The Facts On Medicare: Obama Vs. Ryan

With Mitt Romney’s selection of Paul Ryan as his choice for Vice President, it is likely that the election for President in 2012 will come down to public perception of who really does stand for Medicare. More importantly, it will come down to voter’s perception of who really does stand with senior citizens, now and into the future. The politicking has been intense, and there is an emerging sense of confusion about what each side really does (or would do) with Medicare.

What then, are the unbiased facts? President Obama and the liberals approach the issue as one of ensuring that healthcare is a near-universal provision for Americans. To them, the government of the people can, through taxation and administrative regulation, provide for a health care safety net that works with the free market for younger Americans, and supplants it for our nation’s retirees. For Paul Ryan, Mitt Romney, and the conservatives, the issue is providing for the health care needs of seniors within a predefined budget framework. This notion is built on the idea that a free market will see to the needs of the public, and that money not spent by the government is money saved by the economy.

This blog spends considerable space on the issue of free markets and the fantastic reports of their miraculous powers, so this post will focus on the specifics of the plans themselves, and keep commentary to a minimum. What is clear is that both President Obama and conservatives recognize the need to take action against the cost explosion that is threatening the Medicare program. While the actions differ (in some cases), the initial cuts in spending are similar. It is the long-term effect of the actions that show the greatest variance.

The greatest difficulty in analyzing the positions comes from the volume of activity that Representative Ryan has focused on Medicare, and the vague ambivalence of Mr. Romney on the same topic. Where Paul Ryan has co-authored three different plans (House Concurrent Budget Resolution 34, The Rivlin/Ryan Plan, and the Roadmap For America’s Future), Mr. Romney has abandoned many of the positions he held as recently as 2008, and has been both vague and shifty on his current intentions. President Obama’s intentions and actions are far more clear, as the Affordable Care Act of 2010 is established law, and his further intentions on Medicare have been released by the Office of Management and Budget.

What follows is a simple table describing the general differences between the two competing ideologies on Medicare.

Area of Action

President Obama


Medicare Advantage Makes subsidies for this privatized version of Medicare contingent on income. No specific mention.
Medicare Parts A and B Coverage and Eligibility No changes to coverage or eligibility. Some conservative proposals to raise eligibility age, but none in a Ryan-specific plan. Medicare Part A and B turned from guaranteed coverage to vouchers indexed to inflation. Vouchers, which would go into effect in 2021 are built around the Medicare cost of delivery in 2012. Medicare’s cost of delivery is currently lower than the private market for insurance.
Payments To Providers Payments lowered to facilities with higher than normal rates of readmission. Coverage of unpaid premiums and copayments capped at 25% (currently they are 70%). Payments would no longer be made directly to providers; vouchers be provided to beneficiaries directly for their use in the private insurance market.
Growth In Aggregate Cost The Medicare Payment Advisory Commission, which has recommended billions in cuts over the years that were ignored by Congress, was replaced by the Independent Payment Advisory Board that is tasked with limiting cost growth in Medicare Spending to a fixed percentage of GDP. The IPAB cannot be overruled by Congress without a super-majority vote. Growth in aggregate cost is not addressed, the focus of these plans simply being growth in government cost.

The approach taken by President Obama and the liberals cuts payments to providers, and places limits on the flexibility of insurance companies. It does not cut benefits or coverage to individuals. The approach taken by Mr. Ryan and, presumably, the Romney/Ryan ticket, places total dollar limits on future enrollees based on 2012 dollars, and places its full faith in the ability of the marketplace to cover the retired on the basis of those vouchers.

This post links above to Representative Ryan’s page on his Roadmap, the pdf of the House Concurrent Resolution 34, the CBO’s response to the Rivlin/Ryan plan, and the Office of Management and Budget’s pdf on the deficit and spending resolutions. Citizens can also find easily available information on Medicare, health care spending, and a variety of proposals, compared side by side, at the Kaiser Family Foundation. That site also has an interactive timeline for the implementation of the various facets of the Act known as ObamaCare.

Comment here or on Facebook, and tell The Rational Middle what you think about the competing plans, and how they would affect our nation.


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