American Sauce: The Ryan Medicare Plan
May 31st, 2011
11:00 AM ET
3 years ago

American Sauce: The Ryan Medicare Plan

Capitol Hill (CNN) - As families make their 2011 summer plans, we here at American Sauce are thinking about 2011 summer politics. The Medicare plan from House Budget Chairman Paul Ryan, R-Wisconsin, is a clear, early contender, to dominate town halls and political barbecues.

What's in it? That is our podcast this week. Listen here. Comment below. Or keep reading.

True, the Ryan plan is not likely to become law in the next two years. Republicans do not have the votes in the Senate or the seat in the Oval Office. And recently, the party has seemed to lift its foot gently off the gas behind the Ryan Medicare Plan.

But RyMed, let's call it that for short, is one of the key pivot points for debate on Medicare. And it is a key political dividing line over government philosophy.

But to know what lawmakers' views mean, Americans need to understand what's in the plan.

Check out our "Explain It To Me" video here. Or the cheat sheet below.

CHEAT SHEET: Ryan Medicare Plan

Basics

- Starting in 2022, Medicare would privatize. Private health insurers would take over most of the functions government performs now for Medicare.
- In general, RyMed would affect Americans age 54 and younger. Those 55 and older would stay on the current version of Medicare.
- BUT, those 55 and older would be affected in the costs of prescription drugs. The Ryan plan reopens the "donut hole," a point in the cost curve where seniors must pay full price for their drugs.

What Happens To Each Person On Medicare

- Again, starting in 2022.
- Each person on Medicare would be allotted a certain dollar amount from the government to help them buy private health insurance.
- RyMed calls this a "premium support" payment.
- Next each person would chose from a list of government-approved private health insurance plans.
- Then the government's allotted payment for that Medicare recipient goes directly to the health insurer they chose.
- The Medicare recipient pays the difference between the insurance plans costs and what the government has allotted for them.

What Does That Mean? In Dollars?

- Here's how the Congressional Budget Office looked at that in dollars.
- CBO estimated that in 2022, the government would allot $8000 for a 65-year-old, to go toward buying a health insurance plan.
- CBO estimated that the 65-year-old would then pay an additional $12,500 for that plan and for all out-of-pocket costs.

Medicare Survival

- Medicare is running out of money.
- The latest forecast from Medicare trustees predicts Medicare will completely go through its trust fund by 2024.
- At that point, money coming into Medicare will not cover the costs of current benefits.
- The Ryan plan cuts the government's Medicare costs, thereby offering one way for the system to survive.
- Ryan argues that the system cannot continue with the amount of cash coming in and the much larger amount going out for costs.
- Critics point out that the Ryan plan shifts Medicare costs from government to the individual. Individuals continue paying into Medicare at current rates, but could face increased out-of-pocket costs for the same benefits they receive now.

How Much Government Will Pay (wonky but important)

- Under the Ryan plan, the government's Medicare payments would increase by no more than the rate of inflation each year.
- Ryan sets the inflation rate at CPI-U, the consumer price index for urban consumers. That is the broadest current CPI measure.
- Other Medicare plans (Simpson-Bowles, for example), tag Medicare cost increases to GDP or the growth in the economy.
- Depending on the economy, the Ryan measure could keep Medicare costs lower for the government. But it could thereby increase the out-of-pockets costs of individuals each year.

What We Don't Know

- How much costs will go up by age. The Ryan Medicare Plan allows insurers to charge more for older Medicare recipients. Thus, an 85-year-old could have significantly higher costs than a 65-year-old.
- What the benefits look like. RyMed stipulates that private insurers have to give Medicare recipients at least the same value of benefits that Members of Congress and other federal employees receive. What that means, specifically, is unclear.

What do you think of the Ryan plan? Did we miss anything?

Comment below.

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You can also listen to American Sauce on iTunes, Stitcher or subscribe to the podcast via RSS.


Filed under: American Sauce • Medicare • Paul Ryan
soundoff (36 Responses)
  1. diridi

    idiot, find a way to raise revenue, not cut medicare, social security, only way to raise revenue is raise who make more than 250k and more tax them....o.k, Privatizing medicare and social security in industrialized nation is bad, bad, and bad....idiots, just know this....an educated....

    May 31, 2011 11:58 am at 11:58 am |
  2. Lyric

    Regardless of how you look at it or which side you are on, the cost of health care still comes out of our pockets. The government is the least efficient way of buying insurance since they have to pay the beauracracy before they pay for our insurance. They use our tax money to pay for Medicare. Obamacare doesn't provide free health care. It requires that YOU BUY health care if you don't have it. You will get more for your money if you take care of your own health care. Even Obama can't grow money (or health insurance) on trees.

    May 31, 2011 12:01 pm at 12:01 pm |
  3. Aaron

    The Ryan plan is fundamentally flawed. It makes assumptions about what the free market will do and how individuals will behave in a free market, but the trouble is... it isn't a free market. Compulsory private insurance coverage subsidized by the government has nothing to do with any concept of a free market. A free market means I chose to buy private insurance with my own money or I don't. That kind of market forces private companies to keep prices low and quality high, because if they don't, I won't buy from them.

    Without those forces in the market (my free choice to buy insurance with my money) the market will not behave the way Ryan says it will. There will be no savings. Insurance policies will start in price at whatever the government is doling out per individual and go up from there. And there will never be any pressure for them to go lower. Individuals will not shop for savings, but will spend every penny allotted to them. There will be no significant variety in the types of coverage offered at the low end of the scale (read, for poor people) because they will buy the minimum required by law – just like compulsory auto insurance. This will be nothing more than a giant insurance industry giveaway. Nothing more.

    Calling something a free market doesn't make it one. I'm telling you, it ain't gonna quack like a duck if it ain't a duck.

    May 31, 2011 12:03 pm at 12:03 pm |
  4. GI Joe

    Republicans do not think or feel the way Jesus taught and preached in his short time on earth.

    They are NOT the christian party. THEY LIE. They love their $$$$$$ and will take from the poor to give to their wealthy campaign donors.

    May 31, 2011 12:07 pm at 12:07 pm |
  5. Rudy NYC

    IN case you have not noticed, the Ryan Plan and the Affordable Care Act (in its' present form) cannot co-exist.

    May 31, 2011 12:14 pm at 12:14 pm |
  6. Lynne

    Paul Ryan = a one man death panel - his kill medicare bill should be called the kill GrandMa bill

    May 31, 2011 12:19 pm at 12:19 pm |
  7. Lynne

    My mom is on medicare and there is no insurance company on earth that would cover her and all of her illnesses....this new kill medicare bill will kill my mom!!!!!

    May 31, 2011 12:21 pm at 12:21 pm |
  8. prabha

    Reality is that Affordable Health Care Act do consider the means test to pay for insurance. Sure if you can afford to pay your premium do you want a hand out from federal govt. However if your cousin or neighbor needs help to pay for that premium why would you object heartlessly arguing that fed. govt is inefficient. Insurance company are not to do charity out there. They are efficient but only in gouging prices and take you out to dry cleaner. Fee for service is totally inefficient and courrupting the health industry. Health industry has no benefit in efficiency. Each individual in that industry for him or herself.

    May 31, 2011 12:26 pm at 12:26 pm |
  9. Jim in San Mateo

    Republicans want to end Medicare as we know it rather than fix it so they can pay for tax breaks for the wealthy and big oil companies.

    May 31, 2011 12:27 pm at 12:27 pm |
  10. Rob San Diego

    Why would it matter to Paul Ryan (R), he's got his great medical plan and retirement paid for courtesy of the same American Taxpayers he wants to throw to the wolves while he is left sitting pretty with the Citizens picking up his medical bills. So typical of the GOP policy to continually stand against working and elderly Americans.

    The GOP and its strictly working for Party Dogma to advance itself against all costs instead of serving the Americans whose money they spend wastefully is brazen and arrogant. The GOP causes economic collapse with anything they touch, because the first people they think of is their own GOP pockets to line with corporate kickbacks. They are against transparency because they are like roaches, when the lights are on, they scatter for the corners.

    All I say is hold on Citizens, we are in for a ride to ruin so long as GOP continually blocks progress and prosperity in America. The GOP looks to the past, they don't get that you can't go back, you can only move forward. Lets vote these crooks out of office!

    May 31, 2011 12:29 pm at 12:29 pm |
  11. Joe

    What a joke. The Ryan "Medicare" plan is not worthy of the name Medicare. It scraps that program and sets up a voucher system that does not guarantee to cover costs. Despite his (and CNNs) attempts to water this down, it will ration care for future seniors, plain and simple. It will also not even guarantee coverage for them because the private market has no interest in insuring high risk persons. Leaving the system in place for those over 55 is a deliberate pander to current seniors who make up a large percentage of Republican voters. If seniors voted Democratically, you can bet Ryan would be throwing them under the bus as well.

    May 31, 2011 12:49 pm at 12:49 pm |
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