Medicare row escalates with Romney's VP pick

Updated: 2012-08-20 10:25


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WASHINGTON - The US political fight over Medicare, the federal healthcare program for older Americans and some disabled people, was escalating after Mitt Romney's selection of Congressman Paul Ryan as his vice presidential nominee. But the nation's inefficient Medicare system cannot be saved by "Mediscare " demagogue, experts say.

Ryan's entrance energized the Republican base but also brought the Medicare issue into the limelight, as the lawmaker's latest budget plan included reform of the popular healthcare program. Given the role as the architect of the House-approved budget plan for the 2013 fiscal year starting in October 2012, Ryan has been attacked by Democrats as he would end Medicare "as we know it."

Seniors would get a voucher to buy private insurance under Ryan's plan, and because the voucher wouldn't keep up with healthcare costs, the plan would force seniors to pay an extra $6,400 a year for healthcare spending, US President Barack Obama charged on August 15 during a campaign event in the US state of Iowa. Democrats were not totally right about him.


Ryan's latest budget plan would allow current seniors to keep their current Medicare coverage unchanged, but it would alter the arrangement for those turning 65 after 2022, offering "a list of guaranteed coverage options, including a traditional Medicare fee- for-service plan" to ensure a "strengthened Medicare program for future generations".

The plan also called for gradually raising the Medicare eligibility age from 65 to 67. The budget plan sailed through the Republican-controlled House of Representatives this March, but went nowhere in the Democratic-led Senate.

In essence, Ryan's defined-contribution Medicare plan would provide stipend-style premium support in the amount of about $8,000 to seniors to shop around for healthcare coverage and forced different insurance plans to compete against each other and reduce costs.

The premium support program would change the current defined- benefit Medicare system, in which the federal government bought services whose costs were rising at a much faster clip than the economic growth rate.

Between 1985 and 2009, spending for Medicare program, which covers around 48 million people currently, grew almost 9 percent annually, compared with a 5-percent annual economic growth during those years, figures from the Kaiser Family Foundation showed.

Combined US healthcare spending including Medicare and Medicaid, a state-federal insurance program for low-income families, topped 2.6 trillion US dollars, or 17.9 percent of US economic output in 2010, highest among all developed countries, governmental data showed.

However, the United States did not fare well in terms of key health metrics including infant mortality rate, obesity rate and life expectancy, according to the Economic Cooperation and Development (OECD).

Even a number of Democrats once believed-- and some still do-- that a well-crafted version of premium support was part of a balanced and sustainable long-term fix for Medicare, noted William Galston, a senior fellow at Brookings Institution.

In this election year, demagoguing Ryan was bad for Democrats, warned Galston, a policy advisor for former US President Bill Clinton.

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