The Paul Ryan Primer: Medicare, Medicaid and Why His VP Nomination Matters

Republican presidential hopeful Mitt Romney named Representative Paul Ryan (R-Wis.) as vice presidential nominee last week. As chairman of the House Budget Committee, Mr. Ryan is heavily involved in fiscal policy and has outlined plans to address the growing costs of Medicare and Medicaid. While Mr. Romney and Mr. Ryan agree on repealing President Barack Obama's healthcare law, Mr. Ryan has some ideas of his own to curb the rising expenses within the two major federal healthcare programs.

Mr. Ryan has called Medicare "the big budget issue," and he has stood by his plan that involves significant changes to address the program's costs. Although known for his fiscal conservatism, Mr. Ryan has sometimes worked across the aisle and collaborated with Democrats such as Sen. Ron Wyden (Ore.) and Alice M. Rivlin, a former director of the Congressional Budget Office, to establish his plan for Medicare.

The Obama administration's $700 billion reduction in Medicare spending is one matter in which Mr. Romney and Mr. Ryan differ. While Mr. Romney would reverse that reduction, along with the entire Patient Protection and Affordable Care Act, Mr. Ryan has called to maintain those cuts and redirect the savings into a Medicare trust fund. Nearly every House Republican has backed Mr. Ryan's plan, whereas Mr. Romney continues to advocate a full-force repeal of the PPACA. Some attribute this disagreement to Mr. Ryan's more textured understanding of math and politics and Mr. Romney's long-held political stance against "Obamacare" and his opposition to lessen it at this point in the campaign.

In his fiscal year 2013 budget resolution, The Pathway to Prosperity, Mr. Ryan advocates a premium support payment program for Medicare, which some refer to as a voucher program, that would begin in 2023. The program would affect people who are now 54 and younger. Seniors who choose to accept the premium support payments — which would have capped annual increases — would use them to purchase health insurance in a private Medicare marketplace. This could be a private insurance plan that is still regulated by the government or a government-run program, much like traditional Medicare.

Through competition, Mr. Ryan has said this Medicare marketplace would ideally reward providers who offer high-quality and low-cost care. Seniors who choose plans with more benefits would then pay more out of their own pockets. "It’s better to have a system where the beneficiary is the driver and the decision maker, where she gets to decide among competing providers for her benefit," Mr. Ryan has previously told reporters.

Mr. Ryan's plans for Medicare also include gradually raising the eligibility age from 65 to 67 by 2034. He would also cap the Medicare growth rate after 2023 so that it does not exceed the growth rate of the economy, plus an additional 0.5 percent.

Mr. Ryan has said the Medicaid program is "coming apart at the seams," and he specifically mentioned how providers are "fleeing the system" to avoid underpayments, which is leaving beneficiaries with reduced choices and access to care.

Along with curtailing Medicaid spending by $810 billion over 10 years, Mr. Ryan's plans for Medicaid including converting the federal program to a block grant indexed for population growth and inflation. Each state would receive a lump sum to provide tailored Medicaid programs fit for the needs of their low-income populations. This would put an end to what Mr. Ryan calls a "misguided one-size-fits-all approach."

Mr. Ryan's plan for the block grant coincides with Mr. Romney's view that "the state is the best place to determine who is poor. The state is the best place to determine what's the best way to help those poor."

More Articles on Healthcare in the 2012 Election:

10 Considerations for Hospitals in the Aftermath of Supreme Court's PPACA Decision
Poll: 51% of Americans Oppose PPACA; 1 out of 6 Want More Reform
Romney: President Slowed Economic Recovery to Focus on Healthcare Reform

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