The Difference Between Obama And Ryan’s Medicare Cuts

August 13, 2012 7:30 a.m.

Lost in the back and forth between the Obama and Romney campaigns over who’s the real Medicare cutter is a critical difference between visions: President Obama’s plan is to make the program solvent by reducing payments to health care providers, while Rep. Paul Ryan achieves his savings by transforming Medicare into a voucher-like system.

“There’s only one president that I know of in history that robbed Medicare — $716 billion to pay for a new risky program of his own that we call Obamacare,” Romney said in a CBS interview Sunday evening.

The claim is central to Romney’s strategy of deflecting attacks on his vice presidential pick’s plan to remake Medicare. But it papers over important facts, one of which is Ryan’s budget blueprints — which Republicans overwhelmingly voted for in 2011 and 2012 — include the same cuts he’s slamming.

The Medicare cuts, passed in the Affordable Care Act, come in the form of reimbursement reductions to hospitals, Medicaid prescription drugs and private insurance plans under Medicare Advantage. The Congressional Budget Office projects that they’ll extend the solvency of Medicare by eight years.

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AARP, the seniors’ lobby and chief gatekeeper of Medicare benefits, endorsed the Affordable Care Act despite its cuts, arguing that they wouldn’t affect seniors’ access to care. The law expanded benefits by closing the prescription drug coverage gap known as the “doughnut hole.” The hospital and drug industries also endorsed the legislation, believing that the additional customers via the coverage expansion would more than make up for the cuts.

Obama and Ryan agree that Medicare per-beneficiary cost growth needs to be capped at per-capita GDP plus 0.5 percent. But they disagree on what to cut in order to get there.

Ryan’s plan under the Path To Prosperity would end Medicare as an insurance program that directly pays medical bills for the elderly. It would be replaced with a fixed subsidy which seniors may use to buy competing private and public insurance policies on an exchange. If the value of the subsidy does not keep up with the growth of health care costs, seniors would make up the cost and pay higher medical bills.

The Congressional Budget Office projects that Ryan’s plan would raise seniors’ out-of-pocket expenses by $6,500 per year.

Obama’s long-term plan to save Medicare, approved under the Affordable Care Act, is to set up a panel of 15 Senate-confirmed experts tasked with issuing proposals to rein in the growth of spending if it exceeds a certain level. The Independent Payment Advisory Board, or IPAB, may only propose cuts to providers, not beneficiaries. Congress may replace the cuts by passing its own or with a three-fifths super-majority.

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