NEAL CONAN, HOST:
This is TALK OF THE NATION. I'm Neal Conan in Washington. When Republican presidential candidate Mitt Romney picked Paul Ryan as his running mate, both campaigns focused even more closely on Medicare. As House Budget Committee chairman, Congressman Ryan famously proposed changes that Democrats describe as an effort to end Medicare as we know it.
Republicans reply by pointing to the president's Affordable Care Act, which they say is paid for by raiding Medicare of $716 billion. Candidate Romney says he'd repeal the president's health care law and replace it, and while he's not yet provided details, we do have the Ryan plan, which he's endorsed.
So how are these two options different? How would they change health coverage for older Americans? If you have questions, give us a call, 800-989-8255. Email us, email@example.com. You can also join the conversation at our website. That's at npr.org.
Later in the program, the cynical twists on all sides in the fallout from a Senate candidate's offensive remarks about rape. But first, Medicare. For a look at what a Romney-Ryan approach might look like, we turn to Edmund Haislmaier, a senior research fellow in health policy studies at The Heritage Foundation. He joins us from his office there. Nice to have you with us today.
EDMUND HAISLMAIER: Thank you for having me.
CONAN: And what would Medicare look like under a Romney-Ryan administration?
HAISLMAIER: Well, I think the basic approach that they've discussed is a - what's called premium support or defined contribution, if you will. The idea is that instead of the federal government micromanaging the benefits and the payments to providers, the beneficiaries would instead get the value of their Medicare benefits that they could use to purchase from a range of competing plans, including one run by the government, very similar to the way Medicare Advantage is today.
CONAN: Well, a couple of points that Democrats would dispute in their - one, you call it premium support. Democrats call those vouchers.
HAISLMAIER: Well, you could use that term as well. I mean the relevant thing here is the design of the program. You know, in the approach that we have had so far with this program, the government attempts to be an insurance company and handle all of these issues of paying providers and setting rates and all the rest.
In a premium support approach, the government's role is really just to handle the money, and the beneficiaries make the decision. So that's how, for example, the federal government operates the program for its own employees. The federal government for its own employees doesn't micromanage the plan and set one plan. Rather, they simply provide an amount that the employee can choose from competing providers - sorry, competing private plans and purchase.
That's called the Federal Employee Health Benefits Program, and that's been in existence actually longer than Medicare. It was set up in 1960 and has been running longer than Medicare. So those are the basic differences in the approach.
CONAN: The other objection that some have put out is that such a premium or voucher would not cover everything that Medicare currently covers.
HAISLMAIER: Well, it's actually more likely to cover more than Medicare covers right now. And that may seem paradoxical, but it's not when you consider the enormous amount of waste and fraud in Medicare because they're not actually checking to see that the claims are legitimate a lot of times. They just sort of what's called pay and chase.
The private plans do a much better job of keeping a lid on that and thus have money to spend on other things. And we've seen that track record not only with FAHBP, the federal employee program, performing better than Medicare on that scale, but also in terms of the Medicare Advantage plans that are currently out there, to which about a quarter of seniors are now enrolled.
I should also add, by the way, that one of the interesting things about the federal employee plan is in the old days, before the 1983 Medicare reforms, federal civil servants weren't part of Social Security and Medicare. So you still have a couple hundred thousand people, including my own mother, who never got into Medicare. She's 86 years old; she's in FAHBP. She picks her plan every year, and she's done that every year since 1960.
So the idea that this is somehow strange or new - no, this is - we've got a lot of experience with this.
CONAN: And so smaller, cheaper, more efficient, all those good things. There is, however, a question. The Romney campaign has made a great deal about the $716 billion that the Affordable Healthcare Act, the president's plan, that reduces from Medicare. In fact, Congressman Ryan's plan made the very same assumption, with some slight changes, but the same number.
HAISLMAIER: Well, this gets into the arcana of scoring budgets. Basically...
Some say $716 billion is not arcane.
Well - well, there's a difference between arcane and minimal. I didn't say it was minimal. It is arcane, but it's not minimal. No, what you really need to focus on is the approach here, okay, and the question is basically the proposal - the approach in the Patient Protection and Affordable Care Act, the federal health legislation, is similar to what Congress has done in the past, which is to say we preserve the benefits in name, but then to make up savings if we need them, we propose to at some point in the future cut payments to the people actually providing the benefits.
Now, one of two things happens. Either the cuts go into effect, and the benefits in effect get hallowed out, because OK, you have this benefit, but now you have trouble finding somebody who will take such a low reimbursement to see you - we see this is in Medicaid, for example. I mean in New Jersey, you can get on Medicaid, but good luck finding a doctor who will see you because the pay is so lousy, they just can't afford to take you.
And we saw this in Medicare with the doctors. The other thing that could happen is what we saw with doctors is the cuts don't really happen because of the obvious dislocation. So for example, the '97 Balanced Budget Act proposed to control the rate of growth in physician pay in Medicare, but every time the cuts were going to come into place, Congress stepped in and said, well, no, not this year, we'll do it next year.
CONAN: Next year, maybe.
HAISLMAIER: Maybe. And so what's happened is, on top of that $250 billion in physician cuts that they've never actually put into place but would happen if they didn't kick the can one more time, the PPACA puts in another $700 billion in cuts, and this time on hospitals, mainly.
And so the chief actuary of Medicare says, well, you know, if you do actually do those cuts, then you're going to see a lot of these - I think it's 25 to 30 percent going bankrupt. Of course that's going to scare Congress into not making it, in which case, well, then you've never really saved anything in the first place, and...
CONAN: Ed Haislmaier, I'm afraid we're going to have to end it there, but thank you very much for your time today.
HAISLMAIER: Thank you.
CONAN: Edmund Haislmaier joined us from the Heritage Foundation, where he's a senior research fellow in health policy issues. We turn now to Neera Tanden. She served as senior advisor for health reform at the Department of Health and Human Services, where she worked with the White House team to pass the Affordable Care Act. She's now president at the Center for American Progress and joins us from a studio there. Nice to have you with us today.
NEERA TANDEN: Great to be with you. Thanks for having me.
CONAN: And we went through this debate once, but I guess we're going through it again. How will the Affordable Care Act change Medicare?
TANDEN: Well, first and foremost, it doesn't actually change Medicare for beneficiaries at all. There are changes to the way we pay hospitals, but specified in the law are no changes to beneficiaries, which is actually a fundamental difference between the president, President Obama's approach, and the Romney-Ryan approach to Medicare.
The Affordable Care Act has savings for in hospitals and overpayments to insurance companies and plows the savings back into the system by ensuring that there's additional assistance for prescription drug coverage; that's happening now for seniors, prevention benefits for seniors, and other ways in which we are promoting the health and welfare of seniors, as well as the American people.
CONAN: So that's that $716 billion.
CONAN: OK, let's get onto the other side's plan, however, and that's the Romney-Ryan plan, so much as we know it. The voucher program, how would that - we've just heard a description of how it might make Medicare smaller, cheaper, more efficient.
TANDEN: Well, it'll definitely make Medicare smaller. It will make it less efficient in this fundamental way, which is that right now Medicare is actually more efficient and effective than the private health care market. It produces - it provides benefits to seniors at lower administrative costs. Administrative costs in Medicare is three percent; it's 15 to 20 percent in the private market.
So what's so strange about the Romney-Ryan approach to health care is to take that benefit away from people, that guaranteed benefit of Medicare, when it is efficient and effective, people like it, it's a good plan, take that away and give people in return a voucher and say you can choose in the private health insurance market, and now they are also offering the traditional Medicare.
But what they're - the way they actually save money, the reason why this plan is in Ryan's budget proposals, is that it saves, you know, a trillion dollars over time, and the reason why it saves that money is because it increases costs to seniors. It says to seniors we're going to give you a voucher, it's not going to go up as much as health care costs go up. We're going to save money. The value of that voucher will decrease over time.
Premiums are generally 12,000, we're going to give you a value that's 6,000. So you're going to have to bear the burden of those costs. And that's how the voucher saves money. I mean it saves money to the federal government and puts those costs on seniors. And that's why it saves a trillion dollars in Romney and Ryan's budget. And, you know, I think that's the wrong approach, but you know, at least they're being honest in that they're - they think seniors, their view is that seniors pay too little for health care.
CONAN: In the long run, though, as we look at our financial problems down the road, don't we have to save money in Medicare somehow? Is the present system not unsustainable?
TANDEN: Well, you know, we have Medicare challenges, but we should all recognize that what's driving costs in the Medicare program is not that Medicare is bloated, or it's inefficient or ineffective. In fact, as I said, it delivers the same benefits at lower costs that private health insurance.
What's driving health care costs, what's driving Medicare, is two things: health care inflation, and you know, national health expenditures are - the amount we pay for health care goes up annually as a country more than other costs - it's a rising cost driven by the private market - and the fact that we have an aging population.
So, you know, in the Affordable Care Act we have numerous mechanisms to drive down health care costs, and in fact those costs, those mechanisms are actually driving down costs now. Medical inflation is decreasing. It has - it has been at lower levels than in the last 50 years, in the last two years. So that's an important mechanism, and one of the promises of the Affordable Care Act is to lower costs.
CONAN: Neera Tanden, thanks very much for you time.
TANDEN: Thank you.
CONAN: Neera Tanden, president of the Center for American Progress. She joined us from the center's studio here in Washington, D.C. We're talking about the battles over Medicare and trying to get at the truth behind the political rhetoric. Up next, Marilyn Werber Serafini of the Kaiser Health News joins us to answer your questions, 800-989-8255. Email firstname.lastname@example.org. It's the TALK OF THE NATION from NPR News.
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CONAN: This is TALK OF THE NATION. I'm Neal Conan. We just heard from both sides on the future of Medicare. It's become issue number one in the presidential campaign, at least right now, and there's plenty of confusion about the competing plans and how they might affect some 47 million Americans who now rely on Medicare.
By 2040, the government estimates that number will climb to nearly 90 million Americans, including many of the people in our audience. So how are these two options different? How would they change health coverage for older Americans? If you have questions, 800-989-8255. Email us, email@example.com.
Joining us now to help sort it out is Marilyn Werber Serafini, she's senior correspondent with our partner Kaiser Health News, which has no affiliation, we should say, with Kaiser Permanente. Marilyn, nice to have you with us here in Studio 3A.
MARILYN WERBER SERAFINI: Great, thank you.
CONAN: Now invariably, campaigns latch onto buzzwords, advertisements use clips and shorthand. Are both sides misrepresenting each other's claims?
SERAFINI: Absolutely. You know, they are, and they aren't in some ways, but what we're hearing mostly - and I was out in Pennsylvania over the last couple of weeks. I've been talking to folks on both sides, both the Democratic and the Republican candidates, mostly in the congressional campaigns, but I've also been paying attention to the presidential campaign, as well.
What we're hearing from the Democrats is Republicans are going to end Medicare as we know it, that's one of the biggest buzz phrases that we're hearing. We're hearing vouchers. They're specifically using the word vouchers, even though Ryan calls his plan a premium support plan. And as you hear Ed say, you know, Republicans don't take a huge amount of issue, it's - these are some fine differences between voucher and premium support.
But the word voucher does not poll very well with seniors. Seniors...
CONAN: Premium support sounds good.
SERAFINI: Premium support sounds OK, I'm going to get something, I'm going to get some support. But the word voucher, they do - well, you know what? The truth is premium support people don't - a lot of people don't know what it is. But the word voucher has a negative response from seniors. So they know that. They know to stay away from the voucher. They also know to stay away from the word privatization.
So Democrats know to use those words, and Republicans know to stay away from those words. In fact, the Republicans at the national level, are coming out with documents, and they're telling their Republican candidates look, stay away from these words. And the Democrats, of course, on the opposite are saying go ahead, use these words, use them as much as you can.
They're also using the figure $6,400. That comes from an older Ryan plan...
CONAN: That's the Democrats using that.
SERAFINI: That's the Democrats using this. They're saying - this was an old figure that came out from an old Ryan plan, from not the last budget that the House passed, but the second-to-last budget that the House passed in 2011. That was a figure that came out from the Congressional Budget Office, that was an estimate for how much more seniors could potentially pay to get the same kind of benefits that they're getting - that they're currently getting. So they're using that a lot.
CONAN: What's the accurate figure for the most recent Ryan plan?
SERAFINI: There is none. That's what makes it so confusing. In fact, that number was so widely used, and it was felt to be so damaging from the Republican side, that when the House budget came up this last time in 2012, for fiscal year 2013, the language was a lot more vague, and the Congressional Budget Office could not score it.
CONAN: And of course it could stand to be vague, because it was never going to be enacted because it had to go to the Senate where the Democrats were never going to pass it.
SERAFINI: Well, that's right, but also we have to remember that in this budget process, this is a budget resolution, and a budget resolution is a non-binding resolution, it never really becomes law. It's a guiding document. But the thinking around town was that this was probably left very intentionally vague so that it never could be scored, so that you couldn't have an updated $6,400 figure, so that it couldn't be used anymore.
However, it's continued - it is still being used, even though the figure that they are using really refers to an old plan.
CONAN: Well, let's get some callers' questions in on the conversation, 800-989-8255. Email firstname.lastname@example.org. We'll begin with Cynthia(ph), and Cynthia's with us from Silicon Valley.
CYNTHIA: Hi, I have a question about the Republican plan. I should disclose I'm over 55, so presumably, I'm not affected. But what does the Republican plan to do - plan to do about the problem of individuals in my age group and older not being able to get coverage from insurance companies, you know, being denied coverage? This is assuming they are repealing Obamacare, which changed that.
CONAN: Is this about pre-existing conditions?
CYNTHIA: Yes, anything, you know, an older person would typically have pre-existing conditions, and it is my understanding that the history of Medicare is that was one of the problems that led to the program in the first place, was older persons were not being able to get coverage.
And then if that is true, that they are not continuing the prohibition against denial of insurance, what incentive will they provide to an insurer to take on an older person? I mean, there must be some monetary incentive. That's my question.
SERAFINI: Well of course if the health care law disappears, all of the requirements that insurance companies do take - everybody, regardless of pre-existing conditions - those requirements also do disappear. Now I will say that many Republicans have said that yes, I want the law to disappear, but we think some of these restrictions on insurance companies, some of these pre-existing condition requirements that they put in place, they - some Republicans do like this, and they want some of these to continue.
Now whether they would, how they would do that, whether - it would be very difficult to repeal just part of the health law. So whether they would repeal it, and then it would be equally difficult just to put a few of those provisions back into place, it would be very, very hard to do.
CONAN: Cynthia, thanks very much for the call.
CYNTHIA: Thank you.
CONAN: Let's see if we can go next to - this is Laura(ph), and Laura's on the line from Sacramento.
LAURA: Hi everyone, thank you so much for taking my call.
LAURA: My question is this: While it wouldn't actually apply to my parents because they are both of Medicare age and are participating in Medicare, my father has a chronic condition, and my mother has dementia. How would my parents and others similarly situated, be expected to shop for health care premiums with their support at a time in their life when they are least capable of dealing with a very complex and important matter under the Romney-Ryan plan?
CONAN: So this is, again, not applying to the caller's parent, but to, Marilyn, you or me if we should get into that case.
SERAFINI: Right. Well, there's not a huge amount of detail about how that would work. Those are the kind of details that are - tend to be worked out after legislation has been passed and is being implemented. However, if you look at the kinds of laws that have been put into place that are similar, for instance the prescription drug plan for seniors that was passed in 2003 and implemented in - that was put into place, you know, it's a very similar sort of thing.
These are private insurance companies, and seniors - the hope from the federal government is that seniors go into these plans, and they look, they examine these plans every single year, and they choose the plans every single year.
So there are mixed reviews. A lot of people would say they go into these sites - I do it every year for my in-laws. I go in, and I sort through them, and we look. And I have to say for me to go in and do it, it's not terribly complicated, but, you know, I still go in, and I do it for them. So yes, it's a little - it's a little tricky. I think a lot of people can do it. But it's the same kind of system.
The government does have a system. It's a website. You know, you have to be - you have to be able to log on to a computer. And how many people with dementia would be able to do it? I assume it's mostly going to be their kids doing it.
CONAN: Laura, thanks very much. Here's an email question, this is from Maryann(ph) in Houston: I work in a dialysis clinic. Most of our patients are on Medicare, no matter their age. They may be on dialysis for 10 to 20 years. Will their premiums be higher than healthier individuals? Will individuals with chronic diseases be given more money in vouchers, or will everyone have the same vouchers in spite of the person's health?
SERAFINI: It doesn't appear that there would be - you know, I can't say for sure. I'm not positive. But the way I understand the proposal is that it really would not be any different. It would be something like - you know, it would be group insurance, that everyone would have the same premium.
Look, the way it would work is that private insurers and the traditional Medicare program, the fee-for-service program that we know today, everyone would bid. They would come into the system, and they would bid to care for whichever seniors want to come into the system. They would say: We will provide this value of benefit for this premium.
Now, they might offer slightly different benefits, but the value, when you add up the value, it should be something similar. So each plan comes in, and they're offering a certain premium. The way it would work is that the government would choose the premium that is the second lowest. They would choose the second lowest bid, and they would base the premium on that bid, unless the Medicare traditional program, the fee-for-service traditional government-run program, was the lowest bid.
If that was the case, then that's the one they would choose, but other than that, it would be the second lowest private plan bid. If the person chose - if an individual chose that plan, then that's the one they would get, and my understanding is that they would get the full premium. If they chose the one plan that came in less than that, they would actually get a rebate. If they chose any of the other plans that came in higher, and there should be a lot of plans that come in higher with additional...
SERAFINI: ...could be benefits, you know, a lot more, then they would have to pay the difference. And that's really what we're talking about. If - so we're talking about the premium covering one of the - almost the lowest cost plan, and that's why we have a lot of people saying that it wouldn't provide enough to cover what people are used to getting.
CONAN: Are used to getting now. There is also a political point, and that's about the 716 - the famous $716 billion. That seemed - the same cut in both plans directed somewhat differently, and again, there seems to be a necessity to make cuts - some substantial cuts to keep the system sustainable.
SERAFINI: Yeah. You know what, both Republicans and Democrats have acknowledged that they feel a need to reduce the costs in Medicare. Look, Medicare, it's eating about 15 percent of the federal budget. It's a very significant - it's significant. Both parties are agreeing that something needs to be done. Republicans, of course, are coming in much stronger with this. Now, you know, in the first House budget that - that had Ryan's Medicare plan, not this past year, but the year before that, in 2011, Paul Ryan had put a Medicare cap.
He had said the federal government should not spend any more on Medicare than the growth of the economy, gross domestic product, plus 1 percent, so it should basically track the growth of the economy plus 1 percent. Now, what happened was, in the second budget, the one that he passed last year, he brought that down to gross domestic product plus a half a percent. Why did he do that? He did that because President Obama did it first. Why did President Obama do that first? Because we were in the middle of budget discussions.
We were in the middle of these huge discussions about raising the debt ceiling and lowering the deficit, and Democrats and Republicans were engaged in these heated discussions. And President Obama basically said if Republicans would agree to raise - to increase revenues, that he would consider making some major changes in Medicare, and that he would bring the Medicare number down. And so Ryan said, well, look, OK, let's bring Medicare down even further, and so he agreed to this. So he brought his Medicare cap even down to an even tougher level.
CONAN: We're talking with Marilyn Werber Serafini, senior correspondent with Kaiser Health News. You're listening to TALK OF THE NATION from NPR News. Email question from Matt in Wilmington, Delaware: How will both the Affordable Health Care Act and the Romney-Ryan plan affect health care professionals, such as physicians?
SERAFINI: Oh, well, that's a very good question. The, you know, one of the main concerns for a long time in our health care system and especially in government programs like Medicare and even more so in Medicaid, the health care program for the poor, is that physicians and hospitals and other medical providers simply aren't paid enough. And if they aren't paid enough, then they aren't going to open their doors to see patients. This has been a bigger problem in Medicaid because Medicaid pays at rates much lower than Medicare.
And the concern has been that if we are lowering - if we are taking money out of Medicare - and this is part of where that $716 billion figure comes in, if we are going to be taking money out of Medicare, where is it coming from? Well, one of the main places where it could be coming from is in cutting reimbursements to hospitals. If we're cutting reimbursements to hospitals, then there is a concern that with any of these providers - we're talking about cutting reimbursements to hospitals, home health, hospice, skilled nursing facilities - if we're cutting reimbursements to providers, then we could be talking about making it difficult for patient access.
The question, though, really had to do with physicians, and that's a bit of a different issue. The Affordable Care Act actually talked about raising physician payment rates, at least for primary care physicians for a certain period of time, but that is only for a certain period of time. It's only for primary care physicians, and you know, it's not that much. It's only about 10 percent. So, you know, we're really where we started in the grand scheme of things, and it's that physicians are always complaining...
CONAN: Because they're underpaid.
SERAFINI: ...that in these government programs, they're just not making enough money.
CONAN: We just have about a minute left, but I wanted to ask you politically how this is playing out, because you have Democrats who have, well, they've always been seen as the party that supports - proposed Medicare and put it through and has defended it in the past. Republicans seemed to be making some headway on this issue.
SERAFINI: Yeah. But you know what, Republicans have made headway on this issue in 2010 and in 2008. In fact, polls have shown pretty regularly in - since 2010 that seniors trusted Republicans more than Democrats when it comes to Medicare. Of course, Democrats, they're going to vote with the Democrats. They're going to trust Democrats more when it comes to Medicare. And the Republicans, they're going to trust the Republicans more when it comes to Medicare. So the group that's really important right now and which both parties are wooing is the group that's in the middle, the swing voters. And that's why both parties are really pulling at that group, at that center group.
CONAN: Marilyn Werber Serafini, senior correspondent with our partner Kaiser Health News, with us here in Studio 3A. Thanks so very much for your time today.
SERAFINI: My pleasure. Transcript provided by NPR, Copyright NPR.