GOP Medicare proposal doesn't match up with current federal plan

Published: Sunday, May 1, 2011 at 8:38 p.m.
Last Modified: Sunday, May 1, 2011 at 8:38 p.m.

WASHINGTON — House Republicans say their budget proposal would make Medicare work just like the health insurance that covers federal employees, including members of Congress. But a close examination shows the two plans are very different, and the differences help explain why the Republican plan has set off a political uproar.

Under the federal employees’ health plan, which covers 8 million people, the government pays a fixed share of premiums. So the federal contribution generally keeps pace with rising premiums, which in turn reflect rising health costs.

No such guarantee exists under the Republicans’ plan to transform Medicare, approved by the House on April 15 as part of a budget blueprint to cut federal spending and deficits.

Under the House Republican proposal, starting in 2022 new Medicare beneficiaries would receive coverage through private insurance plans, and Medicare would subsidize the cost.

The federal payment for a typical 65-year-old would be set at $8,000 a year in 2022, about the same as what Medicare is expected to spend under current law.

In later years, the federal payment would be increased to reflect the age of a beneficiary and general inflation, measured by the Consumer Price Index. But health costs and insurance premiums have, for years, been rising faster than consumer prices in general.

So, the Congressional Budget Office says, under the Republican plan, Medicare would pay a smaller and smaller share of beneficiaries’ total health costs, and seniors would pay a growing share. For a typical 65-year-old, that share would be 68 percent in 2030, more than twice what it would be under current law, the budget office said.

Today, Medicare is an open-ended entitlement. It does not have a fixed budget, though Congress has defined the benefits and prescribed payment rates for doctors and hospitals.

House Republicans have repeatedly likened their proposal to the Federal Employees Health Benefits Program, in which most lawmakers are enrolled.

“We want to prevent Medicare from going bankrupt,” said Rep. Paul D. Ryan, R-Wis., chairman of the House Budget Committee and the lead advocate for the budget proposal. “We want a system that’s sustainable. We want a system that’s solvent and that people can rely upon: guaranteed coverage options just like we have in Congress. That’s what we are proposing.”

But Rep. Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee, said, “We keep hearing that Republicans are offering seniors exactly what members of Congress get. It simply is not true.”

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