• Where the Candidates Stand on Medicare and Medicaid

    By Wire News Sources on September 15, 2012

    by Suevon Lee

    Medicare and Medicaid, which provide medical coverage for
    seniors, the poor and the disabled, together
    make up nearly a
    of all federal spending. With total Medicare spending projected to cost
    $7.7 trillion over the next 10 years, there is consensus that changes are in
    order. But what those changes should entail has, of course, been one of the hot-button
    of the campaign.

    With the candidates slinging
    , we thought we’d lay out the facts. Here’s
    a rundown of where the two candidates stand on Medicare and Medicaid:


    Big Picture

    Earlier this year, the Medicare Board of Trustees estimated
    that the Medicare hospital trust fund would remain fully funded only until
    2024. Medicare would not go bankrupt or disappear, but it wouldn’t have enough
    money to cover all hospital costs.

    Under traditional government-run Medicare, seniors 65 and
    over and people with disabilities are given health insurance for a fixed set of
    benefits, in what’s known as fee-for-service
    coverage. Medicare also offers a subset of private health plans known as
    Medicare Advantage, in which roughly one-quarter
    of Medicare beneficiaries are currently enrolled. Obama retains this structure.

    The Obama administration has also made moves that it says
    would keep Medicare afloat. It says the Affordable Care Act would extend
    by eight years, mainly by imposing tighter spending controls on
    Medicare payments to private insurers and hospitals.

    In contrast, Rep. Paul Ryan, Mitt Romney’s running mate, has
    proposed a more fundamental overhaul of Medicare, which he says is on an “unsustainable
    path.” On his campaign
    , Romney says that Ryan’s proposals “almost precisely mirrors” his
    ideas on Medicare. But he’s been fuzzy on other aspects of the plan.

    A Romney-Ryan administration would replace a defined
    benefits system with a
    defined contribution system
    in which seniors are given federal vouchers to
    purchase health insurance in a newly created private marketplace known as
    Medicare Exchange. In this marketplace, private health plans, along with
    traditional Medicare, would compete for enrollees’ business. These changes wouldn’t start until 2023, meaning current
    beneficiaries aren’t affected – just those under 55.

    Under the Romney-Ryan, the vouchers would be valued at the second-cheapest
    private plan or traditional Medicare, whichever costs less. Seniors who opt for
    a more expensive plan would pay the difference. If they choose a cheaper plan,
    they keep the savings.

    Who’s covered

    In the current system, people 65 and over are eligible for
    Medicare, which Obama has said he would keep for

    Romney has proposed
    raising the eligibility age for Medicare beneficiaries from 65 to 67 in 2022,
    then increasing it by a month each year after that. In the long run, he would index
    eligibility levels to “longevity.” Ryan’s budget plan proposesraising Medicare eligibility age by two months a year
    starting in 2023, until it reaches 67 by 2034.

    Many others looking to keep Medicare solvent have also proposedraising the age of eligibility.

    The Congressional Budget Office estimates
    that raising the minimum age from 65 to 67 would
    reduce annual federal spending by 5 percent.
    But it would also result in higher premiums and out-of-pocket costs for
    seniors who would lose access to Medicare.

    Obama’s health care law also adds
    some benefits for seniors, such as annual wellness visits without co-pays,
    preventive services like free cancer screenings and prescription drug savings.

    Proposed Savings

    The Affordable Care Act is projected to reduce Medicare
    spending by $716 billion over the next 10 years. These reductions, as detailed
    by Washington Post’s Wonkblog, will come mostly from reducing
    payments to hospitals, nursing homes and private health care providers.

    While Ryan criticized such spending
    cuts in his speech at the Republican National Convention, his own budget proposed
    keeping these reductions.

    “The ACA grows the trust fund by giving more general revenue
    to the Treasury, which then gives the trust fund bonds. But it then uses the
    money from those bonds to expand coverage for low- and middle-income people,” explains
    Dylan Matthews on Washington Post’s Wonkblog.

    Romney hasn’t really come up with a solid answer: he
    previously said he would restore
    the $716 billion savings that the health care law imposes. Per this New York
    Times story,
    the American Institutes for Research calculates this would increase premiums
    and co-payments for Medicare beneficiaries by $342 a year on average over the
    next 10 years.

    For more on where the candidates stand on the $716 billion, the
    private health policy Commonwealth Fund offers this helpful

    Caps on Spending

    Both Obama and Ryan have set an identical
    target rate
    that would cap Medicare spending at one-half a percentage point
    above the nation’s gross domestic product.

    But they have different ideas on mechanisms to achieve it.

    The Affordable Care Act establishes a 15-member Independent
    Payment Advisory Board
    that, starting in 2015, would make binding recommendations
    to reduce spending rates. As Jonathan Cohn points
    in the New Republic, the commission is prohibited from making any
    changes that would affect beneficiaries.

    Ryan has proposed hard caps on spending and derided
    this panel of appointed members as “unelected, unaccountable bureaucrats.” When
    laying out his plan in a 2011 memo, Ryan
    wrote that to control spending, “Congress would be required to intervene and
    could implement policies that change provider reimbursements, program overhead,
    and means-tested premiums.”

    Romney hasn’t
    clear proposals for imposing a cap on spending.


    Big Picture

    Though, it’s far less discussed
    on the campaign trail, Medicaid actually covers more people than Medicare. The
    joint federal-state insurance program for the poor, the disabled, and elderly
    individuals in long-term nursing home care currently covers about 60 million
    Americans.  The Affordable Care Act has
    Medicaid coverage further. Beginning 2014, Medicaid will include
    people under 65 with income below 133 percent of the federal poverty level (roughly
    $15,000 for an individual, $30,000 for a family of four). This was estimated
    to cover an additional 17 million Americans as eligible beneficiaries.

    In June, however, the U.S. Supreme Court ruled that
    states could opt out of the Medicaid expansion. A ProPublica analysis estimated
    that the 26 states that challenged the health care law, and thus may possibly
    opt out, would account for up to 8.5 million of those new beneficiaries.

    Romney and Ryan would overhaul this current system by
    turning Medicaid into a system of block grants:
    the federal government would issue lump sum payments to the states, who would determine
    eligibility criteria and benefits for enrollees. These grants would begin in

    Effects on spending

    The Congressional Budget Office estimates that Medicaid
    expansion under the new health care law would cost an additional $642 billion
    over the next 10 years.

    Under the Ryan plan, federal Medicaid grants would be adjusted
    only for inflation, but not health care costs, which grow at a much higher
    rate. The CBO estimates
    Ryan’s plan would save the federal government $800 billion over the next 10
    years. Another study conducted by Bloomberg News shows that the block-grants
    could decrease Medicaid funding by as much as $1.26
    over the next nine years.

    Actual Impact                                                                                                     

    The New York Times points
    that more than half of Medicaid spending goes toward the elderly and
    disabled. An Urban Institute analysis estimates
    the Ryan plan would result in 14 million to 27 million fewer people receiving Medicaid
    coverage by 2021.

    Though rarely mentioned by any of the candidates, Medicaid
    costs are soaring to cover the elderly who require long-term nursing care. As
    the Times’ details
    how, states saddled by high Medicaid costs have begun turning to private
    managed care plans to blunt the cost.

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