Republican presidential candidate Mitt Romney writes on a white board… (Evan Vucci, Associated…)
WASHINGTON — While Mitt Romney and Paul D. Ryan are campaigning on a promise to "preserve and protect" Medicare, their proposal to revamp the popular government health insurance program would be the plan's biggest gamble since it was created nearly half a century ago.
The members of the Republican presidential ticket argue that giving seniors vouchers to shop for a private insurance plan would spark competition among health insurers, holding down costs and ensuring the long-term viability of Medicare.
But several previous experiments with privatizing Medicare insurance coverage have ended up raising costs to taxpayers. And on the other side, there is little evidence that moving millions of elderly and disabled patients into commercial health plans will protect their coverage or tame the nation's skyrocketing healthcare tab.
"Doubling down on private insurers is a risky proposition," said University of North Carolina health policy professor Jonathan Oberlander, a leading Medicare historian. "Medicare has lost money on private plans for a long time."
In recent days, the campaign debate has focused on one element of the Medicare puzzle: President Obama's effort to reduce Medicare spending by about $716 billion over the next decade as part of his healthcare overhaul. Romney, accusing Obama of "raiding" the program, says he would restore that money. Ryan, who once proposed the same cuts, now says he agrees with his running mate.
By restoring the spending that was cut, Romney and Ryan would open a large deficit in Medicare, pushing the program's main trust fund into the red in just four years, rather than 12 under Obama's plan. The former Massachusetts governor hasn't said how he would address that.
The sniping over those cuts, however, obscures bigger questions about what Medicare will look like for the roughly 50 million elderly and disabled Americans who rely on it.
In the face of unsustainable costs, Obama is pursuing a Medicare strategy, enacted in his 2010 healthcare law, that relies heavily on federal administration of the insurance program to force doctors and hospitals to improve their quality and efficiency. That is designed to preserve the program largely in its current form.
Romney, Ryan and other Republicans say that approach won't work.
"The future of Medicare should be marked by competition, choice, and by innovation, rather than bureaucracy, stagnation and bankruptcy," Romney said last fall when he unveiled his Medicare plan. "Tomorrow's seniors should have the freedom to choose what their health coverage looks like."
If Romney and Ryan are wrong, however, seniors would end up paying much more for medical coverage. The Congressional Budget Office, a nonpartisan federal agency, estimates that Ryan's latest plan -- which closely parallels Romney's -- would increase the average cost for a senior entering the program in 2030 by as much as $2,200 a year.
To be sure, there is no guarantee Obama's strategy will preserve Medicare. Previous efforts to squeeze payments to medical providers have a mixed record. The government's own actuaries suggest the deep cuts contemplated in the Affordable Care Act could drive some hospitals and doctors out of business.
Under the president's plan, Medicare's main trust fund is still projected to begin running in the red in 2024 as baby boomers flood the program and their medical bills outpace the payroll taxes that finance benefits. This year, the trustees overseeing Medicare urged lawmakers to act "as soon as possible" to shore up the program's finances.
Republicans have long tried to enlist insurance companies to do this, by replacing Medicare's current structure of standardized benefits and premiums.
In a privatized system, individual insurance companies could offer varied benefits and premiums as they compete to attract seniors.
Seniors, in turn, would use a voucher with a value linked to the cost of available insurance plans. Seniors who want a more expensive plan would have to pay the difference.
Romney and Ryan, while providing little detail about their plan, say they would preserve the current Medicare program as an option -- although the voucher would not necessarily cover the cost of enrolling. They would delay implementation of the plan for 10 years, allowing all Americans now 55 or older to get into the current system.
Critically, many premium support plans, including Ryan's, limit how quickly the value of the voucher would increase over time. That means that if insurance premiums rise more quickly than the value of the voucher, seniors -- and not the federal government -- would have to pay more. That would ensure Medicare spending remains in check while shifting risk to individual seniors.