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Ryan's Medicare plan and his budget: What's in them for you?

The Daily Rundown's Chuck Todd explains how the Obama campaign will take on the Romney-Ryan ticket.

From the moment Mitt Romney announced House Budget Committee Chairman Paul Ryan as his vice presidential running mate, the campaign debate has been full of charges and countercharges over some of the congressman's proposals on Medicare and the budget.

What are the facts? Here’s a guide to Ryan’s budget and his ideas for remaking Medicare.

If you are 65 years old or older and now receiving Medicare benefits, would Ryan’s Medicare proposal affect you? If so, how would it affect you?

No – if you’re receiving Medicare benefits now, Ryan’s proposal would not affect you.

His plan would gradually increase Medicare’s eligibility age from 65 to 67. But his phased-in increase in eligibility age wouldn’t start until 2023, 11 years from now.

Also starting in 2023, Ryan’s proposal would do away with Medicare’s open-ended payment system which now covers most medical costs for seniors. Ryan would limit Medicare spending for those born in 1958 and later, that is, people who turn 65 in 2023 or later.

People who turn 65 in 2023 or later years would get payments from the federal government to help them purchase private insurance; the payments would be higher for low-income people and lower for high-income people; they’d also be higher for sicker people and lower for healthier people.

The payments could grow over time no faster than the nominal annual growth rate in per capita Gross Domestic Product, plus 0.5 percentage points, but they might not keep pace with the increase in the cost of medical care.


Democrats have been on the offensive ever since Paul Ryan was announced as Mitt Romney's vice presidential pick. Gov. Bobby Jindal, R-La., responds to attacks from the left over Ryan's budget plan.

So Ryan’s proposal would not have any effect on seniors, that is, on people who are now receiving Medicare?

His Medicare proposal would not affect today’s seniors.

But – and this is a crucial point – Ryan’s proposal for another federal program – Medicaid, the joint federal-state health insurance program for the poor – would have an impact on those seniors who rely on Medicaid to help pay for nursing home care.

As the Kaiser Family Foundation has noted, “Medicaid is the nation’s largest source of coverage for long-term care, covering more than two-thirds of all nursing home residents” and the elderly and disabled “account for roughly two‚Äźthirds of (Medicaid) spending.”

Ryan proposes to convert the federal portion of Medicaid into grants to each state, allowing each to tailor its Medicaid program to its own population’s needs.

The federal payments to the states would be indexed both to the inflation rate and to the growth in state population. But overall federal outlays on Medicaid would be cut by roughly one-fifth over ten years.

According to an assessment by the nonpartisan Congressional Budget Office (CBO), the spending path as designed by the Ryan’s plan might allow states to “improve the efficiency” of Medicaid in delivering health care to low-income people. But “even with significant efficiency gains,” states would need to increase their spending on Medicaid, CBO said, (and perhaps raise taxes in order to do that) or “make considerable cutbacks” in Medicaid.

“Cutbacks might involve reduced eligibility for Medicaid” or lower payments to health care providers, “or increased cost-sharing by beneficiaries – all of which would reduce access to care.”

If you are 45 years old how would Ryan’s Medicare proposal affect you?

The Daily Rundown's Chuck Todd is joined by Obama campaign adviser Robert Gibbs to discuss Mitt Romney's running mate and his stance on Medicare.

Since Ryan’s proposal, if enacted, would limit Medicare spending for those born in 1958 and later, a person who is 45 years old today would – once he or she became eligible for Medicare – receive benefits that would be less generous or less comprehensive than those now enjoyed by today’s Medicare recipients.

And since Ryan wants to gradually increase the age at which people are eligible for Medicare, a 45-year-old would need to wait longer to get covered by Medicare.

If Ryan’s Medicare plan became law, then starting in 2023, the CBO said, “Most elderly people would pay more for their health care than they would pay under the current Medicare system.”

What’s Ryan’s argument for treating future retirees  those born in 1958 and later – less generously than today’s Medicare recipients?

Ryan says the future costs for Medicare and Medicaid are unsustainable and will lead to tax and debt burdens that will be unbearable.

“We need to preempt and avert a debt crisis” which would force immediate cuts in Medicare and other programs, he told NBC’s David Gregory last year on Meet the Press. “And the way we propose to do that is do it on our terms and prevent people who are currently retired and people about to retire from having severe disruptions in their lives.”

Republicans have charged that President Barack Obama’s health care overhaul is now cutting Medicare spending by more than $700 billion. Obama, not Ryan, is the one hurting seniors, they say. Is this true and if so, are Obama’s Medicare “cuts” similar to or different from Ryan’s proposed reductions in future Medicare spending?

According to the CBO, if Obama’s health care law were repealed, then $711 billion in reductions in Medicare spending over the 2013–2022 period would not occur.

Even Obama campaign spokeswoman Stephanie Cutter on CBS’s Face the Nation Sunday referred to “the $700 billion cuts in Medicare that the president achieved through health care reform.” She said these cuts are “taking subsidies away from insurance companies, taking rebates away from prescription drug companies.”

But that’s not where all of the cost savings will come from: a significant portion of the $711 billion will come from curbing payments to hospitals and other health care providers. Other cuts may be ordered by the Independent Payment Advisory Board, an outside group mandated by the Affordable Care Act.

In contrast to Ryan’s future reductions (starting in 2023) Obama’s reductions in Medicare spending are taking place now – at least the Affordable Care Act orders them to occur and the CBO assumes they will occur.

But it is too soon to judge whether these reductions are providing the same level of care to seniors as before, but simply providing it more efficiently, or whether some seniors are getting (or will get) inferior care as a result of these reductions.

Republican national chairman Reince Priebus said on Meet the Press that Mitt Romney “appreciates and admires the work and the ideas that Paul Ryan has done. But Mitt Romney has his own plan” to reform Medicare. What is that plan?

As presented on Romney’s campaign web site, his proposal – although not fully detailed – includes most of the same ideas Ryan has proposed: not changing benefits for anyone now retired or close to retirement. But for future retirees, he would change Medicare from an open-ended payment system into one in which future beneficiaries would get a payment from the government to buy insurance coverage.

Romney’s proposal says, “If seniors choose more expensive plans, they will have to pay the difference between the support amount and the premium price; if they choose less expensive plans, they can use any leftover support to pay other medical expenses like co-pays and deductibles

Is Ryan’s budget plan, which was OK’d by the House last March, now in effect?

No, it isn’t. The House approved Ryan’s fiscal year 2013 budget resolution in March by a vote of 228 to 191, with no Democrats voting for the proposal and 10 Republicans voting against it. But the Senate has not adopted any budget resolution for FY 2013, which begins on Oct. 1. So in the coming fiscal year, as in the current fiscal year, Congress will operate without any budget. But spending will of course continue.

Apart from turning Medicaid over to the states and redesigning Medicare for future retirees, what else would Ryan’s FY 2013 budget proposal do?

It would cut overall spending by about 12 percent over the ten-year budget window, as compared to the spending plan proposed by Obama; it would cut cumulative deficits by more than 50 percent. Among other things it would limit federal aid to college students and concentrate it on lower income students.

Does Ryan want to cut taxes for rich people, as Democrats charge, and if so by how much?

His FY 2013 budget proposal seeks to have only two income tax rates: 10 percent and 25 percent. The current top income tax rate is 35 percent – so this rate reduction could mean a tax cut for some people -- but Ryan also says he wants to “broaden the tax base” and get rid of “the burdensome tangle of loopholes that distort economic activity” by abolishing many tax breaks. He hasn’t specified which ones he’d seek to eliminate.