After Paul Ryan was announced as Mitt Romney's running mate on Saturday, many Democrats claimed that the Republican's health care reform measures would "end Medicare as we know it" -- a claim that three separate fact checking organizations designated as either the "lie of the year" or one of the biggest lies of 2011.
The charge was popular among liberals and Democrats in 2011 after the House passed a budget with Medicare reforms, dubbed the "Ryan budget" due to Ryan's influence as chair of the Budget Committee. A liberal group ran a Web ad showing a Ryan look-alike pushing on old lady in a wheelchair into a lake.
Politifact called it the "Lie of the Year" for 2011. Factcheck.org named it one of the "Whoppers of 2011." And The Washington Post's fact checker, Glenn Kessler, gave it "four Pinnochios," the worst possible rating, and designated it one of "the biggest Pinocchios of 2011." But that has not stopped Democrats from continuing to claim that Rep. Ryan (R-Wis.) would end the government health insurance program for seniors.
Medicare is on a financially unsustainable course. The Social Security and Medicare Boards of Trustees 2012 annual report states, "Both Medicare and Social Security cannot sustain projected long-run program costs under currently scheduled financing, and legislative modifications are necessary to avoid disruptive consequences for beneficiaries and taxpayers."
Changes, or "legislative modifications," will have to be made to Medicare, therefore, regardless of which political party is in power. Each party offers alternatives that would change Medicare, all the fact checkers acknowledged, but neither party would end the program altogether.
Ryan's plan would offer a premium support system similar to the health care exchange system offered in the Affordable Care Act (ACA), or "Obamacare." Beginning in 2022 (those at or near retirement would not be effected), seniors would be provided a voucher which could be used to purchase insurance in the private insurance market. Proponents argue this would help reduce health insurance costs because insurance companies would have to compete to provide the best service at the best price to get the voucher money.
Ryan's original plan would move all future seniors onto the premium support system. In December, Ryan proposed a bipartisan compromise with Sen. Ron Wyden (D-Ore.) that would keep the current Medicare system in place as an option along with the premium support system.
Ryan's plan also shares some similarities with the Bipartisan Policy Center's Debt Reduction Task Force proposal, chaired by former Senator Pete Domenici, a Republican, and Alice Rivlin, who was director of the Office of Management and Budget for President Bill Clinton.
Democrats have also sought to control the rising cost of Medicare, most notably with the ACA. The ACA, passed in 2010, seeks to reduce future growth in the program by $500 billion. Some of these savings would come from cutting payments to those who provide services to Medicare beneficiaries, such as doctors, pharmacists and hospitals. Other savings would come from the Independent Payment Advisory Board (IPAB), which was created by the ACA.
The IPAB is a panel of 15 experts appointed by the president and confirmed by the Senate. It will make recommendations to Congress to lower Medicare costs. Congress must either accept the recommendations or pass alternative legislation that would reduce costs by the same amount. If Congress does nothing, the IPAB recommendations would go into effect. The White House projects that the IPAB would reduce Medicare costs by $340 billion by 2021.
With Ryan on the Republican ticket, the debate over the best way to reform Medicare will likely intensify. Voters will thus be faced with a choice between reforms that seek to utilize free market forces to control costs (the Republican plan), or reforms that seek to control costs through a centralized government control approach (the Democratic plan).