Since Republican presidential nominee Mitt Romney chose Paul Ryan as his running mate, the future of Medicare has turned into one of the major issues of the 2012 campaign. How to reform Medicare serves as one of the most “fundamental differences” — to quote the candidates — between the two parties. At the heart of the debate is what to do to a program that the government says is set to become financially insolvent after 2024.
Obama has extended that estimated end date by eight years with sweeping changes to Medicare, which have filtered $716 billion out of the system. That includes $156 billion in subsidies to insurance companies. Romney and Ryan have slammed Obama on the trail for these cuts — even charging that the president “robbed Medicare” — but Ryan included the cuts in his own budget plan.
The Associated Press has tackled details of what Obama plans to do from here with Medicare. For starters, premiums would rise for retirees making $85,000 or more (or $170,000 for married couples).
The nonpartisan Kaiser Family Foundation found that in 2017, a single retiree at that income level would pay $447 more in premiums for Medicare’s outpatient and prescription drug coverage. A married couple would pay close to $900.
Romney’s plan, meanwhile, would enact more noticeable changes to the Medicare system. Romney, Ryan and other Republicans say they’re needed changes. Obama and other Democrats often accuse him of trying to turn Medicare into a “voucher system.”
“My plan has already extended the life of Medicare by nearly a decade,” Obama said at a campaign stop in New Hampshire in August. “Their plan would put Medicare on track to be ended as we know it.
“It would be an entirely different plan — a plan in which you could not count on health care because it would have to be coming out of your pocket. That’s the real difference between our plans on Medicare.”
Here is Romney’s plan, which combines the candidate’s own proposals with those of Ryan:
- Medicare is reformed as a premium support system, meaning that existing spending is repackaged as a fixed-amount benefit to each senior that he or she can use to purchase an insurance plan [Note: This is the part that Obama and others paint as the “voucher” system.]
- All insurance plans must offer coverage at least comparable to what Medicare provides today
- If seniors choose more expensive plans, they will have to pay the difference between the support amount and the premium price; if they choose less expensive plans, they can use any leftover support to pay other medical expenses like co-pays and deductibles
- “Traditional” fee-for-service Medicare will be offered by the government as an insurance plan, meaning that seniors can purchase that form of coverage if they prefer it; however, if it costs the government more to provide that service than it costs private plans to offer their versions, then the premiums charged by the government will have to be higher and seniors will have to pay the difference to enroll in the traditional Medicare option
- Lower income seniors will receive more generous support to ensure that they can afford coverage; wealthier seniors will receive less support
- Competition among plans to provide high quality service while charging low premiums will hold costs down while also improving the quality of coverage enjoyed by seniors
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