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What Does Romney Ryan Mean for Your Medicare?

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Saturday, Republican nominee Mitt Romney announced his choice for Vice President -- Congressman Paul Ryan of Wisconsin. Ryan is most widely known as a proponent of a radical restructuring and privatization of Medicare. But beware the hyperbole on both sides. Ryan's plan would not necessarily "save" Medicare; nor would it necessarily destroy it.

I will write more on this as the campaign develops, but in the meantime here are a few things to think about:

1. If you are on Medicare now, the Ryan proposal will not immediately affect you. It is designed to phase in over time. If you are over 55, you may still have an opportunity to keep your current Medicare options, at least for awhile. It is not clear what the longer term impact of the Ryan proposal would have on Medicare as we know it now.

2. If you like the idea of private insurance, you will love the Ryan plan. He proposes to give seniors a voucher (or as he calls it "premium support") to go out and buy their own private insurance. The biggest threat to this idea is that the "support" part would be capped and limited, so that over time, if not adjusted well for inflation, you the beneficiary would pay more and more out of your own pocket. The premium support/voucher idea will be a major point of discussion. Read up on it here and here.

3. Medicare already relies heavily on private insurance, but when Medicare is PRIMARY (as it fits with supplmental/gap plans), it is able to exert considerable market power on your behalf when it chooses to do so. Turning Medicare over to the private sector would raise a number of critical questions -- would there be insurance reforms to be sure that private plans could not turn you down or "underwrite" you, or raise your premiums because of your pre-existing illnesses? How would these premiums be adjusted for the rising costs of health care? And if, as Ryan proposes, traditional Medicare would have to compete with the private plans, most think that the sickest people would stay in traditional Medicare, ultimately driving up costs and causing traditional Medicare to self-destruct.

4. Ryan will be telling us we have to do something about Medicare NOW (in the middle of Presidential campaign) because it is going broke. Mostly false. The Medicare Trustees report that Medicare will be solvent through 2024. That gives us the next 12 years to make the changes necessary to keep it solvent. Will that be easy at any time? Absolutely not. But will we get a decent debate in the heat of a partisan campaign? Not likely.

5. Is Paul Ryan's Medicare proposal "right wing social engineering" as Newt Gingrich labelled it? I have no idea what Gingrich was thinking or does think at any given time, but changing Medicare dramatically in the direction of a private sector that has profit at its driving force is certainly "engineering" of major proportions.

The median income of Medicare beneficiaries is $25,000 a year. Medicare already requires seniors to pay a considerable part of their income for their peace of mind. Most people feel a tremendous sense of relief when they turn 65, however, because they know that at least they cannot be turned down for insurance, and they will receive assistance from Medicare to pay their medical bills. Turning over the Medicare program to the private sector, especially without a number of safeguards and regulatory oversight (which Republicans tend to dislike) does not sound like the direction we ought to be going.

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