VP primer: Paul Ryan’s Medicare plan"Campaign - Presidential" "Health Care"
By: David Nather
August 11, 2012 02:11 AM EDT
Meet the new addition to the Republican presidential ticket: Paul Ryan’s Medicare plan.
It’s made Ryan a hero on the right and a lightning rod for criticism from the left. And now that Mitt Romney has chosen Ryan to be his running mate, you'll be hearing about it nonstop until November.
Under Ryan’s plan, the government would help seniors buy health insurance — rather than receive coverage straight from Medicare, as they do now.
And as much has been written already, there are a few surprises. For a guy who hates “Obamacare” so much, for example, Ryan doesn’t throw it all out the window. And in the latest version, seniors can still choose traditional Medicare — with a catch.
Here are a few things you might not know about the plan:
Voucher v. premium support
Liberals say the Ryan plan replaces Medicare with a voucher system. But Ryan insists the proper term is “premium support.” Is there a difference? Technically, yes. The idea is to turn Medicare into a program that subsidizes private insurance plans. A voucher would do that by sending the money to seniors, and they’d go out and buy the plan. With premium support, Medicare pays the money straight to the plan that the senior chooses.
So yes, there’s a difference — but it’s hairsplitty. What worries people about vouchers is the idea that the money will be limited, and it won’t cover their costs. Will the payments be limited in premium support? Of course. That’s how it saves money.
Competition among the new private plans is supposed to contain costs. But if that doesn’t work, there’s a Plan B. Medicare spending won’t be able to grow more than the Gross Domestic Product plus 0.5 percent. That’s pretty tight, but Obama himself has set the same goal.
It repeals “Obamacare,” but keeps the savings
Ryan talks a lot about how his budget would get rid of Obama’s health care law, especially the Independent Payment Advisory Board, which would recommend ways to cut Medicare costs. Ryan calls it the “rationing board.”
But that doesn’t mean Ryan tosses out the whole law. In fact, there’s one part he keeps. Need a hint? It’s the part Republicans campaigned against in 2010.
That’s right — the Medicare cuts.
Ryan isn’t shy about it. He just says the cuts — slower growth in payments to providers and the private Medicare Advantage plans — would be used only to extend the life of Medicare, not to finance the expensive new commitments in the president’s health law, like subsidies to help people pay for private health insurance. The latest version of his budget says the plan “ensures that any potential savings in current law would go to shore up Medicare, not to pay for new entitlements.”
It repeals “Obamacare” health exchanges — but it sets up its own
The health care law sets up new marketplaces for private health insurance, called health exchanges, in every state. (If the states don’t build them, the feds will set them up.) Ryan’s plan would get rid of the insurance exchanges and the subsidies that would help people shop in them.
But then it would set up its own health exchange — for Medicare. That’s where private health plans and traditional Medicare would compete for seniors’ business.
And the plans in the Medicare exchange would operate under two important rules that are also in the health care law: They’d have to accept any Medicare-eligible person who applies, even if they have pre-existing conditions, and they couldn’t charge more for the seniors with the most serious health problems.
What’s the difference? Ryan says it’s OK to put seniors together in that kind of regulated marketplace, because they have more serious health care needs than the rest of the population.But everyone else should be able to have more coverage choices with fewer rules.
Traditional Medicare would still be an option — but you might pay more
Ryan’s first Medicare plan got hammered for not keeping traditional Medicare around for future seniors who want it — a provision that Romney also favored. So Ryan changed course. He worked out a new version with Democratic Sen. Ron Wyden of Oregon that would keep traditional Medicare for seniors who want it. And that’s how his latest House-passed budget works.
That doesn’t mean they can just keep it and not pay more, though. If traditional Medicare ends up costing more than some of the private plans it’s competing with, seniors would have to pay the difference.
Here’s how it works: The amount of money the government would put in would be set by the prices of the competing plans, and would either be the second-least-expensive private plan or traditional Medicare — whichever one is cheaper. But if a senior chooses a plan that’s more expensive than the government allowance, the extra cost will come out of pocket. So if they want traditional Medicare, and it’s not the cheapest plan, they’ll pay extra.
Sick people do get more money
Obama and the Democrats have suggested that seniors would be out of luck under the Ryan plan if they get sick. But the plan does deal with that scenario. The new Medicare payments “would be adjusted so that the sick would receive higher payments if their conditions worsened,” according to a House report on the latest version of the plan. It doesn’t give details on how that would work — but the provision is there.
“Classic” Medicare will still be around — but it might be a sinking ship
The first thing Ryan always tells seniors about his Medicare plan is, if you’re already in the program or near retirement, don’t worry — we leave you alone. The changes don’t start until 2023, for people who are currently under age 55. That assumes Medicare can really stay just like it is, even if other people are bailing out of the ship.
In a report last year, Third Way, a centrist Democratic think tank, warned that doctors would start leaving traditional Medicare if there are other options — especially since a lot of them don’t think Medicare pays enough now. So seniors would be able to stay in traditional Medicare as long as they want — but that doesn’t mean they will find doctors to treat them.
It might not be the same benefits
The latest Ryan plan says the new private health plans would have to cover “the actuarial equivalent” of Medicare benefits. So here’s the fine print: that means they might not have to be the same actual benefits.
Why does that matter? Because, in the view of some health care experts, changing the benefits opens up more opportunities for insurers to attract healthier seniors — by emphasizing the kinds of services they’d want, like gym memberships. They can also discourage people with health problems by giving lower priority to other services, like having a bare bones network of diabetic specialists.
The Ryan plan says it protects seniors from “cherry-picking” because the health plans will have to offer coverage to all seniors, regardless of their age or how healthy they are. But there are other, subtle ways for insurers to steer sick people away — and seniors’ group will be watching closely for any signs that it’s happening.