A Deficit-Cutting Plan to End Medicare as We Know It

12/03/2010 11:08 am ET | Updated May 25, 2011

Deficit commission co-chairman Erskine Bowles declared this week that the "era of debt denial is over."

Time will tell. But as Washington starts batting around the plans to slash the long-range national deficit, one stands out as an especially good acid test of just how far we're willing to go. That's the Ryan-Rivlin plan to end Medicare as we know it.

Two members of President Obama's deficit commission propose replacing Medicare for everyone who turns 65 after 2021 with a fixed voucher that would be used to buy private health insurance coverage on a public insurance exchange. If seniors' actual healthcare tab exceeds the voucher's value, they'd be left to pay any additional expense out of pocket.

The eligibility age for Medicare also would be raised gradually starting in 2021, from 65 to 67 in 2032. More immediately, there would be big increases in Medicare Part B premiums, to cover 35 percent of program costs, up from 25 percent today.

Ryan-Rivlin's most dramatic changes wouldn't hit today's seniors, who are already livid about the new healthcare reform law. But Ryan-Rivlin would mean profound changes to the American retirement landscape for boomers and everyone else coming along behind them, just at a time when we're hitting a wall on retirement security.

The impact would be akin to what we've experienced in the past three decades by shifting away from traditional defined benefit pensions -- retire, start getting a monthly check -- to defined contribution 401(k) plans. Here's a fixed contribution to your 401(k), best of luck. We all know how well that's been working.

The Medicare voucher plan is advanced by deficit hawk Rep. Paul Ryan (R-Wis.) and Democrat Alice Rivlin of the Brookings Institution. Ryan-Rivlin is branded "bipartisan" inside the Beltway because it has Republican and Democratic authors, but it's far from centrist. If anything, Ryan-Rivlin shows just how far right the center has moved in Washington.