Medicare and the GOP budget proposal – facts and fictionBlog added by Lauren McNitt on April 20, 2011
Lauren McNitt

Lauren McNitt

Denver, CO

Joined: September 08, 2010

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Republican Rep. Paul Ryan's budget proposal, approved by the House last week, would make some major reforms to Medicare. While polls show most voters oppose drastic changes to Medicare, many also approve of serious government spending cuts.

In the midst of the debate are, as expected, the politicians making their statements of "fact" to convince voters their stance is correct. Here are a few of the most recent claims made:

Under the Medicare changes, those under 55 will participate in the same type of health plan that members of Congress participate in.

Both budget plan creator Rep. Ryan and Republican Rep. Mike Pence of Indiana have said this, but Politifact says the statement is barely true.
    It is fundamentally different from the kind of employer-provided health insurance that members of Congress receive. At a minimum, the premium supports will not keep pace with the historic record of rapidly increasing health care costs. Additionally, seniors make significantly less income than members of Congress and will likely not have the same options to buy more expensive plans. And, finally, they will not get the same protection against rising costs that "Fair Share" provides members of Congress.
Uwe E. Reinhardt in the NYT Economix blog says:
    There is a huge difference in one important aspect between the Medicare program in the Ryan budget plan and the Federal Employee Health Benefit Plan, or F.E.H.B.P., for federal employees and for members of Congress.

    Basically, the F.E.H.B.P. is best described as a typical employer-sponsored health insurance plan. The federal government’s – that is, taxpayers’ – annual contribution to the premiums paid to competing private insurers by employees and members of Congress would rise in step with the average premiums charged by the private insurers. These premiums have been rising over time more or less in step with the overall increase in per-capita health spending in this country.

    By contrast, under the Ryan plan, the federal contribution toward the purchase of private health insurance by future Medicare beneficiaries would be indexed only to the Consumer Price Index. Over the last three decades, the C.P.I. has grown at a much slower rate than per-capita health spending, especially since 2000.

The budget plan abolishes Medicare within 10 years.

Politifact says false:

    For those who turn 65 before then, there would be no changes at all, even after 2022. And for the others, Medicare would change -- dramatically -- but it would still exist.

Reinhardt is more or less in agreement with Politifact for those over age 65. However, his explanation is a bit less clear for those 55 and younger. He says the traditional Medicare program would no longer exist, because it would change to a defined contribution program:

    For people now 55 or younger, the traditional Medicare program – a defined benefit plan — would cease to exist and, starting in 2022, would be converted to a defined contribution program. Starting in 2022 the eligibility age would gradually be ratcheted up to 67 from the current 65.

The Republican budget plan says that 10 years from now, if you’re a 65-year-old who’s eligible for Medicare, you should have to pay nearly $6,400 more than you would today.

President Obama made this remark, citing numbers from a Congressional Budget Office report.

Politifact says this is mostly true, but points out one problem with the CBO data:

    According to the CBO analysis (see page 20 -25), under the Ryan plan, the $8,000 premium support voucher in 2022 would cover 39 percent of the cost of the average private plan for a 65-year-old. Which means the plan actually costs about $20,500 and that beneficiaries would be on the hook for about $12,500 of the cost.

    But Obama left out an important fact, said Stephen Spruiell, a spokesman for the Republicans on the Committee on the Budget: "Elsewhere in the letter, CBO makes clear that the comparison is making unrealistic assumptions in order to construct a future for Medicare under the status quo –- a future in which Medicare goes bankrupt, seniors suffer from reduced access to care, and the nation enters a debt crisis."

    Indeed, the CBO clearly states that both of its scenarios, by keeping benefits largely as they are, would create "pressures over the long term that would make them difficult to sustain." Without Medicare reform, the CBO warned "the government’s debt would skyrocket to levels unprecedented in the United States." That would result in either rising tax rates or "surging federal debt." And that, in turn, might lead lawmakers to reduce Medicare benefits.
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