Paul Ryan's new Medicare plan could be tip of the iceberg (+video)

The arrival of a Republican budget proposal this week, coupled with a rival plan from Democrats, is bringing the volatile issue of Medicare reform to the political forefront.

Paul Ryan, chairman of the House Budget Committee, wants to bring federal deficits down partly by scaling back on government’s health-care promises for seniors. Republicans say that plan will preserve Medicare by keeping the program financially sound.

It's safe to say that Mr. Ryan’s “premium support” model for Medicare – Democrats call it offering a voucher instead of insurance – is destined to generate lots of controversy.

Even if Ryan’s plan is a political nonstarter at present, given Democratic control of the White House and the Senate, the important point may be that Medicare is emerging for serious discussion. President Obama and members of Congress are at least talking about the issue in private meetings.

Budget experts say if there’s any budget issue that deserves the title of “elephant in the room” as a driver of a dangerous expected growth in national debt, it’s health-care programs including Medicare and Medicaid, which provides health insurance for poor Americans.

Adjustments in those programs may or may not happen this year. But there’s wide agreement that cost-saving changes can’t be avoided indefinitely.

“Over the course of coming decades, outlays for Medicare and Medicaid are slated to explode if no action is taken,” said David Greenlaw, an economist at the investment firm Morgan Stanley, in a December analysis of America’s fiscal challenge.

The explosion is already under way, in fact.

What’s still in the future is the point when, if unchecked, the health-care burden could pitch the nation into a fiscal crisis.

A key difference between the government’s two major health-care programs is this: Working Americans pay taxes out of each paycheck to help fund Medicare, as they do for Social Security. Medicaid doesn’t work that way.

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