GOP Medicare Plan Could Share Common Ground With 'Obamacare' Exchanges

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Rep. Paul Ryan's budget proposal to overhaul Medicare already is being lambasted as an attack on seniors.

But the basic details of the plan are not so far off from several other health care systems -- including the coverage provided to members of Congress, the Medicare Advantage program and the so-called health insurance exchanges established under the Democrats' federal health care system overhaul.

Ryan, a Wisconsin Republican and chairman of the House Budget Committee, outlined the framework of his proposal on "Fox News Sunday." He said it would rely on the kind of "premium support" system outlined in an earlier proposal co-authored by him and former White House Budget Director Alice Rivlin -- meaning seniors would get a fixed subsidy from the government to help pay for premiums in the private health plan of their choosing. Ryan said Medicare would send the subsidies directly to the private plans, which would have to "compete against each other" for business.

He compared the idea to Medicare Advantage, a Medicare offshoot which lets seniors put Medicare money toward private plans. But the framework also bares similarities to the exchanges in the federal health care overhaul.

Both proposals presumably would put out a list of approved private health plans and subsidize the policies chosen by patients.

Ryan, asked at an event last month about the common feature, said: "Exchange is not necessarily a dirty word."

However, Ryan suggested the Republican idea of an exchange is much different from the Obama administration's idea.

The differences may lie in implementation. Whereas the federal health care overhaul sets strict standards for the types of plans that would be allowed to compete for subsidized patients' business, the Center on Budget and Policy Priorities cautioned last month that the Ryan-Rivlin proposal "sets no specific benefit standards" for private plans.

Conservatives, though, like the idea of a less-regulated exchange.

John C. Goodman, president of the National Center for Policy Analysis, said he expects Ryan's plan to set some criteria. But he said that probably wouldn't be as strict as the federal exchanges, which he claimed would "virtually dictate" to insurance companies what they have to provide.

"There's going to be choice in both worlds. ... That's similar," he said. "It's not radical. It's not even that new."

But he praised Ryan's approach and suggested it be used as a model for the eventual exchanges under the health care overhaul.

One key difference between the two exchanges is the way the subsidies are calculated. Under the Ryan-Rivlin proposal, the subsidy would be based on the average cost per Medicare patient in 2012 -- and then allowed to increase at the rate of GDP growth plus 1 percent. Under the health care overhaul, subsidies would be based on a calculation that factors in market prices and the income of the individual.

There are other obvious differences. The health care overhaul uses Medicaid to cover very low-income individuals. And, of course, the Ryan-Rivlin plan deals with seniors, whereas the health care overhaul's exchanges are targeted at low- and middle-income individuals who generally are not covered by an employer.

But as with the health care overhaul exchanges, Ryan suggested the GOP might be looking at a sliding scale for Medicare benefits. He told "Fox News Sunday" the proposal would give "more for the poor, more for people who get sick, and we don't give as much money to people who are wealthy."

The Tax Policy Center, in an analysis put out last month, argued that the health care overhaul and the Ryan-Rivlin plan actually go hand-in-hand. The analysis said the federal overhaul lays the groundwork by instituting an individual mandate, setting up an exchange and establishing minimum standards for insurance plans. "Additional premium support for seniors would be the final piece of the puzzle," fellow Howard Gleckman wrote. "Seniors would be able to buy affordable private coverage through the same sort of exchanges as tens of millions of working people. ... The idea is not as radical as it sounds."

He also compared the idea to Medicare Advantage and the plans offered to members of Congress, urging Democrats to stop defending the current "flawed" Medicare system and Republicans to let the federal health care overhaul go into effect -- so the two policies can complement each other.

Though the exchange idea has been around, imposing such a change on Medicare would mark a stark departure from the current system, which provides government money straight to doctors and hospitals for senior care.

The Ryan-Rivlin plan would call for seniors to pay more for smaller expenses but put a cap on what they could pay out-of-pocket. It's unclear whether the new GOP plan would have similar figures, but the Ryan-Rivlin proposal set a flat $600 deductible and capped total expenses at $6,000.

Ryan stressed that the changes would not affect those 55 and older, but would keep the program solvent in the long-term.

"Doing that saves Medicare," he said.

Early criticism, though, has been fierce.

Rep. Chris Van Hollen, D-Md., claimed Ryan was giving a pass to "taxpayer giveaways" to the oil-and-gas industry and other corporate interests at the expense of seniors.

"This is a huge change in Medicare. Not only does it cut the amount for Medicare but it ends the current guarantee that seniors have under Medicare to certain health benefits. And it essentially transfers all the risk of rising health care costs over to the senior," Van Hollen told Fox News. "What he's doing is privatizing Medicare."

A Congressional Budget Office study last November determined that seniors would likely either face higher premiums or less extensive coverage under the Ryan-Rivlin plan.

Goodman said it's true that the Ryan-Rivlin plan would eventually make seniors pay more out of their own pocket. But he argued that it also provides more "flexibility" to the private sector to control costs.

Mike Needham, CEO of Heritage Action for America, said the current system simply won't last.

"What we have now is a Medicare system that's going bankrupt," he said. "The most important thing is saving Medicare for future generations."