Is Paul Ryan's Medicare Proposal Like Obama's Health Care Plan?

Both plans call for setting up exchanges and risk pools.

April 21, 2011, 5:47 PM

April 22, 2011— -- President Obama has dubbed Rep. Paul Ryan's 2012 budget "fairly radical." The Republican congressman from Wisconsin has claimed the president's Affordable Care Act "is accelerating our country toward bankruptcy."

Underneath the rhetoric, however, Ryan's plan to reform Medicare -- a central part of his 2012 proposal -- bears some glaring similarities to President Obama's health care plan.

It calls for setting up exchanges for older Americans similar to those proposed in the Democrats' health care plan that were widely panned by Republicans, even rejected by state leaders such as Oklahoma Gov. Mary Fallin.

Under Ryan's plan, new Medicare beneficiaries in 2022 could select from a list of guaranteed coverage options, and the government would provide money to subsidize the cost of that plan.

The setup is similar to the exchanges that are a key component of the new health care law. Under that law, small businesses and those without existing coverage could shop for coverage on exchanges, which would, in the words of the White House, serve as a "one-stop shop" to compare and find health insurance options.

Both Democrats, when pushing the Affordable Care Act, and Republicans, in promoting Ryan's plan, used the same argument -- that their plans would allow beneficiaries to choose coverage the same way members of Congress do. The exchanges would allow people to choose from government-approved, precertified plans, and the system would be adjusted according to risks and wealth.

Ryan's plan also pools risk among seniors, drawing on the same fundamental philosophy behind the high-risk pools created under the new health care law.

Republicans, however, argue that while they might operate in the same way, the similarities stop there. There is a difference between offering exchanges to a select group, such as senior citizens, versus a larger swath of the population, they argue.

"There is obviously a difference between those over 65 years of age as opposed to all Americans, which is the proposal that the president put forward," a House GOP aide told ABC News. "There's also consensus in the sharing of risk within the senior population, that is Medicare, which Chairman Ryan's proposal seems to do."

Experts say the key difference is that in Medicare exchanges set up under the Ryan plan, the contribution toward private insurance is defined, but there are few or no specifications regarding specific benefits that would be offered over time.

In the way that both call for the setup of exchanges, "they are similar but there are big differences in terms of standards for plans in the exchanges and how they would be expected to adhere to certain rules," said Tricia Neuman, vice president of the nonpartisan Kaiser Family Foundation. "There are not a lot of details that are laid out so it may be that he has an intention to make it more similar to exchanges. It's hard to say."

The pools also differ in that the high-risk pools under the Democrats' health care plan are set up for the short-term, until broader principles are established, while Ryan's plan calls for a more long-term proposition on Medicare risk pools.

The way the Obama administration approaches Medicare also differs widely from Ryan's.

One of the key tenets of the Affordable Care Act exchanges rejected by Republicans is the Independent Payment Advisory Board, a panel of 15 experts nominated by the president to recommend policies to cut Medicare costs.

"The approach taken under Ryan's proposal for future beneficiaries is this premium support model in which we have a fixed contribution, Medicare approved plans on Medicare exchanges, and the choice, in terms of where those fixed amounts ... are directed, is a choice made by the individual as opposed to the federal government or an appointed bureaucrat," the House GOP aide said.

Ryan's plan would abolish the advisory board and repeal part of the 2010 law that would have closed the Medicare drug benefit's coverage gap, or "doughnut hole."

"They really are taking very different approaches to address the broad challenges of reducing the federal deficit and debt," Neuman said. "The administration is building on the existing system to reduce spending. The Ryan proposal is a fairly dramatic change in the current structure."

Americans view both plans with skepticism.

In an ABC News poll released this week, 65 percent of Americans said they opposed changing Medicare to a system in which the government would give older Americans vouchers with which to buy private insurance. The Republican budget plan includes what's been widely described in news reports as a voucher or voucher-style system, though Ryan has maintained that it's not a voucher system, because subsidies would go directly to insurance companies.

As for Obama and the Democrats' health care plan, Americans remain confused about what it entails, a year after it was passed. In Kaiser's March health tracking poll, 52 percent of those polled said they did not have enough information about the health reform law to understand how it would affect them personally. The poll found that 42 percent of Americans hold favorable views of the law, while 46 percent view it unfavorably.

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