What the Romney-Ryan and Obama Medicare plans have in common

Which of the candidates for President proposes to give people a defined amount of federal money (call it a voucher) to buy coverage from competing qualified private insurers (under federal benefit mandates) offered through a health insurance marketplace run by government?

The answer: Mr. Romney, and his new running mate, Paul Ryan. And President Obama.

How is that, you say?  Isn’t the Romney/Ryan vision of how to reform health care diametrically opposed to that of Obama?  Yes . . . and no.

Romney and Ryan both propose to convert Medicare from an open-ended, defined benefit program to a defined contribution, which means that the government would give seniors:

  • a defined amount of federal money (call it a voucher),
  • to buy coverage from competing private health insurers,
  • all of which would be required to offer at least the current Medicare benefits,
  • sold through a federally-run health care marketplace.

Democrats say that the proposal is a radical plan to “end Medicare as we know it.”

So Republicans are for vouchers and Democrats are against them, right?  Not so fast.

President Obama’s Affordable Care Act would extend health insurance coverage to about 16 million uninsured Americans (with incomes from 133 to 400% of the federal poverty level) through subsidized private insurance offered through exchanges.  This means that the government would give them:

  • a defined amount of federal money (call it a voucher, or a subsidy),
  • to buy coverage from competing private health insurers,
  • all of which would be required to offer a federally-defined level of benefits,
  • through a state (or federally-operated) health care marketplace (exchange).

(You might also recall that when Mitt Romney was governor of Massachusetts, he signed into law a program—considered by most to be the pre-cursor to Obamacare—that similarly gives vouchers to help uninsured people buy private health insurance through a state-run marketplace.)

Nevertheless, Republicans say that the Obama’s plan calls for a “radical . .. . health care take-over” by the government.

So let’s get this straight: when Republicans propose vouchers, it is a radical scheme to end a widely popular program (Medicare); when Democrats propose them, it is a radical and unpopular scheme by the government to take-over health care (except when the Republican nominee did it for his own state)!

Go figure.

That’s not the only place where the GOP and the Democrats may have more in common than either admits.  The Washington Post’s Ezra Klein points out the Paul Ryan’s budget plan would keep the ACA’s $700 billion in Medicare cuts that the Republicans say Obama is “stealing” from Medicare (although they have no plans to give the money back to seniors). The difference is that Ryan’s budget would use $700 billion for tax cuts and deficit reduction, Obama uses it to help fund coverage for the uninsured. The Ryan budget and President Obama’s budget both allow Medicare spending to grow by exactly the same amount: the gross domestic product plus O.5%!

This isn’t to say that there aren’t big differences between Romney/Ryan and Obama.  They disagree on  how to restrain future Medicare growth.  As Klein explains, “Democrats believe the best way to reform Medicare is to leave the program intact but vastly strengthen its ability to pay for quality. Republicans believe the best way to reform Medicare is to fracture the system between private plans and traditional Medicare and let competition do its work.  It’s worth saying there’s no particularly good evidence for either option.”

And there is a difference between proposing vouchers to limit how much the federal government spends on an existing health care entitlement (Medicare), as Romney/Ryan propose, and using vouchers to create a new health care entitlement program (ACA), as Obama advocates. One is a partial takeaway of existing benefit guarantees for tens of millions of seniors, the other is a partial expansion of health benefit guarantees to tens of millions uninsured persons.

On Medicare, Romney and Ryan would convert Medicaid to a block grant while cutting federal contributions, saving the federal government many trillions while resulting in 27 million more uninsured (low-income) persons.  Obama’s Affordable Care Act will add up to 17 million more persons to Medicaid, paid for almost entirely by the federal government.

The Ryan budget also would dramatically reduce federal spending on non-defense discretionary programs, with the liberal think tank Center on Budget and Policy Priorities estimating that it would essentially “end most of government except Social Security, Health Care and Defense by 2050.”  President Obama proposes much more modest budget reductions and in some cases, increased “investment” in programs that would get the axe under Ryan’s plan.

And, of course, Romney and Ryan both propose to repeal the ACA, lock-stock-and-barrel, while Obama would continue to implement it.

So yes, this is a big election, with big choices on taxes, Medicare, Medicaid, coverage for the uninsured, and the role of government in funding just about everything.  But the dirty little secret that neither party wants to talk about is that Republicans and Democrats alike have embraced the idea of giving people vouchers to buy health insurance coverage, even though each disparages the other for being so “radical” as to even suggest it!

Bob Doherty is Senior Vice President of Governmental Affairs and Public Policy, American College of Physicians and blogs at The ACP Advocate Blog.

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  • aclumember

    The only health insurance anyone should look for is the Five Star high end coverage that the Congress and the Ruling Class of top federal bureaucrats vote themselves.
    I want to spend months on end at the Mayo Clinic (if i needed it) like Jesse Jackson Jr.
    Otherwise, cancel the $700+ billion in cuts to Medicare that are going to be used to pay for Obamacare.

    • lissmth

      Sen. Rand Paul’s proposal is for all seniors to have the exact same choices as government employees.

  • Donald Green MD

    The major difference between Ryan/Romney and present Medicare other than their focus to provide medical insurance is where the commonality ends. The purpose of the R/R plan is to change Medicare into a commercial insurance plan. Medicare takes on all comers and promises to cover the benefits it offers. Commercial insurance has the history of cherry picking subscribers and shifting costs to them as expenses grow. This is almost guaranteed to happen if vouchers are handed over to insurers. So Medicare takes on risk and commercial insurers will avoid it. Further the amount under R/R is restricted to less than the rise of actual costs. It results in more out of pocket costs to purchasers of this type of insurance. Doctors before making judgments should review what percentage of their income comes from Medicare, likewise hospitals. For an adult practice this is 35 to 40% because of their more frequent visits and less than 20% from any single commercial insurer.

    • lissmth

      A 64-year-old can buy high deductible + HSA-type insurance for less than $250/month.* A 65-year-old has no choice but government medicine. That costs a cool $12,000 a year.

      I would do about anything to have my health care freedom and private insurance back. Medicare has been a nightmare.

      *My zip code.

  • William Nuesslein

    A supplement to the comment of Dr. Donald Green.

    Some decades ago reformers said the high cost of medical care was the result of the Blue Cross/Blue Shield monopoly and insurance companies competed for group contracts/ The competition did not reduce costs at the community level because the competition was in ability to underwrite – choose risks in Dr. Green’s terms. .Why would vochers be different with realtively healthy people buying cheep plans?

    The major problem with high health care costs comes from entitlement. Once a patient qualifies for treatment, the patient and his doctor would be fools for not getting ALL they can. Having doctors as employees would help a lot, (I do appreciate the satisfaction a doctor has in his practice.) Tort reform helps a lot. Better management of end-of-life care (where the big bucks are) would help, too. The ACA seems to me to be a big step in the right direction. I can’t understand why one would repeal ACA as his first order of business.

  • http://twitter.com/CrushTheLeft Rules4FreeRadicals

    The best health insurance is the coverage the Congress and Washington Bureaucrats give themselves, exempt from the veterinary mandates of ObamaCare.

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