EconoBytes - Wednesday, August 15, 2012
EconoBytes is a quick daily economic roundup for journalists, sponsored by the Roosevelt Institute and compiled by Fenton Communications. We bring together blogs, analyses, and studies by progressive economists, policy experts, and think tanks on the most pressing issues in the current public economic debate. To subscribe to EconoBytes, email firstname.lastname@example.org.
Wednesday, August 15, 2012
Today, four things the public should know about Medicare, the Affordable Care Act and the Ryan plan.
Mitt Romney’s choice of Paul Ryan as his running mate has catapulted the Medicare issue into the forefront of the political debate, again. The key point of conflict appears to be over claims that the Affordable Care Act (ACA) cuts Medicare in such a way as to reduce coverage. The debate centers on whether Romney/Ryan or Obama cut Medicare and if so, how, and with what implications for coverage.
1. The key difference between the Romney/Ryan proposal and ACA is in the means by which the plans save money.
The non-partisan Congressional Budget Office (CBO) concludes that the Affordable Care Act saves money by reducing Medicare payments to drug companies, hospitals, and other providers, not by cutting payments to Medicare beneficiaries. “The Romney-Ryan plan, by contrast, achieves its savings by turning Medicare into a voucher whose value doesn’t keep up with expected increases in healthcare costs…” Via Robert Reich.
2. The Ryan Plan cuts the same dollar amount from Medicare as ACA.
Under both the Ryan and ACA, the growth rate of Medicare is GDP+0.5%: “Let’s be very clear on what that means: Ryan’s budget — which Romney has endorsed — keeps Obama’s cuts to Medicare, and both Ryan and Obama envision the same long-term spending path for Medicare.” Via Wonkblog.
3. The Ryan Plan will earn its "savings" by shifting costs onto consumers. ACA saves by lowering costs.
CBO estimates that total health care costs under a voucher system (like the one proposed by Paul Ryan) would be higher than under Medicare due to the higher administrative costs of private insurers. “…[In] 2022, when the voucher system would go into effect, total health spending attributable to a 65-year-old Medicare beneficiary would rise from $14,750 under the Medicare program as it operates today to $20,500 — an increase of 32 percent. This beneficiary’s out-of-pocket costs would more than double — from about $6,000 a year to over $12,000. (See graph)." Via CBPP.
4. ACA will significantly improve the long-term health of Medicare.
"Health reform has significantly improved Medicare’s long-term financial outlook. Under the trustees’ main projection, the [Hospital Insurance] program faces a shortfall over the next 75 years equal to 0.79 percent of taxable payroll — that is, 0.79 percent of the total amount of earnings that will be subject to the Medicare payroll tax over this period. The Medicare actuary estimates that if health reform were repealed, HI’s long-term shortfall would increase from 0.79 percent to 3.89 percent of taxable payroll. Under that analysis, health reform has reduced the size of HI’s shortfall by four-fifths. Without health reform, the Medicare Hospital Insurance program would become insolvent eight years earlier, in 2016."Via CBPP.
Special thanks to Mike Konczal of the Roosevelt Institute for today’s issue of EconoBytes.
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