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Medicare and the Election: FAQ

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Reviewed by Louise Chang, MD

WebMD Health News

Mitt Romney's selection of Rep. Paul Ryan (R-Wis.) as his running mate on the Republican ticket focuses new light on the congressman's plan to restructure Medicare -- the program that provides health care to 47 million elderly and disabled Americans. Although Democrats accuse Romney of wanting to end Medicare, Republicans say that Obama's health reform law would add hundreds of billions in costs to the existing program.

In an effort to clear up the confusion, here are some answers to common questions about both plans and the future of Medicare.

Will Paul Ryan's budget plan really end Medicare?

Not now, but under Ryan's approach traditional Medicare will be just one option in a newly created competitive marketplace. Everyone aged 55 and older would be grandfathered into traditional Medicare.

How does Paul Ryan's plan work?

Seniors would get a fixed amount of money, called "premium support," to pay for their health care. One option for that care would include traditional Medicare. Other insurance plans would also bid for Medicare business, offering consumers other options for their coverage. 

Would seniors get the same amount of coverage?

Under today's Medicare, the government sets the premiums. Under Ryan's premium support plan, health plans would submit bids and the federal contribution would be based on the proposals.

If beneficiaries want more expensive coverage than the premium support amount, they would pay the difference. If they select a cheaper plan they could possibly get a rebate.

Would seniors pay more under Ryan's plan?

Experts differ on how premium support would impact the quality and cost of Medicare.

Opponents like Marilyn Moon, PhD, a former Medicare trustee who heads up the health program at the American Institutes for Research, says the approach will drive up premium costs.

Moon says Medicare will ultimately price itself out of the market. It will be "trivialized" as a last refuge for the sickest -- and costliest -- patients. Over time, for-profit plans are more likely to win most of the business, since premium support probably won't cover the increasing expense of traditional Medicare.

The Obama campaign says that the Ryan proposal could raise future retirees' Medicare premium costs more than $6,000 a year. That's according to the Center on Budget and Policy Priorities -- a liberal think tank. They based their numbers on an earlier analysis by the non-partisan Congressional Budget Office. 

On the other hand, Ryan's plan could empower consumers to choose options best suited to their needs and their pocket books.

Gail Wilensky, who ran the Medicare and Medicaid program under President George H.W. Bush, offers Medicare's prescription drug plan as an example of how this system could work. It allows consumers to choose among different coverage plans, depending on their needs.

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