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Smart Benefits: Will Paul Ryan’s Plan for Medicare + Medicaid Fly?

Tuesday, August 21, 2012

 

Minutes after Paul Ryan was named Mitt Romney’s Vice Presidential running mate, critics called his plans for reforming Medicare and Medicaid too radical while supporters claimed them necessary to contain spiraling out-of-control costs. If you missed the media coverage, below is a summary of his approach.

Ryan on Medicare

Ryan’s plan for Medicare doesn’t affect retirees who are currently receiving Medicare benefits. Rather, it would only impact those under age 55 today.  How?

  • Rather than the federal government funding all future medical expenses, Ryan’s plan would include a co-sharing arrangement.
  • Private insurance companies would bid for the Medicare business, competition Ryan hopes would bring down premiums. 
  • The federal government would accept the second least expensive plan and allow retirees to enroll for zero premium. 
  • Retirees would have the option to purchase the least expensive plan and receive a rebate, or buy up to higher levels of coverage available through private insurers.

If Ryan’s proposal is implemented, to offset the out-of-pocket expenses, those enrolled in Health Savings Accounts (HSAs) could use their savings to pay for their Medicare expenses or a spouse’s. With an HSA, funds can be saved now – and earn tax-free interest – to cover future qualified medical expenses, including Medicare.

Fanciful or Flexible: Voters Decide

Everyone agrees Medicare and Medicaid must be reformed to reduce costs, expand choice and improve access. The question is how. Ryan’s plan puts the states at the center of decision-making, giving them greater flexibility to spend federal funds to deliver care. Is Ryan’s plan the solution? We’ll find out when voters decide on November 6th.

Amy Gallagher has over 19 years of healthcare industry experience. As Vice President at Cornerstone Group, she advises large employers on long-term cost-containment strategies, consumer-driven solutions and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, is a member of local organizations like the Rhode Island Business Group on Health, HRM-RI, SHRM, WELCOA, and the Rhode Island Business Healthcare Advisory Council, and participates in the Lieutenant Governor’s Health Benefits Exchange work group of the Health Care Reform Commission.

 

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