TOPICS > Politics

Presidential Candidates’ Medicare Platforms Could Affect Undecided Voters

August 23, 2012 at 12:00 AM EST
Under Rep. Paul Ryan's 2013 budget proposal, Medicare recipients eventually could choose to opt for a private insurance plan. Judy Woodruff talks to American Enterprise Institute's Joe Antos and Urban Institute's Judy Feder to understand the presidential candidates' plans for Medicare and how this is affecting the campaigns.
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JUDY WOODRUFF: And we turn to the battle for the presidency and the latest in our continuing coverage of the issues — tonight, Medicare.

Ever since Mitt Romney selected Paul Ryan as his running mate two weeks ago, Medicare has become a subject of hot debate on the campaign trail. To a large extent, that’s because Ryan, as chairman of the House Budget Committee, has proposed a big change to Medicare over time.

He wants it to eventually move to a system where some beneficiaries would receive fixed payments to buy an insurance plan. Romney has not embraced the full Ryan plan, but has signed onto that concept.

MITT ROMNEY (R): When there are big issues that come up, like how do we save Medicare, this man said, I’m going to find Democrats to work with, found a Democrat to co-lead a piece of legislation that makes sure that we can save Medicare.

JUDY WOODRUFF: New polling out today shows Romney’s support for Ryan’s idea could be giving President Obama an edge in some key swing states.

The Quinnipiac University, The New York Times, and CBS News found in a joint poll that more voters in Florida, Ohio, and Wisconsin trust the president to handle Medicare.

Less than a third support the plan backed by Romney and Ryan, even though Romney asserts he has no plans to change the Medicare program for current seniors.

Right now, the federal government is required to help pay for each medical service used by Medicare enrollees, with no limits. But those costs are rising, and the Medicare trust fund will be insolvent in 2024.

As House budget chair, Ryan passed a plan that would increase the eligibility age gradually from 65 to 67 by 2034 and cap spending increases for Medicare at just above the growth rate of the economy.

The biggest change, when future beneficiaries, those currently under 55, become eligible for Medicare, they will receive a set annual amount of money from the government to purchase private insurance or join the traditional government plan.

President Obama called the plan an end to Medicare as we know it, as he told voters in Iowa last week.

PRESIDENT BARACK OBAMA: They want to turn Medicare into a voucher program.

CROWD: No!

BARACK OBAMA: That means seniors would no longer have the guarantee of Medicare. They’d get a voucher to buy private insurance. And because the voucher wouldn’t keep up with costs, the plan authored by Gov. Romney’s running mate, Congressman Ryan, would force seniors to pay an extra $6,400 a year.

JUDY WOODRUFF: The president wouldn’t change traditional Medicare service. But his health care reform law includes more than $700 billion in payment cuts over 10 years to insurers, hospitals and other providers.

The Quinnipiac/New York Times/CBS poll found Medicare now ranks as the third most important issue in Florida, Ohio, and Wisconsin, right behind the economy and health care.

A closer look now at what both candidates are proposing and how their plans would impact Medicare.

Joe Antos is a health policy analyst with the American Enterprise Institute. And Judy Feder is a professor of public policy at Georgetown University and a fellow at the Urban Institute.

We thank you both for being with us.

JOSEPH ANTOS, American Enterprise Institute: Thank you.

JUDY WOODRUFF: Joseph Antos, I’m going to start with you. And I want to ask both of you this question.

Just to quickly set the table, how much trouble is the Medicare trust fund in, and why is it?

JOSEPH ANTOS: Well, it’s in tremendous trouble.

The trustees tell us that the main trust fund will run short of money by 2024. But that really doesn’t tell you anything. The fact is that the Medicare program has been spending much more rapidly than any other major part of the budget. In fact, it’s the fastest growing part of the budget, other than interest on the debt.

JUDY WOODRUFF: How would you describe how much trouble it’s in, Judy Feder?

JUDY FEDER, Urban Institute Well, I think that there’s a concern that the payroll taxes that people pay to support Medicare become inadequate to support it fully in the future, and that’s because health care costs are growing.

Medicare cost, like overall health care costs, is growing. So we do need action to slow the growth of Medicare costs, as well as the nation’s health costs, and we are taking those actions.

JUDY WOODRUFF: So let’s talk about — let’s look at these two proposals as they are out there.

And start with what Gov. Romney, Joseph Antos, and Congressman Ryan are talking about. What in a nutshell would they do with Medicare?

JOSEPH ANTOS: Well, the whole idea is to change the way the health sector looks at Medicare.

Right now, under the current Medicare program, under traditional Medicare, health care providers know that if they do more work, they will get paid more. And that’s without regard to whether the additional services are actually worth it for the patient.

What the Romney/Ryan plan does is it says that seniors get a fixed amount of money, more if they’re low-income, more if they need more help. But they get a fixed amount of money. They can select a plan they want. It could be traditional Medicare. It could be a private plan.

And what that does to the health sector is, it sends the message that, if you want to do well, you have to do a better job of providing the right services at the right time to the patients.

JUDY WOODRUFF: And under the Ryan plan, which is where this — is, it would happen in 10 years.

So, Judy Feder, when you hear that, many people listen to that and say that sounds like a logical thing, a choice for seniors.

JUDY FEDER: Well, I think let’s start with what — where Joe talked about fixing the dollars.

Right now, under Medicare, you’re guaranteed a set of benefits, and you get those benefits. What this — what the Romney/Ryan plan would do is, instead of guaranteeing benefits, would, as Joe said, guarantee you dollars.

And then you would go shopping for a health plan in order to, if they want to get savings out of those dollars, they have to — they are constraining the dollars with which people have to shop.

And what the evidence tells us from the Congressional Budget Office and others is that those vouchers become inadequate to buy the Medicare benefit package. And so there is then a shift of cost to seniors.

JUDY WOODRUFF: Become inadequate, why?

JUDY FEDER: Because health care costs — the voucher is not likely to grow at the rate of growth in premium costs.

And that’s why the Congressional Budget Office found that in the future, seniors would pay an additional $6,000 out of pocket for the premiums.

JUDY WOODRUFF: So, Joe Antos, you’re shaking your head.

JOSEPH ANTOS: Well, first of all, that $6,000 figure doesn’t refer to Ryan’s current plan.

Second of all, it makes unreasonable assumptions. The fact is that under Obama’s plan, which is passed into law, $700 trillion — $700 billion would be taken out of the Medicare program. Now, you could say, well, it’s just reducing payments to hospitals and physicians. Sure it is.

But if you think that you can take that money out without turning Medicare into a program that doesn’t provide services, you’re wrong.

JUDY FEDER: Well…

JUDY WOODRUFF: Well, and I do want to ask you about the Obama proposal, the — which Ryan accepts those cuts, but just quickly on this point about if you go to a voucher system or whatever terminology you use, that there will be less funds because the cost of medical care will go up over time.

JOSEPH ANTOS: So, the question is, will the health sector respond to the clear incentive?

Right now, they’re responding to clear incentive, do more, get paid more. So if they actually face some limitation on federal subsidies, will they turn around and find efficiencies? That’s the question. If they don’t, then we’re sunk. But we’re sunk either way.

JUDY WOODRUFF: So, you — but you would be counting on that as a more logical…

JOSEPH ANTOS: And so is everybody else on both sides.

JUDY FEDER: Well, what the Ryan/Romney or Romney/Ryan plan does is give people, as we said, a fixed amount to shop with and then hopes that cost containment, that plans will become efficient, but leaves puts the risk if costs rise faster on the beneficiary, on the senior.

Joe has talked about health care payment being out of whack, that we pay for more and more services, ever more costly services. We need to address that.

And the Obama plan does address that, but it does so in a way that holds providers accountable and uses the Medicare program to keep costs under control. It doesn’t shift the responsibility to the shopping seniors.

JUDY WOODRUFF: And you mentioned that $716 billion, Joe Antos.

JUDY FEDER: Yes, and let me talk a little about that.

JUDY WOODRUFF: Well, let me come back to Mr. Antos just a minute, because you were saying those cuts to — mainly to providers, what’s the problem with that? You’re trying to find economies and efficiencies.

JOSEPH ANTOS: Right.

Frankly, the Medicare program should be cut. I think we all agree with that. The question is how. What the actuaries tell us is that if those cuts go through, then Medicare will be paying at the rate of the Medicaid program. The Medicaid program is renowned for lack of access to care.

JUDY WOODRUFF: These are for individuals, low-income individuals, those with disabilities.

JOSEPH ANTOS: Right. Right.

So, not only does the Ryan plan, but the Obama plan really does depend on major transformations in the way health care is delivered.

JUDY WOODRUFF: What about his point about the Obama plan?

JUDY FEDER: So, let’s talk about the $700 billion-plus that Ryan did take out of his plan as well.

Those are reductions in the rate of growth in payments to providers and to the private health insurance plans that some beneficiaries buy to supplement Medicare. But the — that growth, if you remember where those came from — and they are part of the Affordable Care Act — they came in agreements with the hospital industry, who agreed that they could accept cuts of that nature.

And evidence tells us that where there is pressure to reduce costs in terms of what’s paid to the hospital, not what’s given to people to shop, that there are efficiencies that can be taken.

And with those cuts, what is not acknowledged in this debate is Medicare as a result of the Affordable Care Act is already growing at an extraordinarily slow-per-beneficiary rate.

JUDY WOODRUFF: So what about this idea that this money would come from hospitals? They have agreed to do it. They’re going to work on doing it, on finding sensible cuts.

JOSEPH ANTOS: Well, apparently, they are all charitable organizations.

In reality, that was the political decision that you would make when you think that something’s going to happen anyway, and that’s what they thought, and in effect that’s what happened. We had the health reform law passed.

But that doesn’t mean that they’re not going to come back, as they do year after year after year, saying, we need some relief.

JUDY WOODRUFF: Meaning the hospitals and providers?

JOSEPH ANTOS: Hospitals and physicians are going to be back to Congress, and Congress is very likely to knuckle under.

JUDY WOODRUFF: And just quickly, that, for patients, they will be left paying — paying what? What happens with patients?

JUDY FEDER: The difference between the Obama plan and the Romney-Ryan plan is that because Medicare is a very large purchaser, it can set rates that providers will accept because they need the business.

We are, as older people, a big part of their business. So the response — the pressure is put on the providers and, through a lot of innovations — we didn’t talk about those — changes in the way they’re paid.

JUDY WOODRUFF: Very big subject. We have taken a crack at it tonight.

We thank you both for doing that. I know it’s something we are going to come back to again and again during the fall campaign.

Joe Antos, Judy Feder, thank you both.

JUDY FEDER: Thank you, Judy.