Romney’s Choice Of Ryan Is Key To Politics Of Medicare Debate

KHN’s Mary Agnes Carey and Marilyn Werber Serafini discuss how Medicare reforms could figure into November’s presidential election now that presumptive GOP presidential candidate Mitt Romney has chosen Rep. Paul Ryan, R-Wis., to be his running mate.

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MARY AGNES CAREY: Good day, this is Health on the Hill.  I’m Mary Agnes Carey.  Presumed GOP presidential nominee Mitt Romney’s choice of Wis. Republican Paul Ryan to be his running mate has put new energy into Gov. Romney’s quest for the White House.  The announcement has also given President Obama and Democrats fresh ammunition to attack Romney and Ryan on the issue of entitlements. The Republican-controlled House has twice approved a plan that would make major changes to both Medicare and Medicaid.  With us to discuss Ryan’s proposal and what it means for the presidential race is Marilyn Werber Serafini of Kaiser Health News.  Marilyn, thanks for coming.

MARILYN WERBER SERAFINI:  My pleasure.

MARY AGNES CAREY:  Let’s talk a little bit about Paul Ryan.  As we know, he heads the House Budget Committee.  He has a budget plan they’ve passed twice with major changes for Medicare.  Tell us about those.

MARILYN WERBER SERAFINI:  Paul Ryan has been talking about Medicare, and he has had a plan on the table to fundamentally restructure Medicare for a number of years.  Now, the House has passed his plans as part of their budget resolutions for the past two years, but he had a couple year head start on that.  He started out with a true voucher program: Give people a set amount of money; let them buy private plans in the private marketplace.  That has evolved over the years.  The current plan that he is talking about – the most recent plan that the House passed this year as a part of its budget resolution, which went no further, but it passed the House – would have specified a certain about of money that would go to individuals to purchase insurance.  Now that insurance could be a private plan – it could be the traditional government-run Medicare plan.

MARY AGNES CAREY:  This is fee-for-service.

MARILYN WERBER SERAFINI:  Fee-for-service. So, all of these plans, including the government-run plan, would bid. The second lowest bid would be the amount that the government would cover. So if a person chose a plan that cost more, they would have to pay the difference. If there was a plan that cost less, then the person could actually, potentially get a rebate. Now, the amount that he would cap federal spending at would be the growth of gross domestic product plus half of a percentage point. It’s important to point out that’s different from today, because Medicare currently pays whatever it takes to cover a  set amount of benefits for each individual beneficiary.

MARY AGNES CAREY:  So there’s currently no cap on growth in spending?

MARILYN WERBER SERAFINI: That’s correct.

MARY AGNES CAREY: Now Gov. Romney has also advanced a Medicare plan. How is that similar or different from what Paul Ryan wants to do?

MARILYN WERBER SERAFINI: It’s really the same thing. Right before Ryan came out with his latest plan, Romney came out with essentially the same plan.

MARY AGNES CAREY: And how do the ideas from Mitt Romney and Paul Ryan, how are they similar or different from what President Obama and Democrats have proposed on Medicare?

MARILYN WERBER SERAFINI: Well, they actually have a surprising number of similarities, although the differences are much bigger than the similarities. So let’s start with the similarities. They both set a cap on federal spending at the growth of gross domestic product plus a half of a percentage point. In fact, President Obama laid down that marker first. He did it as part of budget deficit reduction negotiations this past year.  As soon as he did that, Paul Ryan said: Well, if he can do it, I’m going to go down to that mark too. Because previously, Paul Ryan had been at gross domestic product plus 1 percent. But here’s the difference, at least on that front: The big difference is that Paul Ryan, if under his plan Medicare spending exceeded that level, it would automatically be brought down to the growth of gross domestic product plus half of a percentage point.

Under the Affordable Care Act, that is the same target. However, there is a specified formula for decreasing spending if that target is exceeded. And that formula might or might not take spending down to that level. So it is not as strict.

And that’s really one of the major differences. Similarities? Again, both of them say they would preserve traditional Medicare for people who were currently in the program. Everybody age 55 and above, Ryan says, would still be allowed to get Medicare exactly as they have it today.

The biggest difference is the benefits. Would you have Ryan saying — if you want the benefits that you have today, would you be able to still get them without paying more money? And there’s really a question about that, because [Ryan] says that you would, because his basic plan would have the same benefits guaranteed as traditional Medicare. But critics say you might have to pay more for the same kinds of benefits.

MARY AGNES CAREY: But, if I understand it correctly, neither President Obama nor Democrats are suggesting a premium support or voucher plan at this point, right?

MARILYN WERBER SERAFINI: That’s correct.

MARY AGNES CAREY: Let’s talk a bit about Ron Wyden. He’s a Senator from Oregon, a Democrat, who has worked with Paul Ryan to put out a framework for Medicare overhaul. How will that play into the presidential race?

MARILYN WERBER SERAFINI: Well, it depends which party you’re talking about. If you’re the Republicans, you’re going to say: Look, we have this bipartisan plan.

OK. Is it really bipartisan? Yes. Sen. Wyden did come together on a plan with Paul Ryan. He is the only Democrat who came together with him, so I’m not sure that makes it a major bipartisan plan. Plus, it’s really important to note that Sen. Wyden and Paul Ryan came together on a plan, then Paul Ryan came with a new plan, a new revised plan, which Sen. Wyden did not endorse. It is stricter. It brings the level of spending down further than two had agreed to initially.

MARY AGNES CAREY: Thanks so much, Marilyn Werber Serafini, Kaiser Health News.

MARILYN WERBER SERAFINI: Thank you.