Kathie Herrman is sick of flipping on the television and getting an earful about which presidential candidate wants to “rob” or “end” Medicare.
“I get aggravated with them because they tell you one thing and when they start all this business of throwing mud at each other,” she said, trailing off.
President Barack Obama and Republican challenger Mitt Romney both seek to preserve the popular health insurance program for seniors and restrain its costs to the same level.
The overheated rhetoric comes from their sharply contrasting visions for how to keep Medicare’s costs under control and what the program will look like — the present structure of centralized control and predetermined federal coverage or a competitive marketplace with an annual federal payment to seniors to help them buy coverage they choose.
Herrman, 76, who relies almost entirely on income from Social Security and health insurance from Medicare, spent a recent Wednesday morning at a senior center in southwest Ohio, participating in the AARP’s attempt to cut through the clutter.
A group of 13 seniors flipped through booklets describing various proposed changes to Medicare and Social Security, in which there is no mention of Romney or Obama. It was one of a series of focus group-type discussions AARP is holding across the country.
“Everybody’s getting weary of this nondiscussion and just finger-pointing without any substantive discussion about what solutions might really be,” AARP Ohio President Mike Barnhart said.
Medicare takes up 15.5 percent of the federal budget — a number expected to rise as the American population ages and health costs increase. It is perhaps the most daunting challenge to any policymaker seeking to bring down record deficits.
Obama’s 2010 health care law and proposed reforms aim to use Medicare’s immense purchasing power to promote quality of care over quantity and save money on payments to providers. Romney aims to introduce market-based competition by helping seniors buy either Medicare or private insurance.
Each candidate claims to have a superior vision to preserve the program by restraining spending, and each relies on unproven forecasts.
“There is a real question of how to finance care for an aging population with very tough questions about who should pay,” said Tricia Neuman, director of the Program on Medicare Policy at the nonpartisan Kaiser Family Foundation.
Medicare was designed in 1965 to provide health insurance for senior citizens, whose high risk makes coverage costly. The program expanded in 2006 to add prescription drug coverage.
Retiring baby boomers with longer lifespans and rising health care costs pose long-term challenges for the program, as laid out by this year’s annual Medicare trustees’ report. If its growth is unchecked, Medicare would constitute 10.4 percent of the nation’s entire economic output by 2086.
“Growth of this magnitude, if realized, would substantially increase the strain on the nation’s workers, the economy, Medicare beneficiaries and the federal budget,” wrote the trustees, appointed by the president.
The incumbent’s approach to Medicare can be found in the 2010 Affordable Care Act and in subsequent budget proposals. Though the central purpose of the ACA — often referred to as “Obamacare” — is to extend universal health coverage, it also made several changes to Medicare.
It made Medicare more generous by closing the gap in prescription drug coverage known as the “doughnut hole” and eliminating co-payments or deductibles for certain preventive care services.
The law also reins in spending in the long run by altering payments to Medicare providers and hospitals and reducing reimbursements for privately administered Medicare Advantage plans, which had been reimbursed at higher rates than traditional Medicare.
The law created a 15-member presidentially appointed board as an additional check on Medicare growth. If spending increases exceed a certain rate, the Independent Payment Advisory Board must recommend cutbacks to Congress, which must approve the recommendations or come up with an equally thrifty alternative.
The result, according to the nonpartisan Congressional Budget Office, is Medicare will be $716 billion cheaper over the next decade than it would be without the ACA. Republicans have criticized this cut against the program’s growth as draconian and have made it a centerpiece of their Medicare attack on Democrats, who contend that the cuts do not affect benefits.
A key to the Republican argument is that Democrats used the Medicare cuts to “pay for” health insurance subsidies for non-seniors. CBO found the law reduces the deficit because increased spending on the new subsidies and other health programs was offset by tax increases and reduced Medicare spending.
Obama has not proposed drastic long-term changes to Medicare, though experimental programs in the ACA are intended to find a way to push the health care system as a whole toward paying for results rather than à la carte services.
In his 2013 budget — which did not garner a single vote in Congress — Obama proposed an additional $276 billion in Medicare savings over the next decade by reducing payments to some providers and taking measures to reduce waste and fraud.
Obama would also keep Medicare payments to doctors steady in the face of sharp reimbursement cuts due in January. The scheduled cuts are a relic of a 1990s Medicare reform effort and a reminder of the perils facing any cost-control efforts. Under pressure from doctors, Congress has made it an annual ritual to undo the cuts. Romney has not made clear what he would do about the physician payments.
The Romney-Ryan plan
Romney has pledged to immediately grant states waivers to ACA and to repeal it as soon as Congress will allow. This action would increase Medicare spending in the near term, while Romney seeks to rein in costs over the long haul by creating a voucher-type system in place of the traditional Medicare structure.
Beginning 10 years after the law is signed, new enrollees in Medicare under the Romney plan would be given a credit by the federal government to use to buy either standard fee-for-service Medicare or a competing private plan.
The Romney plan — which Romney’s website says “almost precisely mirrors” an outline by his vice presidential nominee, Rep. Paul Ryan, and Sen. Ron Wyden, D-Wash. — would require the competing private health care plans to offer minimum standards of coverage, and traditional Medicare would continue to be administered by the government.
The biggest question is the value of the government’s premium support. Romney’s plan would give larger subsidies to poorer, sicker or older recipients. Medicare currently bases its premium assistance only on wealth.
Romney’s plan is noncommittal on how the premium support would be calculated. The Ryan-Wyden plan would tie the subsidy to the cost of the second-cheapest health insurance plan in the marketplace.
The Ryan-Wyden plan proposed a cap on Medicare spending growth of 1 percent more than gross domestic product growth — the same as Obama’s payment board. In the long run, both Obama and Ryan have proposed limiting Medicare growth to 0.5 percent over GDP.
With the parties’ cost-crimping goals being almost identical, Joseph Antos of the free market-promoting American Enterprise Institute think tank said: “The question is how do we most effectively do that?”
Backing the Romney plan on a Heritage Foundation health policy conference call for reporters last week, Antos added, “Do we order them from Washington to stop doing what they are doing and start doing something else, or give them a strong financial incentive to stop what they are doing and start doing something else?”
In addition to faith in the free market to spur innovation and productivity, conservatives have a model for cost containment in the Medicare Part D prescription drug benefit. Drug costs have risen relatively modestly since 2006 under a competitive plan approach similar to what Romney wants to implement for the rest of Medicare.
But slower growth in drug prices has been the case across the board recently, due in part to a lack of significant new drugs and increased prevalence of generics.
Foes of the premium support model claim it endangers Medicare’s coverage guarantee.
While cost control is laudable, the model “shifts the risk of disproportionate medical inflation from the federal government to the elderly, and that’s not a sensible way to do it,” said Theodore R. Marmor, professor emeritus of public policy at Yale University.
Still, Marmor said the Obama health care law’s “cost control menu, I would say, varies from weak to mediocre.”
In a March paper in the Journal of General Internal Medicine, Marmor and Jonathan Oberlander of the University of North Carolina at Chapel Hill argued that American policymakers spend too much time searching for the “holy grail” of health reform that will improve quality and reduce costs simultaneously.
Reducing costs, they wrote, “does require the U.S. to emulate the lessons of other nations that have been more successful at limiting spending through budgeting, systemwide fee schedules, and concentrated purchasing.”
By picking Ryan as his running mate last month, Romney chose to stand firmly behind the Wisconsin congressman’s controversial Medicare plan and thrust the entitlement into the center of the campaign, from ads to stump speeches.
The political stakes are high, particularly in the major swing states of Ohio and Florida, where there is a disproportionate number of senior citizens and each side is vigorously accusing the other of endangering Medicare.
At the Republican National Convention in Tampa, Ryan cited the reduction in Medicare provider payments in the ACA to say, “The greatest threat to Medicare is Obamacare, and we’re going to stop it.”
On Tuesday in Norfolk, Va., Obama said, “We are certainly positive that the best way to strengthen Medicare isn’t to turn it into a voucher that leaves seniors paying additional costs out of pocket.”
Many voters are left apprehensive about the candidate they do not support. Before Romney spoke in Chillicothe, Ohio, last month, Obama backer Susie Burke, 49, said she wants a stable Medicare program in place when she retires.
“If Romney is elected and he’s going to change it for the younger folks, we’re taking a chance here that it’s going to be messed up for the younger generation — me included,” she said.
At the rally, Romney supporter Nancy Hill, 58, said she was “not sure” about Romney’s Medicare plan, but she is sure about the incumbent: “I know it’s not right for Obama to be robbing it for however many billion dollars.”
Back in Ohio, AARP volunteer Ken Fouts said the group’s mission was to turn down the heat via a series of listening sessions. Volunteers guide seniors through 15 proposed changes to Medicare and 12 Social Security proposals, presented in a booklet with analysis on each policy from the left-leaning Brookings Institution and right-leaning Heritage Foundation. The seniors discuss and grade each one, and their preferences are to be presented to lawmakers after the election.
Fouts, 71, said this effort at even-handedness was spurred in part by sharp criticism AARP took when it endorsed the Affordable Care Act before it passed. Nonetheless, he said, it is an important service.
“Seniors are surely aware what we all are hearing right now is campaign rhetoric,” Fouts said. “I think most people here know that. They’ve been lied to so many times by politicians — local and federal.”
Kathie Herrman said she is still eager to learn more about the candidiates. She leans toward voting for Obama, but her more pressing concerns include a son who recently lost his home and a broken-down Buick that she and her husband cannot afford to fix.
“It’s scary,” she said. “You start thinking about the different things. If it wasn’t for the Medicare, I don’t know what we would do.”
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