U.S. Rep. Paul Ryan's Medicare plan is designed to keep the government-run health insurance program for older Americans solvent by making some important changes to the way it operates for future enrollees. The plan came under scrutiny in 2012 when Republican presidential nominee Mitt Romney chose Ryan as his running mate.
There have been at least two incarnations of the Ryan Medicare plan, both of which generated controversy in Congress. Ryan unveiled the current plan on March 20, 2012, in a budget document titled "The path to prosperity: A Blueprint for American Renewal."
Ryan Medicare Plan Details
The most important and controversial proposal in the Ryan Medicare plan would alter it from a defined-benefit program, in which Americans are entitled to specific benefits and health coverage, into a defined-contribution program, in which those old enough to be enrolled in Medicare instead are guaranteed a federal subsidy to purchase their own coverage through a Medicare Exchange.
If adopted, the Ryan Medican Plan would apply only to Americans who become eligible by turning 65 on or after Jan. 1, 2023. Those who became eligible for Medicare before that date would remain in the current defined-benefit program.
How the Ryan Medicare Plan Would Work
Americans becoming eligible for Medicare beginning in 2023 would receive a fixed amount of money, or voucher, from the federal government. With that money, they would be able to purchase private health insurance or enroll in a government-run plan that would be similar to Medicare.
The amount of the federal subsidy would be equal to the cost of the second-cheapest private plan available in the exchange.
Americans who chose to purchase a more expensive private insurance plan would be required to pay the difference between the amount they receive from the federal government and the plan's cost. The private insurance plans would be regulated by the Centers for Medicare and Medicaid Services.
Impact of Ryan Medicare Plan
Ryan has said his plan would keep Medicare largely intact while helping it avoid bankruptcy.
"In their most recent report, the Medicare Trustees projected that the account that funds Medicare’s hospital benefit will go bankrupt in 2024," Ryan writes on his congressional website. "Reports like this illustrate that we can no longer let politicians in Washington deny the danger to Medicare – it is all too real, and the health of our nation’s seniors is far too important. We have to save Medicare to avoid disruptions in benefits for current seniors and to strengthen the program for future generations."
Ryan has said his reforms would "ensure affordability by fixing the currently broken subsidy system and letting market competition work as a real check on widespread waste and skyrocketing health-care costs."
"Putting patients in charge of how their health care dollars are spent will force providers to compete against each other on price and quality. That’s how markets work: The customer is the ultimate guarantor of value," Ryan says. "Reform aimed to empower individuals — with a strengthened safety net for the poor and the sick — will not only ensure the fiscal sustainability of this program, the federal budget, and the U.S. economy. It will also guarantee that Medicare can fulfill the promise of health security for America’s seniors."
Criticism of Ryan Medicare Plan
Critics of the Ryan Medicare plan say it will harm senior citizens by making them pay more for health care than they otherwise would have under the government-run program. Liberal groups specifically have falsely claimed the Ryan plan would "end Medicare" and that the gap between the federal subsidy and quality private health care plans would be large, forcing seniors to forego some treatment.
President Barack Obama sharply criticized 2012 Republican presidential nominee Mitt Romney and Ryan on the campaign trail.
"I've proposed reforms that will save Medicare money by getting rid of wasteful spending in the health care system. Reforms that will not touch your Medicare benefits," Obama said during a campaign event in Iowa in August 2012. "And Gov. Romney and his running mate have a different plan. They want to turn Medicare into a voucher system. That means seniors would no longer have the guarantee of Medicare - they’d get a voucher to buy private insurance. And if it doesn’t keep up with costs, well, that’s the seniors' problem."