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Democratic Policy & communications center | Senator Debbie Stabenow, Chairwoman
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Paul Ryan’s Plan to End Medicare As We Know It -- Version 2.0

Mar 20, 2012

Even though 70% of Americans support keeping Medicare as it is, Chairman Ryan's new budget proposal would again seek to end Medicare as we know it. This time, he has proposed creating a two-tiered system that would replace the current structure of guaranteed benefits with a voucher for seniors to use to purchase either private insurance or traditional Medicare. Although he will claim that this new version protects Medicare in name, the fact is that it would fatally undermine the program.

Fact: The Ryan plan still raises costs for seniors.

  • The Ryan plan would cap vouchers - or premium support payments - for  individuals at growth levels that are lower than the existing increases in health care costs. CBO indicates that the plan would cut future spending by $5,900 per senior, and could lead to higher out-of-pocket expenses and diminished access to quality care. Unless Congress intervened, seniors would be forced to pay out-of-pocket to make up the difference.
  • The amount of the voucher would be equal to the second-least costly plan available in a given area, meaning that in high Medicare-cost areas seniors would have to pay out-of-pocket to stay in traditional Medicare.

Fact: The Ryan plan still severely weakens traditional Medicare.

  • In Chairman Ryan's own words he admits, "...we are stopping the open-ended, defined benefit system." In other words, Paul Ryan's voucher system will end Medicare's traditionally guaranteed benefits structure.
  • Although the plan calls for private benefits to be actuarially similar to those offered by Medicare, private insurers would not be required to offer standardized benefits - opening the door to insurance companies skimming the healthiest beneficiaries from the market.
  • Under Chairman Ryan's plan, traditional Medicare would risk taking on the sicker beneficiaries. If Medicare wasn't properly compensated it would have to raise premiums, driving away even more healthy beneficiaries and setting off a premium spiral that could unravel the program.

Fact: The Ryan plan still exposes seniors to the profit-making whims of insurance companies.

  • Henry Aaron, considered one of the "fathers" of the premium support model, and health economist Austin Frakt, have argued that Republican attempts to embrace premium support "lack safeguards for beneficiaries. They threaten to shift costs to the elderly and disabled and force them to shop for coverage in a confusing insurance market."
  • In order to protect seniors in a voucher system, private insurance offerings would have to be highly regulated and strictly limited - requirements not contained in Chairman Ryan's plan.

Chairman Ryan's latest idea isn't much more popular than his last one - only 25% of those polled expressed support for the idea. However, there isn't much hope that the GOP will end its assault on Medicare any time soon. In Chairman Ryan's own words, "We're just going to keep doing it and doing it..."