ryan’s plan is a hard cap on federal spending. He would automatically lower Medicare spending so that it is below the trigger level.
Obama is proposing a target that might not bring federal spending down to that level. His proposal follows an effort in the 2010 health law to curb Medicare cost growth by tying the spending target to the Consumer Price Index in early years, and later on to the rate of GDP growth plus 1 percentage point. Now Obama is proposing to lower the target to the rate of GDP plus half a percentage point. If federal spending per Medicare beneficiary is rising faster than that – a determination made by the Medicare actuary – then cuts are triggered.
The cuts would come as a percent reduction in Medicare spending. Such cuts wouldn’t necessarily be sufficient to meet the target, however.
Q. How would beneficiaries be affected by cuts under Obama’s plan?
As under the health law, Obama would make direct cuts to benefits off limits. The health law created the Independent Payment Advisory Board (IPAB) to come up with proposals to reduce spending if Medicare grows at a higher rate than the target. But the board’s 15 members, who will be appointed by the president and confirmed by the Senate, are not allowed to recommend anything that would ration care or change benefits, eligibility or cost sharing for Part A (hospital services) or Part B (physician services). It also couldn’t do anything to change the percentage of premium that seniors pay for prescription drug coverage or the subsidies that low-income individuals get. The expectation is that reductions would come from medical providers, although hospitals are protected at first.
Beginning in fiscal year 2015, if Medicare spending exceeded the target, the board would send its recommendations to Congress. The secretary of health and human services would have to implement those recommendations unless Congress passed alternative cuts. The future of IPAB is questionable, as Republicans – and some Democrats – have sought to kill it, arguing that the board will end up rationing care and have too much control over Medicare. Obama has yet to nominate panel members.
Some health care analysts argue that reducing payments to medical providers could drive them out of Medicare and create access issues for beneficiaries. Richard Foster, Medicare’s chief actuary, warned in the 2012 Medicare trustees’ report that the health law will eventually lower payments to medical providers so much that “Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.”
Q. And under Ryan?
Ryan is not specific in his plan about what he’d cut to keep spending below his proposed cap, but has said that Congress could expand requirements for higher-income beneficiaries to pay more. Spokesman Conor Sweeney says that competition among both public and private health plans would lower costs and seniors would be able to choose the best health plans to suit individual needs. “Seniors want more power and control over their Medicare dollars,” he said.
Under Ryan’s so-called premium support proposal, all plans, including traditional Medicare, would submit bids for how much they would charge to cover a beneficiary's health care costs. All plans would include a minimum set of benefits equal to the value of those in the traditional program. The government would pay the full premium for the private plan with the second lowest bid, or for traditional Medicare, whichever is lower. Beneficiaries would have to pay the difference if they chose a plan that set rates higher. Ryan estimates that this system would keep Medicare spending below his target. If it doesn’t, however, then automatic cuts would occur.
The Congressional Budget Office estimated that Ryan’s proposal from last year would require a typical 65-year-old person to pay a lot more for Medicare by 2030. His latest plan is missing key details, so the Congressional Budget Office has been limited in its analysis.
Although Ryan would give future seniors the option of remaining in the traditional, government-run Medicare program, it would have to compete with private plans. Critics predict that traditional Medicare could become unaffordable if it attracts the sickest people while private plans lure the healthiest. They also say that beneficiaries might have trouble finding physicians if they abandon the program because their rates are cut.
Obama is a critic of premium support: His ideas are rooted in the health law, and would retain Medicare’s existing structure. Currently, the government runs the program on a defined benefit basis, meaning that the government will pay whatever it takes to cover a specified set of services. A quarter of beneficiaries are enrolled in private Medicare health plans, although they don’t compete with the traditional program on price, as they would under Ryan’s plan.
Q. What’s next for Medicare?
The House Ways and Means Committee conducted a hearing April 27 on the premium support concept, but lawmakers are unlikely to consider legislation that would restructure Medicare in any significant way until a new Congress -- and possibly a new president -- are seated in 2013. Still, after the elections, Congress may try to pass budget reduction legislation that would avert automatic 2 percent cuts in Medicare required under last year’s budget agreement. In the meantime, Medicare is proving to be a contentious issue in presidential and congressional campaigns nationwide, as both parties vie for the coveted senior vote. Behind the scenes, stakeholders - from seniors’ advocates to insurance leaders - are working to produce proposals that protect Medicare and their interests.
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This story was produced in collaboration with Kaiser Health News, an editorially independent program of the Kaiser Family Foundation, a nonpartisan health care policy research organization which is unaffiliated with Kaiser Permanente
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The GOP always have plans to do something, but when it comes down to doing it, the average citizen takes it in the shorts. Just like their budget plan, 7 pages of ZERO $ in it. No mention at all of what they would be borrowing and spending on.
Yes, the health care (Obamacare) is based on Mittcare. And they both need to be reworked. Instead of saying NO to everything, maybe it's too much to hope that the GOP could come up with a actually good plan. Instead of complaining about it, these elected crooks need to fix it.
Neither party has put forth effective plans at controlling the rising costs for Medicare. The Affordable Care Act also doesn't address this issue. Everyone agrees that either way something will have to be done with Medicare but neither party is willing to address the issue because as soon as someone proposes something the other party condemns them for wanting to push granny off a cliff or implementing death panels. The media picks up on it and demonizes suggestions because it sells news.
Both parties have became so extreme that neither can come together to fix the problems with medicare or anything else.
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It just makes sense for the people who need it least to get the lowest benefits. But as usual, Ryan's republican plan is designed to line the pockets of the insurance companies at the expense of the taxpayers and beneficiaries. Privatization will ultimately destroy the program altogether as the private sector takes all the healthiest people, making a killing, and Medicare costs per-capita go through the roof.
just vote these rightEEs out of office. they are not for the middle class.G.O.P.(GROUP OF PHONIES)
The Ryan plan would really create "death panels," as many seniors would be priced out of comprehensive care. They would also lose access to many physicians that have been treating them for years and are familiar with their histories. We saw what happened with Medicare "Part D," a great profit center for the insurance companies that provides little, if any, benefit to most customers, whose costs went up precipitously while the plan delivered few benefits. Medicare, at least, needs to retain "access for all," and a great country would do the same for every citizen.
Softdude, everybody that see's the numerous post that you blog on all msnbc blogs that have anything to do politics see's that you are just a democrat pundit in sheeps skin. You better wake up to reality that this country is BROKE. The insurance industry stands to make billions on the Obama Health Care Law. Take a look at his donor list. You will see that the insurance industry big boys account for 14% of Obama's reelection monies. At what point do you believe that people should start taking care of themselves instead of relying on others. Is it really right to take from some to give to others ? If you believe this nonsense then let me know where you live and I will come over and just take what I want. Your democrats have opened the flood gates of socialism years ago and now we/you are going to pay the price. Your democratic/socialistic ideas do work in some countries but very few. And every one of those countries do not have a military to defend themselves and of the ones that do, their military accounts for such a small number that they would not even be able to defend themselves. Socialism will never work in our society. So lets bash capitalism. Yeah lets go after those guys. Why should they have something I want. I want it too mentality. Your democrats have ruined this country. Our financial situation is due to the frand/dodd amendment which gives everybody with the american dream a home. Well that worked well. Stop living in a utopia state of mind and you might be able to start seeing a reality.
This is garbage. The health insurance industry would not touch Medicare recipients with a 10 foot pole unless the government guarantees then profit as it does with the Medicare "Advantage" corporate welfare program. This is either a way to distract attention form the gutting of Medicare or maybe they think that the magic elves of the so called free market will take care of everything.
Just another way for the 1% to loot the middle class
TITAN not BUSH BOYS 2 unfunded wars and tax breaks.
I have somes news for these two a$$hole$, as a senior I now pay MORE for Medicare than I paid for my group health insurance before I retired! Plus my supplemental health plan costs MORE than my group health insurance before I retired! Who's kidding who?
Wouldn’t it be so much easier and cheaper to adopt a mandatory age limit, say 30, when one must be put to sleep. Let’s combine SOYLENT GREEN and LOGAN'S RUN into one for the 21st century. Also, to help our over population problem, outlaw abortion and let all newborn babies be on their own for the 1st year. That way only the strongest shall survive. Just like a much smaller and leaner government goes hand in hand with a much smaller and leaner human population all would benefit. Think how many jobs we could grow without any entitlements or aid to anyone except corporations and the 1% that knows how to appreciate the finer things in life. Everyone on his own, you must work your way to the top of the success ladder. Health insurance only to the ones that can afford it and must have a decent, responsible job to qualify.
LRLucas, as a retiree, my experience is the opposite of yours. I pay somewhat less for a package of Medicare, a supplement and Part D. In my husband's case, if I had to factor in his high prescription costs -- he fortunately qualifies for VA help -- then he would indeed pay more than he paid for employee coverage.
Except. He paid nothing for his insurance as an employee. (We did pay for family coverage, then COBRA for a while, for me.) That's the only way I can envision that you pay more -- your employer paid all or part of your insurance premiums.
Representative Paul Ryan has once again proposed a budget plan that would seek to end the unsustainable growth of the federal government's entitlement programs. Restructuring Medicare and Medicaid, while stripping some of the provisions of the ACA, Ryan is attempting to alter policies and various incentives in the sector in order to optimize the programs.
For the Medicare program, the most radical component of Ryan's plan would be to shift the organization from a defined benefit model to defined contribution. Beneficiaries would be given a subsidy for the purchase of private plans, rather than having unlimited services provided to them directly. Total program spending would be limited to gross domestic product growth plus 0.5 percentage points. A recent analysis shows that competition could reduce federal Medicare spending by 5.6% a year, maintaining basic benefits and without raising taxes.
Similarly, Medicaid reform under the Ryan plan would give greater control over the program to the states in exchange for a more predictable federal subsidy paid in the form of a block grant. According to the Ryan plan, total Medicaid spending would decline by $810 billion over the next decade.
Estimates from the CBO show that outlays for both of these programs are set to increase substantially, especially with health reform's expansion of Medicaid. The Ryan plan would finally place greater control on this unsustainable growth ().