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Friday, October 12, 2012

Comparing Medicare Plans (NYT fact checkers reflect on Biden-Ryan debate)




Michael Cooper and Jonathan Weisma
No program faces bigger changes under Mr. Ryan’s budget than Medicare, the program providing health coverage for the elderly, and his plan to overhaul the program forms the basis in many respects for Mr. Romney’s plan — and Mr. Biden just took it on head on.
Mr. Ryan’s plan calls for reshaping the curren, government-sponsored defined benefit fee for service insurance system. Under his plan, which would begin a decade from now, each beneficiary would receive a fixed amount of money — Democrats call it a voucher — to purchase private insurance or buy into the existing government program. Under the most recent Ryan plan, the money, known as premium support, would rise each year by the growth of the economy, plus 0.5 percentage points, considerably slower than health care’s current rate of inflation.
Mr. Ryan believes competition will drive down the cost of health care, keeping the voucher’s value up to date. The Congressional Budget Office projected that over time, the value of the voucher would erode, shifting the extra costs to the elderly.
Critics also warn that under Mr. Ryan’s plan, private insurers would try to sign up the healthiest seniors, leaving the sickest, most-expensive-to-cover elderly to enroll in the government program. That would boost the government’s costs and steeply erode the value of those recipients’ vouchers.
Mr. Biden noted that Mr. Romney’s original Medicare plan would have cost future beneficiaries $6,400 in higher costs and questioned what his current plan would cost. But it is difficult to assess what Mr. Romney’s plan would cost, because he has not released key details.
Unlike Mr. Ryan, who proposed capping the growth of premium support to the growth of the economy, plus 0.5 percentage points, Mr. Romney has not specified how much money he would give to future beneficiaries to buy coverage, or how fast it would grow — making the effects of his proposal difficult to assess.
The Romney campaign’s policy director, Lanhee Chen, wrote that while higher-income seniors might be asked to pay more under Mr. Romney’s plan, “all seniors will be guaranteed sufficient support because the support is actually set based on what plans will cost.”
But the campaign has not said how its plan would work. A question and answer section of the campaign’s Web site puts it this way: “How high will the premium support be? How quickly will it grow? Mitt continues to work on refining the details of his plan, and he is exploring different options for ensuring that future seniors receive the premium support they need while also ensuring that competitive pressures encourage providers to improve quality and control cost.”
Mr. Romney has suggested keeping the growth of the subsidies below the rate of medical inflation in the past. He told the Washington Examiner last December that allowing the subsidies to grow at the rate of medical inflation “would have no particular impact on reining in the excessive cost of our entitlement program.”
If his campaign’s theory that increased competition among private plans will slow the growth of health care costs proves wrong, future beneficiaries could well face higher costs. (Mr. Romney’s pledge to repeal Mr. Obama’s health care law would also cost them more, because part of the law helps Medicare beneficiaries pay for prescription drugs by filing the so-called doughnut hole.) But without knowing the size of the subsidies or how fast they would grow, it is impossible to assign a dollar value to the cost, as the Obama campaign has tried to do.

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