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.

View 6 Comments >