By RICARDO ALONSO-ZALDIVAR, Associated Press
WASHINGTON (AP) — President Barack Obama and Republican rival Mitt Romney agree there has to be a limit to how much seniors pay for Medicare, but they're worlds apart on how to make that happen.
You wouldn't know it from the accusations they hurl on the campaign trail, but that is the real heart of the argument between the two leaders and their political parties.
There will be consequences for seniors and the nation's health care industry no matter which way the debate is decided, because both sides agree Medicare spending must be controlled.
Obama relies heavily on cutting payments, the amount hospitals might get for a heart bypass or how much a radiologist is reimbursed for reading an MRI.
Romney would give future retirees a fixed amount of money to pick their health insurance from competing private plans or a government program, thereby limiting taxpayers' financial exposure.
Some questions and answers about both approaches, and their pros and cons:
Q: Obama cuts Medicare by $716 billion, so how much does Romney cut?
A: There's no precise dollar-for-dollar comparison.
Obama's cuts to hospitals, drug companies and other providers are phasing in now as part of his health care law.
Romney has largely embraced his running mate Paul Ryan's Medicare overhaul plan. If implemented, Romney-Ryan wouldn't go into full swing until 2023, and key details have not been spelled out.
Nonetheless, the Congressional Budget Office did some long-range calculations on the Wisconsin congressman's latest plan.
The nonpartisan analysis found that Medicare spending would rise under both current policies that reflect Obama's approach and under Ryan's plan. But Ryan's way would grow Medicare far less.
In 2040, Medicare spending for a 67-year-old would average $14,300 under current policies, which include Obama's health care law, and $9,500 under the Republican plan. (It's about $6,000 now.)
The differences would grow noticeably bigger with time. In 2050, Medicare spending for a similar retiree would be $19,100 under current policies, and $11,100 under Ryan's plan.
That amounts to a "substantial cut in spending" compared with other policy scenarios, the budget office said.
Q: So, Ryan's plan — the one Romney agrees with — would cut Medicare more?
A: That's what Democrats claim. They're calling the plan a massive cost shift to retirees. (Under Romney's plan, those now 55 and older could stay in traditional Medicare, while those 54 and younger would go into the new program.)
Republicans say their plan is not about shifting costs.
They point out that other major industrialized countries are getting the same or better quality medical care for less money. Because Ryan's fixed insurance payment to retirees would limit the amount of taxpayer financing going into Medicare, it would finally force everyone, from the medical center CEO to the individual retiree, to be more cost-conscious about health care decisions.
Backers of the Romney-Ryan approach say its competitive design would help bring down costs for everyone. Romney says his goal is to preserve Medicare.
The budget office says the implications of the plan are unclear, because they would depend on specifics not yet fully spelled out as well as the reaction of hospitals, insurers, drug companies and other industry players.
Q: What are the risks of what Romney and Ryan are proposing?
A: The main risk is that the government payment for health insurance won't keep pace with health care inflation, shifting an ever-growing share of costs to people on fixed incomes, or forcing them to settle for lower quality service.
Think of it as being similar to the difference between a traditional pension plan that provides a defined benefit, and a 401(k) plan where individual circumstances and choices come into play.
Leaning against such risks, Ryan adjusts the government insurance payment so that it would grow a little faster than the overall economy. His plan also envisions added help for seniors in poor health.
That still may not be enough.