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GOP Details Huge Medicare Change In Leaked Platform

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"The first step is to move the two programs [Medicare and Medicaid] away from their current unsustainable defined-benefit entitlement model to a fiscally sound defined-contribution model," the draft platform reads. "While retaining the option of traditional Medicare in competition with private plans, we call for a transition to a premium-support model for Medicare, with an income-adjusted contribution toward a health plan of the enrollee's choice. This model will include private health insurance plans that provide catastrophic protection, to ensure the continuation of doctor-patient relationships."

The esoteric language gets to the heart of the change that ends the basic structure of Medicare. Since its inception in 1965, Medicare has been a government-run insurance program that directly pays medical bills for the elderly per their needs (i.e. "defined benefit"). Republicans want to turn it into a partially privatized system that pays seniors a fixed amount to buy their own health insurance (i.e. "defined contribution").

"Under the defined contribution approach envisaged by the Rivlin-Ryan plan [a proposal that's remarkably similar to Romney's], most of the risk of future health-care cost increases would be shifted onto the shoulders of Medicare beneficiaries," Uwe Reinhardt, a health policy expert at Princeton University, said last year. "This feature makes the proposal radical."

The nonpartisan Congressional Budget Office has found that the plan will raise seniors' out-of-pocket medical expenses by thousands of dollars, a fact Democrats hasten to point out. The draft Republican platform claims that the competition among private insurance plans will lead to major cost savings, though little evidence exists to support this argument.

Unlike the first Ryan budget unveiled in 2011, the Romney-Ryan plan seeks to mitigate some of the potential adverse effects of privatization by including the option for seniors to buy into a government-run plan with their voucher. Under the Romney-Ryan plan, the value of the voucher, as long as it doesn't exceed a certain level, adjusts to cover the cost of the second-cheapest policy on a competitive insurance exchange.

By contrast, President Obama wants to preserve Medicare's defined benefit structure by introducing efficiencies into the program and by setting up an independent panel of Senate-confirmed experts to cut reimbursement rates to providers if per-beneficiary expenses exceed per-capita GDP plus 0.5 percent -- a budget cap that Ryan also establishes in his blueprint.

Echoing a Romney campaign plank, the Republican platform also champions an increase in the eligibility age -- currently 65 -- for those who aren't about to retire.

"Without disadvantaging retirees or those nearing retirement," it reads, "the age of eligibility for Medicare must be made more realistic in terms of today's longer life span."

RNC spokespersons didn't immediately respond to queries about whether the Medicare language would be altered before final approval.

Update 2:30 P.M. ET: An RNC official tells TPM the platform will face a vote Tuesday afternoon but declines to reveal any new information about the Medicare plank.

"[T]he final platform will be voted on tomorrow at 2 p.m. by the full RNC convention," the official said in an email. "Unfortunately we aren't making the platform language public until it is voted on by the delegates but it will go out tomorrow."

About The Author

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Sahil Kapur is TPM's senior congressional reporter and Supreme Court correspondent. His articles have been published in the Huffington Post, The Guardian and The New Republic. Email him at sahil@talkingpointsmemo.com and follow him on Twitter at @sahilkapur.