How will Paul Ryan change Medicare?

The selection of Wisconsin congressman Paul Ryan as the running mate for presumptive Republican Presidential nominee Mitt Romney could have serious consequences for the Medicare program.

Ryan, Budget Committee chair for the House of Representatives since Republicans gained control of the chamber 2 years ago, is best known for budget proposal, which includes a plan to overhaul Medicare and transform it into a “premium support” system.

Romney announced his choice of Ryan, 42, at a campaign stop in Norfolk, Va., on Saturday.

Under Ryan’s plan for Medicare, which he has proposed for each of the last 2 years, enrollees would be given a choice between traditional fee-for-service Medicare and several private insurance plans once they become eligible for coverage. All of the private plans would be required to cover “at least the actuarial equivalent of the benefit package provided by fee-for-service Medicare,” according to the proposal.

Once a beneficiary chooses a plan, the government would send that plan a “premium support” payment equal to either the cost of traditional Medicare or the second least-expensive private plan, whichever is less. The plan is not unlike the way Medicare Advantage works now. Ryan’s plan would affect those younger than 55, who would begin enrolling in Medicare in 10 years.

“We have to save Medicare to avoid disruptions in benefits for current seniors and to strengthen the program for future generations,” Ryan says on his website. He points to a Medicare trustees report predicting that if nothing is done, the program will go bankrupt by 2024.

Medicare’s growth should be determined by a competitive bidding process using choice and competition, forcing providers to reduce costs and improve quality, according to Ryan.

Critics have charged that Ryan’s plan will end up making seniors spend more money on Medicare than they do now. “Since the premium support voucher does not keep up with increasing health care costs, the Congressional Budget Office estimates that new beneficiaries could pay up to $1,200 more by 2030 and more than $5,900 more by 2050,” Think Progress, a liberal Washington policy group, said in a press release.

Ryan’s proposal for overhauling Medicaid involves the use of block grants. The federal government would cap the Medicaid spending in each state and let the states figure out funding rates themselves.

Also on his website, Ryan says constant forestalling of changes to Medicare’s Sustainable Growth Rate formula for physician reimbursement is unacceptable.

“Physicians should not have to wait on Congress to act every year in order to prevent pay cuts that are arbitrarily determined by an outdated formula,” he writes. “Fundamental reforms to Medicare and our broken health care system are urgently needed, and I will continue to push my colleagues to take on this challenge.”

He does not elaborate on his plans for reimbursement changes.

Ryan also hammers President Barack Obama’s Affordable Care Act, saying it does nothing to address costs and creates uncertainty in the health care system. However, he stops short of saying it needs to be repealed.