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V.P. candidate Paul Ryan's Medicare plan back in spotlight

By Ricardo Alonso-Zaldivar

Associated Press

Published: Monday, Aug. 13 2012 6:46 p.m. MDT

The private plans would be regulated by the government, and low-income people, as well as those with severe health problems, would get additional assistance. People who pick plans with relatively generous benefits would pay more out of their own pockets.

The transformation would mirror the shift in workplace pension plans taking place over the last 20 years. Medicare would start looking more like a 401(k) plan than a plan that provides open-ended coverage for a set of benefits.

Ryan would also gradually raise the Medicare eligibility age from the current 65 to 67. In more general terms, Romney has also spoken of providing "generous" but undetermined subsidies to help future retirees buy private insurance, or let them have the option of traditional Medicare. He's also endorsed a gradually increasing age to qualify for benefits.

Some prominent Democrats have supported Ryan's general approach, even teaming up with him on different versions of his proposal. The GOP-led House has passed budgets written by Ryan two years in a row.

Backers say the result of his Medicare plan would be a more affordable and sustainable program, both for taxpayers and beneficiaries. Currently, Medicare's giant trust fund for inpatient care is projected to run out of money in 2024.

But critics see a massive cost shift to beneficiaries.

"The only way to drive real savings is to set a lid on the growth in the voucher," said Democratic economist Judy Feder. "That most likely means shifting costs to beneficiaries, not controlling costs."

Antos, however, called the latest version of Ryan's proposal a "reasonable plan" that "provides a decent benefit for people."

In an analysis earlier this year, the nonpartisan Congressional Budget Office said some of the effects of Ryan's plan "would of necessity be a great deal stronger" than current law, which includes Medicare cuts in Obama's health care law yet to take place.

Under the most likely current budget scenario, Medicare spending for the typical 66-year-old would rise to $9,600 in 2030, or about 75 percent more than now, the CBO projected.

But under Ryan's plan, spending would rise more slowly to $7,400, or about 35 percent more than current levels.

That difference would result in a cost shift of thousands of dollars to individual retirees, critics say.

Under the previous version of Ryan's plan, a typical 65-year-old retiree would have been responsible for about two-thirds of his or her health care costs in 2030.

Ryan's proposal for turning Medicaid into a block grant program for the states would also have far-reaching consequences. It sharply reduces the future size of the program relative to the overall economy, the CBO said.

Even if states can run Medicaid more efficiently, they'd still face the difficult choice between cutting the program or pouring more of their own money into it, the CBO said.

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