It may come as a surprise that President Barack Obama and GOP vice
presidential nominee Paul Ryan are pushing the same target rate for
controlling federal spending on Medicare. Each would set it at half a
percentage point higher than the growth rate of the economy – the gross
domestic product – after a phase-in period.
Looking at their plans in more detail, however, their approaches to
curbing costs are very different. And the practical effects on seniors
are also likely to be different.
"There is a consensus, an agreement that Medicare
is unsustainable," Ryan spokesman Conor Sweeney said in the spring
after the House approved Ryan’s proposal as part of the budget
resolution. "That's where the agreement is, and it's where the agreement
ends."
That hasn’t changed. Republican presidential nominee Mitt Romney has
embraced the broad outlines of Ryan’s proposal. Like Ryan, he would
replace Medicare’s current defined-benefit coverage of all medical costs
incurred by a beneficiary with a defined contribution toward premiums
for private health insurance or traditional, government-run, Medicare.
While Democrats have criticized Ryan’s Medicare proposals for years,
their attacks have become more vociferous since Romney tapped the House
Budget Committee chairman as his running mate. Democrats charge that
Ryan’s plan would raise out-of-pocket costs for seniors and ultimately
destroy traditional Medicare. Republicans have countered with a spirited
reprise of their claims from the 2010 congressional elections that
Democrats already cut hundreds of billions of dollars out of Medicare as
part of that year’s Affordable Care Act.
Here are some questions and answers about the Democratic and
Republican approaches to moderating spending on the popular program,
which covers 47 million seniors and disabled people.
There are important differences. Ryan's plan, which would only affect
people currently under age 55, would impose a hard cap on federal
spending on the program.
Obama is proposing a softer cap. His proposal follows an effort in
the 2010 health law to curb Medicare cost growth by tying the spending
target to the Consumer Price Index in early years, and later on to the
rate of GDP growth plus 1 percentage point. If federal spending per
Medicare beneficiary is rising faster than that – a determination made
by the Medicare actuary – then cuts would be triggered. The cuts would
come as a percent reduction in Medicare spending, but they wouldn’t
necessarily be sufficient to meet the target.
Later, in budget deficit reduction negotiations, Obama proposed to
lower the target to the growth of GDP plus half a percentage point.
2. On the campaign trail, Democrats say that seniors would
pay more for coverage under Ryan’s Medicare plan, but Ryan suggests they
could choose from one or two plans at no cost. Who’s right?
Seniors currently pick up some of the tab for Medicare, so it is
unlikely that the federal government would pay the entire premium of
even a lower-cost plan and still come in under Ryan’s spending cap, say
both liberal and conservative health care policy experts.
Under Ryan's so-called premium support proposal, all plans, including
traditional Medicare, would submit bids for how much they would charge
to cover a beneficiary's health care costs. All plans would have to
provide a minimum set of benefits equal to the value of those in the
traditional program, although not necessarily identical in makeup. They
could provide additional benefits beyond that minimum. The government
would pay the premium for the private plan with the second lowest bid,
or for traditional Medicare, whichever is lower. Beneficiaries would get
a rebate if they chose the lowest-cost plan, but would have to pay the
difference if they chose a plan that set premiums higher than the
second-lowest.
3. Republicans are accusing Democrats of cutting $716 billion
from Medicare to finance the health law. Didn’t they used to say $500
billion?
The Congressional Budget Office, using a different time frame to
assess the law’s impact, has updated its estimate of reductions from
future Medicare spending to $716 billion over 10 years. The Ryan plan
calls for the same dollar amount of savings from Medicare, even though
it would repeal the health care law. But Ryan says the money would be
plowed back into the program.
The reductions in the health law mostly affect hospitals, health
insurers, home health and other providers who supported the measure
because it extended coverage to 30 million uninsured Americans, raising
the number of paying customers. The law also significantly reduced
payments to private Medicare health plans.
4. How would Obama's plan for Medicare affect beneficiaries ?
Obama is a critic of premium support. He would retain Medicare's
defined-benefit structure, meaning that the government will pay whatever
it takes to cover a specified set of services.
The health law seeks to hold down costs by promoting changes in the
ways providers are organized and paid, to shift from rewarding volume of
services to improving quality and patient outcomes.
The health law also created the Independent Payment Advisory Board
(IPAB) to come up with proposals to reduce spending if Medicare grows at
a higher rate than the target. But the board's 15 members, who will be
appointed by the president subject to confirmation by the Senate, are
not allowed to recommend anything that would ration care or change
benefits, eligibility or cost sharing for Part A (hospital services) or
Part B (physician services). It also couldn't do anything to change the
percentage of premium that seniors pay for prescription drug coverage or
the subsidies that low-income individuals get. The expectation is that
reductions would come from medical providers, although hospitals are
protected at first.
Beginning in fiscal year 2015, if Medicare spending exceeded the
target, the board would send its recommendations to Congress. The
secretary of Health and Human Services would have to implement those
recommendations unless Congress passed alternative cuts. The future of
the IPAB is in doubt, however, as Republicans – and some Democrats –
have sought to kill it, arguing that the board will end up rationing
care and have too much control over Medicare. Obama has yet to nominate
panel members.
Some health care analysts argue that reducing payments to medical
providers could drive them out of Medicare and create access issues for
beneficiaries. Richard Foster, Medicare's chief actuary, warned in the
2012 Medicare trustees' report that the health law will eventually lower
payments to medical providers so much that "Congress would have to
intervene to prevent the withdrawal of providers from the Medicare
market and the severe problems with beneficiary access to care that
would result."
5. And under Ryan?
5. And under Ryan?
Ryan is not specific in his plan about what he’d cut to keep spending
below his proposed cap, but he has said that Congress could expand
requirements for higher-income beneficiaries to pay more for their
coverage. Spokesman Conor Sweeney has said that competition among both
public and private health plans would hold down costs, and seniors would
be able to choose the health plans best suited to their individual
needs. "Seniors want more power and control over their Medicare
dollars," he said. If competition doesn’t keep Medicare spending below
Ryan’s target, then automatic cuts would occur.
The nonpartisan Congressional Budget Office estimated that Ryan’s
proposal from 2011 would require a typical 65-year-old person to pay
thousands of dollars more for Medicare by 2030 than would be the case
under its current structure. However, his latest plan, included in the
fiscal 2013 House budget resolution, is missing key details, so the CBO
has said it is unable to assess its impact on beneficiaries.
Although Ryan would give future seniors the option of remaining in
the traditional, government-run Medicare program, it would have to
compete with private plans. Critics predict that traditional Medicare
could become unaffordable if it attracts the sickest people while
private plans lure the healthiest. They also say that beneficiaries
might have trouble finding physicians if they abandon the program
because their rates are cut.
6. What's next for Medicare?
Lawmakers are unlikely to consider legislation that would restructure
Medicare in any significant way until a new Congress -- and possibly a
new president -- are seated in 2013. Still, after the elections,
Congress may try to pass deficit reduction legislation that would avert
automatic 2 percent cuts in Medicare required under last year’s budget
agreement. In the meantime, Medicare is proving to be a contentious
issue in presidential and congressional campaigns nationwide, as both
parties vie for the coveted senior vote. Behind the scenes, stakeholders
- from seniors' advocates to insurance leaders - are working to produce
proposals that protect Medicare and their interests.
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Source from Physicians Practice
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