August 16th, 2012 – Republican Presidential candidate Mitt Romney’s choice of Paul Ryan as his Vice President has made Medicare a hot issue in the presidential race.
Paul Ryan is a powerful Congressman from Wisconsin, who advocates an aggressive budget proposal known as the “Path to Prosperity.” Ryan’s budget proposal was passed by the House, but defeated in the Senate earlier this year.
Ryan’s budget plan would gradually convert Medicare’s fee-for-service approach into a voucher system that relies on private insurers to keep costs down. Under Ryan’s plan, seniors would get a set amount of money each year to purchase health insurance on the private market or to pay for traditional Medicare.
The amount of the subsidy would grow at a slower rate than the projected rate of medical inflation. This concerns many seniors, as that will force them to pay higher out-of-pocket costs for their medical care over time.
President Obama’s alternative would reduce costs by reducing the payments to hospitals and insurers, while somehow maintaining patient benefits. The risk is that providers will increasingly stop treating people with Medicare, as they become increasingly unprofitable patients.
Obama’s savings would be used to expand health coverage to 30 million lower-income Americans, whereas Ryan’s similar savings would go towards reducing the deficit.