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Medicare and the Election: FAQ

In an effort to clear up the confusion, here are some answers to common questions about both plans and the future of Medicare.

By Jeff Levine
WebMD Health News

Reviewed by Louise Chang, MD

Mitt Romney's selection of Rep. Paul Ryan (R-Wis.) as his running mate on the Republican ticket focuses new light on the congressman's plan to restructure Medicare -- the program that provides health care to 47 million elderly and disabled Americans. Although Democrats accuse President Obama of wanting to end Medicare, Republicans say that Obama's health reform law would add hundreds of billions in costs to the existing program.

In an effort to clear up the confusion, here are some answers to common questions about both plans and the future of Medicare.

Will Paul Ryan's budget plan really end Medicare?

Not now, but under Ryan's approach traditional Medicare will be just one option in a newly created competitive marketplace. Everyone aged 55 and older would be grandfathered into traditional Medicare.

How does Paul Ryan's plan work?

Seniors would get a fixed amount of money, called "premium support," to pay for their health care. One option for that care would include traditional Medicare. Other insurance plans would also bid for Medicare business, offering consumers other options for their coverage.

Would seniors get the same amount of coverage?

Under today's Medicare, the government sets the premiums. Under Ryan's premium support plan, health plans would submit bids and the federal contribution would be based on the proposals.

If beneficiaries want more expensive coverage than the premium support amount, they would pay the difference. If they select a cheaper plan they could possibly get a rebate.

Would seniors pay more under Ryan's plan?

Experts differ on how premium support would impact the quality and cost of Medicare.

Opponents like Marilyn Moon, PhD, a former Medicare trustee who heads up the health program at the American Institutes for Research, says the approach will drive up premium costs.

Moon says Medicare will ultimately price itself out of the market. It will be "trivialized" as a last refuge for the sickest -- and costliest -- patients. Over time, for-profit plans are more likely to win most of the business, since premium support probably won't cover the increasing expense of traditional Medicare.

The Obama campaign says that the Ryan proposal could raise future retirees' Medicare premium costs more than $6,000 a year. That's according to the Center on Budget and Policy Priorities -- a liberal think tank. They based their numbers on an earlier analysis by the non-partisan Congressional Budget Office.

On the other hand, Ryan's plan could empower consumers to choose options best suited to their needs and their pocket books.

Gail Wilensky, who ran the Medicare and Medicaid program under President George H.W. Bush, offers Medicare's prescription drug plan as an example of how this system could work. It allows consumers to choose among different coverage plans, depending on their needs.

According to the House Budget Committee, chaired by Paul Ryan, costs per beneficiary in 2010 were 22% lower than the Medicare trustees originally projected.

Moon and Wilensky both say that today's Medicare must change.

Is it true that $716 billion will be cut from Medicare under the Affordable Care Act (ACA)?

That all depends on the meaning of the word "cut." The law does slow the rate of Medicare growth by that amount, primarily by trimming reimbursement rates to medical providers like doctors, hospitals, and managed care plans. At the same time, the law encourages innovations that make care more efficient. A newly created institute will make high-level recommendations about which treatments work best for the money. So proponents argue some of the reduced funding will be offset by incentives to create a more efficient system.

Will the health reform law result in less coverage for seniors?

In the short run the ACA provides extra benefits, like shrinking the insurance coverage gap in the Medicare prescription drug plan and covering preventive services like an annual wellness exam and mammograms. What happens over time depends on how successful the ACA's new cost control mechanisms rein in Medicare's current growth trajectory. Decreasing reimbursements may discourage some doctors from taking Medicare patients.

Will health care costs for seniors go up under the health reform law?

Even with the cost control measures built into the new law and the increased emphasis on prevention, Medicare's history suggests program costs and patient premiums will continue to go up over time. Although the health reform law puts much of the financial burden on providers, beneficiaries will share some part of the expense.

SOURCES: The Congressional Budget Office. The Kaiser Family Foundation. Kaiser Health News. The New York Times. Department of Health and Human Services. Web sites operated on behalf of the Obama and Romney campaigns.

©2012 WebMD, LLC. All Rights Reserved.








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