None of Ryan's ideas has caused as much outcry as his plans to remake Medicare. Critics say he wants to undo the fundamental nature of the government-run insurance program — its open-ended commitment to getting seniors the benefits they need. Ryan says he would give retirees more freedom while saving Medicare from going broke.
After his earlier plan to privatize Medicare provoked a firestorm, Ryan put forth a retooled version late last year, which resembles Romney's idea of preserving a form of traditional Medicare alongside an option to choose from private insurance plans. Romney hasn't addressed the specifics of his new running mate's proposal.
Future retirees would get fixed government payments that could either go toward buying private plans or joining a government-run program modeled on today's Medicare. The insurers, including the government program, would make annual competitive bids that would be assessed to set the amount of the government payments. Older and sicker people would get larger payments; wealthier retirees would get smaller ones.
The growth of Medicare spending would be capped to keep medical inflation from overwhelming the national budget. In contrast, Obama proposes another way to limit Medicare costs — by cutting payments to medical providers if spending surges.
Ryan's limit might not keep pace with fast-rising health care costs. Over time the government payments could cover much less of a retiree's medical costs than Medicare does now. For example, an analysis by the nonpartisan Congressional Budget Office found that Ryan's plan would hold government spending on a typical 66 year old to $7,400 in 2030. That compares with $9,600 estimated for the same retiree in 2030 under current law.
Ryan says his plan would keep costs down by creating competition within the health care system and giving retirees incentive to be smart medical shoppers. He also would gradually increase the eligibility age for Medicare from 65 to 67.
People already 55 or above could stay in the current system.
The starting point for Ryan's plan is some $700 billion in Medicare cuts already to be phased in under Obama's health care law — cuts that are a favorite target of Romney and other Republicans who want to repeal "Obamacare." Despite that criticism, Ryan would keep those Medicare restraints.
HAND OFF MEDICAID
The fate of the health program for the poor is one of the most glaring differences between Ryan's vision and Obama's.
The president's health care overhaul would pour more U.S. money into the joint state-federal program so it can cover millions more low-income people. Ryan wants to repeal that expansion, curtail the program's growth and hand the whole package over to the states.
Ryan says converting the program into grants for the states would free them to use the money as its needed most and manage it more efficiently.
Even before Obama's expansion, Medicaid has been growing faster than the economy, putting a strain on state budgets and dinging the U.S. government, too. Ryan's budget would cut its federal cost over the next decade from more than $4 trillion down to $3.4 trillion.
The Congressional Budget Office says the Ryan plan would sharply reduce the size of the program relative to the overall economy and leave states the choice of cutting benefits, possibly by pushing people off the Medicaid rolls, or spending more of their own money.
WHAT ABOUT SOCIAL SECURITY?
For several years Ryan pushed plans to partially privatize the national retirement program, an idea that flared and dimmed during George W. Bush's presidency. He also talked about raising the retirement age gradually to 70 and reducing benefits for all but the poorest future retirees, to deal with demographic changes that threaten to overwhelm the program. Although there is wide agreement that changes of some sort must be made to shore up the program's finances, Ryan has dropped those lightning-rod specifics.