Ryans plan is to eventually move Medicare toward private insurance companies by giving people a set amount to buy their own health insurance plans. The new system would be for people who are under age 55 now, and it would give them voucher-like credits to buy traditional fee-for-service Medicare or competing private insurance plans. Romney describes the credits as premium support. But the Romney-Ryan approach closely matches the dictionary definition of a voucher a form or check indicating a credit against future purchases or expenditures.
In 2022, the first year the voucher would apply, the Congressional Budget Office estimates that total health care expenditures for a typical 65-year-old would be almost 40 percent higher with private coverage under the Ryan plan than they would be with a continuation of traditional Medicare, Bob Greenstein wrote.
CBO also finds that this beneficiarys annual out-of-pocket costs would more than double from $6,150 to $12,500. In later years, as the value of the voucher eroded, the increase in out-of-pocket costs would be even greater. The CBO analysis, and the other groups analyses that were built on those CBO numbers, refer to the original Ryan plan, not to the current one. The current plan is slightly more generous in how fast it allows subsidies to grow as health care costs increase, while still keeping spending lower than current projections. Van de Water a fellow at the Center for Budget and Policy Priorities said the Obama campaigns decision to use the old numbers was defensible.
It also seems reasonable to cite the most recent available analysis when Ryan has not provided enough detail to do a new one. The Republican response to attacks on the Ryan plan has been to attack back, saying President Barack Obama has cut $700 billion out of Medicare. Claims that Obama would cut Medicare need more explanation to be fully accurate. Because Medicare spending gets bigger every year, the cost-saving mechanisms in the health care law also get bigger. In fact, the effects of time are the main reason the number has turned into $700 billion up from $500 billion. Neither Obama nor his health care law literally cut a dollar from the Medicare programs budget. The health care law instituted a number of changes to reduce the growth of Medicare costs. The reductions were mainly aimed at insurance companies and hospitals, not beneficiaries. The law makes significant reductions to Medicare Advantage, a subset of Medicare plans run by private insurers. Medicare Advantage was started under President George W. Bush. The idea was that competition among the private insurers would reduce costs. But in recent years the plans have actually cost more than traditional Medicare. The health care law scales back the payments to private insurers. Hospitals, too, will be paid less if they have too many re-admissions, or if they fail to meet other new benchmarks for patient care. The overall Medicare budget is projected to grow for the foreseeable future. The health care law tries to limit that growth, making it less than it would have been without the law, but not reducing its overall budget.
Does Ryans budget keep the reductions in Medicare spending? The short answer is yes. Ryan himself said his plan did include the reductions in future spending that were part of the federal health care law. Thats because both sides agree on one point: Medicare spending is growing too rapidly, and it needs to reined in.
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