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From left, Sen. Lindsey Graham, R-S.C., Sen. Rand Paul, R-Ky., and Sen. Jim DeMint, R-S.C., Sen. Mike Lee, R-Utah, unveiled a Medicare reform plan in a news conference on Medicare reform on Capitol Hill March 15, 2012.
Updated at 5:23pm ET Running a political risk during an election year, Republicans continue to offer proposals to cut future Medicare outlays.
The latest offering came on Thursday from a quartet of fiscally conservative Republican senators. The group proposed replacing the current open-ended, fee-for-service Medicare with enrollment of seniors in the Federal Employees Health Benefits Plan (FEHBP) which offers an array of privately-run health insurance plans.
Members of the group include Rand Paul of Kentucky, Jim DeMint and Lindsey Graham of South Carolina, and Mike Lee of Utah.
“This will be the new Medicare,” Paul said at a Capitol Hill news conference. “Medicare will be the federal employee health care plan.”
DeMint described the plan as “beginning to privatize” Medicare, an all too familiar description for Democrats who use similar terms to stigmatize GOP Medicare reform plans.
Medicare covers 50 million older and disabled Americans. The program’s spending will nearly double in the next ten years, continuing to grow at a rate faster than the nation’s income, according to the Congressional Budget Office.
Paul said the plan “means-tests the benefits and gradually allows the age of eligibility to go up.” The current Medicare eligibility age is 65; his plan would gradually raise it to 70 by 2034. “There is means-testing in this -- and the reason you have to do that is: we’re spending more on Medicare than is coming in.”
Paul said the proposal would reduce Medicare costs by $1 trillion over ten years, but he acknowledged that adding older Americans to FEHBP would drive up the cost of the plans offered by FEHBP. He said the plan would include a high-risk pool “for really sick people” that get an additional subsidy. Paul added “they also still will have Medicaid,” the federal-state insurance plan for low-income people.
Democrats, DeMint said, “know that a dependent voter is a dependable vote.” The proposal he and the other GOP senators were offering is “basically kryptonite to a Democrat – because it gives people choices, it gives them freedom … .”
Paul thanked Sen. John Kerry, D-Mass., for letting the group “borrow” the idea. Paul said the plan was part of Kerry’s campaign platform in 2004.
In fact, Kerry in 2004 proposed to allow uninsured people, not seniors, to enroll in FEHBP.
“Entitlements are broken,” said Paul. “It’s not Republicans’ fault; it’s not Democrats fault. I tell people, ‘It’s your grandparents’ fault for having too many kids and then your fault for not having enough kids.’ It’s a demographic problem.”
Graham said he hopes to solve the problems with Medicare before the election this year.
“What I would tell the person near retirement is don’t fear change, embrace it, because you’ll have more doctors available to treat you and your family,” Graham said. “Think about not just what happens to you … think about where we’ll be as a nation if something doesn’t change pretty quickly with these big programs.”
The quartet’s proposal follows one offered two weeks ago by Sen. Richard Burr, R- N.C., and Sen. Tom Coburn, R-Okla., which would also raise the Medicare eligibility age (to 67, not 70) and subsidize seniors so they could purchase private insurance plans.
Meanwhile House Budget Committee chairman Paul Ryan, R- Wisc., has altered a plan he offered last year and reached across the aisle to partner with Democratic Sen. Ron Wyden of Oregon. The Ryan-Wyden plans would allow seniors to stay in traditional Medicare or choose a private insurance plan.
Ryan is scheduled to give speeches next week at two conservative think tanks in Washington and is likely to address Medicare.
But Paul said on Thursday that the Ryan-Wyden option wouldn’t save the federal government any money. ”If you give people the inertia of staying where they are versus moving, they may not move,” Paul said.
The Ryan-Wyden plan says that for people who are now age 54 or younger, "we propose to strengthen Medicare by transitioning the current program toward a coverage-support plan with the choice of guaranteed coverage options -- including traditional Medicare -- on a Medicare exchange."
But critics of the Ryan-Wyden plan argue that it would not really preserve traditional Medicare since it would create a marketplace where future retirees would need to purchase coverage of either traditional fee-for-service Medicare or another plan, and it would limit future program growth to the Gross Domestic Product growth rate plus 1 percent.
President Obama, too, acknowledges that Medicare needs to be redesigned and wants some of those getting Medicare to pay more for their coverage.
In his Fiscal Year 2013 budget plan, Obama is calling for a variety of cost increases for people on Medicare, although perhaps it is no coincidence that Obama’s proposal would take effect only in 2017, after he would leave a second term in office.
Under Obama’s plan, in beginning in 2017, the Medicare premiums that higher-income people pay would increase by 15 percent. The higher premiums, co-pays and deductibles that Obama proposes would add up to about $33 billion over ten years.
That amount to only four-tenths of one percent of total Medicare outlays over the next ten years.
Nearly everyone in Washington agrees that the federal government can’t get control of its deficits and ever-increasing debt unless it curbs entitlement spending.
It was President Bill Clinton’s former budget director, Leon Panetta, now defense secretary, who chided the Senate Budget Committee a week ago: “You can’t meet the challenge that you’re facing in this country” by only cutting discretionary spending, the outlays on items like prisons and national parks, which is less than a third of spending.
“If you’re not dealing with the two-thirds that is entitlement spending, if you’re not dealing with revenues, and you keep going back to the same place, frankly you’re not going to make it, and you’re going to hurt this country’s security.”
But when leaders of either party do try to curb Medicare spending, the opposing side carpet-bombs them with TV ads playing on senior citizens’ fears.
In 2011, when Ryan offered his plan to raise the Medicare eligibility age to 67 and to do away with Medicare’s open-ended payments which cover almost all medical procedures, one Democratic group ran an ad showing a man -- presumably Ryan -- pushing a terrified elderly woman in a wheelchair off a cliff.