The growth of Medicare – fueled by the transition of the giant baby-boom generation into seniorhood – threatens to bankrupt the country.
Obama’s goal is to address the unsustainable growth of the program without cutting back on benefits to seniors. Reforms in the ACA to slow the growth in Medicare payments include reducing payments to providers, rolling back federal subsidies to private Medicare Advantage plans, and curbing waste and fraud.
In addition, the new Independent Payment Advisory Board's panel of 15 medical experts is empowered to institute measures to reduce per capita Medicare spending, if it grows too fast. These measures could include reducing reimbursement rates to hospitals with high readmission rates and recommending reforms to cut wasteful spending.
Romney and Mr. Ryan say that Obama is “raiding Medicare” – removing $716 billion over 10 years – to pay for his health-care law. But under the ACA, spending on the government’s health-insurance program for seniors isn’t really being cut – its growth rate is being slowed.
By contrast, Romney and Ryan would fundamentally overhaul the system by turning Medicare into a “premium support” system, in which recipients get a fixed amount with which to buy insurance. Seniors would have the option of sticking with traditional fee-for-service Medicare, but if it ends up costing more than private plans, then government premiums will rise. Competition among plans would hold down costs, Romney says. Lower-income seniors would get more support than wealthier seniors. And nothing would change for those currently at or near retirement.
Repeal of the ACA would bring back the so-called “doughnut hole” on Medicare prescription drugs, the coverage gap that seniors face after they have spent $2,700. Romney has not discussed an alternative.
Repeal of the ACA would also remove the legal basis for the new Independent Payment Advisory Board. And in Ryan’s House GOP budget plan, the same $716 billion in Medicare savings is there, though Ryan says that money would go toward extending the life of Medicare. Team Obama argues that Romney-Ryan would gut the system.