Ryan's Medicare plan could hit senior wallets

Senior citizen puzzles over Medicare changes

UPDATED REPORT

STEVE CHIOTAKIS: Wisconsin Republican House member Paul Ryan will introduce a federal budget plan that'll trim more than $5 trillion over the next decade. That's the plan. Now his plan includes some spending cuts and tax code reforms. But the lion's share of savings comes from cuts to Medicare and Medicaid.

Marketplace's Gregory Warner is with us live from the Health Desk at WHYY in Philadelphia. Good morning Gregory.

GREGORY WARNER: Good morning.

CHIOTAKIS: So paint this landscape for us. How different does health care look like under Congressman Ryan's plan?

WARNER: So start with Medicaid. Right now, if your income is low enough, the states and the federal government pretty much have to cover you. Under Ryan's plan, the ammount of money the feds would spend on that coverage is capped, with a block grant even to the states to use how they want.

Even a bigger change though would happen to Medicare that covers seniors and also people with disabilities. Ryan's plan would disolve Medicare and instead seniors would buy private insurance on the open market. Just you know, go get the best deal they can, and then the government would help pay a percentage of those premiums.

CHIOTAKIS: Now we've seen what a tricky a financial issue health care reform can be, certaily. Isn't this going to face the same scrutinany?

WARNER: Oh, of course. I called JB Silvers -- he teaches health care finance at Case Western Reserve University. He points out that seniors are a lot wealthier now than they were in 1965 when Medicare was passed. So some might agree that they should pay more for health care. Politically it's a different story.

JP SILVERS: I mean, it's a huge gamble with Grandma. And to be honest, Grandmas not going to like this at all.

And of course Congressman Ryan knowns this, and he's made it clear this will not affect seniors in the program now. Just the rest of us -- the next-generation grandpas and grandmas.

CHIOTAKIS: Marketplace's Gregory Warner, at the Health Desk. Gregory thanks.

WARNER: Thanks Steve.


ORIGINAL REPORT

STEVE CHIOTAKIS: Here at home, House Republicans today will introduce a plan to trim more than $5 trillion from the federal budget over the next decade. Wisconsin Republican Paul Ryan's plan would find many of the savings by overhauling Medicare.

From the Health Desk at WHYY in Philadelphia, Marketplace's Gregory Warner reports.


GREGORY WARNER: It's a plan to privatize Medicare. Congressman Ryan calls it premium support. The plan calls for Medicare -- as we know it -- to be dissolved. The next generation of seniors would buy private insurance plans. The government would pay a percentage of those premiums. Critics say the very sick or the very poor may end up forced into plans with fewer benefits. And all seniors would pay more for their insurance company's administrative costs.

JB SILVERS: In other words all the problems of private insurance.

JB Silvers teaches health care finance at Case Western Reserve University.

SILVERS: You'd also get the good things about private insurance.

People would be more prudent in choosing a plan -- and have more incentives to shop around for care. Senior citizens are wealthier as a group than they were when Medicare was passed 45 years ago. Representative Ryan's plan would make them pay more for their health care.

SILVERS: I mean it's a huge gamble with Grandma! And to be honest, Grandma's not gonna like this at all.

Ryan's made it clear that for everybody 55 and older, Medicare will stay the same. So the question is, how do the future grandmas feel about his plan?

In Philadelphia, I'm Gregory Warner, for Marketplace.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.

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