U.S. Rep. Paul Ryan’s budget proposal includes a big change to Medicare. Most notably, the Republican chairman of the House Budget Committee aims to convert the program into a system that offers what he calls “premium support,” which his detractors call vouchers. Among those defending Ryan’s proposal is Rep. Chip Cravaack of Minnesota.
“The [new Medicare] benefits being proposed is what I receive in Congress right now,” Cravaack assured listeners of April 14, 2011, Midmorning broadcast.
On the surface, there are similarities between the two plans. Look deeper, and the differences are stark.
Currently, the government pays doctors and hospitals for treating Medicare patients, though some beneficiaries also pay premiums and other costs.
The Ryan plan would change all that for those who are younger than 55. Starting in 2022, the government would provide beneficiaries with a payment, which they would use to buy insurance that meets standards set out by the Office of Personnel Management (OPM), a branch of government that also sets standards for federal employee coverage. Just as federal employees do, Medicare beneficiaries would be able to choose a private plan from an array of choices.
That’s where similarities between the plans end.
The federal employee plan isn’t much different from private sector employee-sponsored coverage: the federal government – or the “employer” – pays roughly 75 percent of premium costs, and federal employees pick up the remainder.
That ratio is commonly called the “Fair Share” formula because even if health care costs rise, the federal government is required by law to pick up the bulk of the tab.
Ryan proposes to link Medicare payments to the consumer price index, which has lagged behind increases in the cost of medical care. Over time, the payments Ryan is proposing would buy less coverage as a result, potentially making it difficult to purchase plans similar to those enjoyed by federal employees.
In fact, the Congressional Budget Office predicts that, under the Ryan plan, by 2030, the average 65-year-old beneficiary would be paying 68 percent of his or her benefits compared to 25 percent under current law.
It’s also worth pointing out that no detail has been given on how OPM would structure these plans and what sort of benefits insurance providers would be required to include. So, it’s impossible to say whether Medicare coverage would be like coverage Cravaack gets.
There’s a nugget of truth in Cravaack’s claim: the Republican plan envisions that Medicare and federal employee benefits would have to meet standards set by the same branch of government, and that both groups would get to choose from an array of private plans.
But Cravaack’s statement that the GOP Medicare proposal is “what I receive in Congress right now” is misleading to the point of being false because the government is guaranteed to cover 75 percent of his premium costs, regardless of how expensive health care gets. That’s not the case for the new Medicare plan proposed by the GOP; in fact, it is likely beneficiaries will end up paying far more than they do now.
Minnesota Public Radio News, Midmorning, April 14, 2011
The Path to Prosperity: Restoring America’s Promise, accessed May 3, 2011
The Congressional Budget Office, Letter to Paul Ryan regarding proposed changes to Medicare and Medicaid, April 5, 2011
The New York Times, Comparing Ryan’s Medicare Plan to What Congress Gets, by Uwe E. Reinhardt, April 18, 2011
The Congressional Research Services, Health Benefits for Members of Congress, by Barbara English, Sept. 25, 2007
The U.S. Office of Personnel Management, Federal Employees Health Benefits Program Handbook, accessed May 3, 2011
The Commonwealth Fund, Stark Choices: The Health Care Budget Proposals from the President and the House of Representatives, April 29, 2011, by Karen Davis
PolitiFact.com, Mike Pence said the Republican Medicare proposal will allow seniors to buy the same kind of health care as Congress, by Angie Drobnic Holan, April 13, 2011
The Washington Post, Fact Checker: GOP Medicare plan ‘just like’ Congress’s coverage?, by Glenn Kessler, April 30, 2011
Interview, Shawn Ryan, spokesman, Rep. Chip Cravaack, May 2, 2011
Interview, Jack Hoadley, Georgetown University Health Policy Institute, May 3, 2011
Interview, Stuart Guterman, Vice President for Payment and System Reform, the Commonwealth Fund, May 3, 2011
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