A piggy bank and a stethoscope to depict medicare Image: flickr/401(K) 2012; 401KCalculator.org
Medicare and Medicaid, which provide medical coverage for seniors, the poor and the disabled, together make up nearly a quarter of all federal spending. With total Medicare spending projected to cost $7.7 trillion over the next 10 years, there is consensus that changes are in order. But what those changes should entail has, of course, been one of the hot-button issues of the campaign.
With the candidates slinging charges, we thought we'd lay out the facts. Here's a rundown of where the two candidates stand on Medicare and Medicaid:
THE CANDIDATES ON MEDICARE
Earlier this year, the Medicare Board of Trustees estimated that the Medicare hospital trust fund would remain fully funded only until 2024. Medicare would not go bankrupt or disappear, but it wouldn't have enough money to cover all hospital costs.
Under traditional government-run Medicare, seniors 65 and over and people with disabilities are given health insurance for a fixed set of benefits, in what's known as fee-for-service coverage. Medicare also offers a subset of private health plans known as Medicare Advantage, in which roughly one-quarter of Medicare beneficiaries are currently enrolled. Obama retains this structure.
The Obama administration has also made moves that it says would keep Medicare afloat. It says the Affordable Care Act would extend solvency by eight years, mainly by imposing tighter spending controls on Medicare payments to private insurers and hospitals.
In contrast, Rep. Paul Ryan, Mitt Romney's running mate, has proposed a more fundamental overhaul of Medicare, which he says is on an "unsustainable path." On his campaign website, Romney says that Ryan's proposals "almost precisely mirrors" his ideas on Medicare. But he's been fuzzy on other aspects of the plan.
A Romney-Ryan administration would replace a defined benefits system with a defined contribution system in which seniors are given federal vouchers to purchase health insurance in a newly created private marketplace known as Medicare Exchange. In this marketplace, private health plans, along with traditional Medicare, would compete for enrollees' business. These changes wouldn't start until 2023, meaning current beneficiaries aren't affected – just those under 55.
Under the Romney-Ryan, the vouchers would be valued at the second-cheapest private plan or traditional Medicare, whichever costs less. Seniors who opt for a more expensive plan would pay the difference. If they choose a cheaper plan, they keep the savings.