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Paul Ryan’s plan for Medicare

By Jennie L. Phipps · Bankrate.com
Monday, August 13, 2012
Posted: 3 pm ET

On Saturday, presumed Republican U.S. presidential candidate Mitt Romney picked Rep. Paul Ryan, R-Wis., to be his running mate. Together they vowed to reform Medicare to help control its costs.

How would their plan affect most people currently retired or close to implementing their retirement planning?

Ryan is the author of the plan, which was spelled out in the 2012 Republican budget proposal. At that point, he said there wouldn't be any immediate change to Medicare for people currently 55 and older. The changes would begin in 2022, when the age of Medicare eligibility would begin to increase by one month every year until it reached 67 in 2033. Older Medicare recipients would have the option of remaining in the original program or converting to the new one.

If your retirement is more than 10 years away, by then Ryan proposes to entirely eliminate Medicare's traditional fee-for-service structure. He would instead enroll all beneficiaries in what policy wonks call a premium support system. That means, he would give every recipient a flat amount of money to use to buy insurance in the private marketplace. This amount of money would initially reflect the average amount the government is spending per Medicare recipient at the time the change is made. After that, it would be indexed for inflation.

Ryan and supporters of his plan argue that this approach not only would save money because it would encourage providers and insurers to hold down costs, but also it would give recipients more leeway in choosing the kind of insurance they want. For instance, you might choose a policy that pays for home care while limiting payments for in-hospital treatment.

Skeptics argue there isn't much evidence that private insurers will be as effective in holding down costs as traditional Medicare has been. They point to Medicare Advantage plans, which have a similar, flat-fee approach and cost more than traditional Medicare. But that's a hazy comparison because the Ryan plan is significantly different.

Until the details are clear, who knows how this plan would actually work. But indisputably the goal of Ryan's plan is to keep the government from being responsible for extreme costs. So the question is: If the government isn't paying, will Medicare recipients, insurance companies or both be required to pick up the tab for catastrophic and long-lasting ailments?

That's a dilemma and one of many serious questions about this proposal we deserve answers to before we go to the polls in November.

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15 Comments
JW
October 05, 2012 at 1:49 pm

You would have to be stupid to believe a health voucher insurance would be beneficial. Private insurance companies live for profits and you better believe that they are all for this voucher plan. Medicare helps those who needs it the most. They don't turn their backs on you when you need healthcare. On the other hand, private insurance companies can, and has turned down many people in need operations, many test for proper diagnosis and the like. We "middle class people" and those less fortune have to wake up and smell the coffee. Or you're going to wake up one day smelling the stench of your body decaying!! President Obama understands what Americans need.

MICHAEL FITZGERALD
October 02, 2012 at 2:23 pm

1)UNDER CLINTON (D) SOCIAL SECURITY WAS SOLVENT AND NO ONE HAD TO WORRY FOR YEARS AND YEARS. 2) HERE COMES A (R) BUSH & WHO DON'T CARE OF THE 47% THAT RELIES ON THE "GOVERMENT" FOR SOMETHING THEY PAID INTO ALL THEIR LIFE! BUSH DRAINED THE SOCIAL SECURITY ACCOUNT FOR GOD KNOWS WHAT, MAY HIS OWN WAR! NOW HERE COMES ROMENEY (R) THAT WOULD RATHER PUT MEDICARE (AND RYAN) IN THE HANDS OF THEIR MULTI MILLION DOLLAR FRIENDS (MULTI-BILLION?) TO RETURN A FAVOR OH AND DON'T FORGET ROMENEY WHO DOESN'T CARE OF THE 47% OF THE POPULATION THAT (LIVES OFF THE GOVERNMINT). HE WOULDN'T OR BUSHS HOW TO WORRY HOW THEY WERE GONNA PAY A BILL MONTH TO MONTH, NOT WHEN THESE CANDY ASSES WERE ACCUALLY BORN WITH A SILVER SPOON IN THEIR MOUTH, LITERLY! TRUST FUND BABYS!

IAmWinner
August 24, 2012 at 11:31 pm

That wimp of a so called president, Nobama, froze the COLA on Medicare for the years 2010 and 2011! People, this is the 700 billion dollars Nobama raided from Medicare to put into his Obamacare (soon to be repealed by Mr. Romney)!

SUNRISE
August 17, 2012 at 3:47 pm

How many commercials do you see on tv for electric wheel chairs, electric carts, catheters, diabetic supplies that these companies are going to make get covered by Medicare? And if they are not covered by Medicare than the company pays for it. Sounds like some kind of loophole fraud to me.

Dmitry
August 15, 2012 at 3:52 pm

@American -
if you believe that private market is better for health care you are wrong. It is a clear conflict of interests when your private company stands to benefit by providing/denying health care.

The abuses have been documented time and time again - by insurance companies, doctors, pharma and medical device companies.

The government may not be a most competent operator, but they are not in it to rip you off as much as possible, which is exactly what the target is of any PRIVATE business - profits before morals.

@American3 - you are correct that more doctors, nurses, hospitals, etc should bring the price down. HOWEVER, the entryway is tightly controlled by medical boards, who engage into blatant protectionalist practices (including law suits) denying licenses, preventing new technologies threaten their flow of revenue by removing the need for them.