Politics 2012: Medicare, the issue that could turn the campaign

With his choice of Rep. Paul Ryan, R-Wis., as his running mate, presumptive Republican presidential nominee Mitt Romney has managed to make Medicare the campaign's red flag issue.

If Social Security is the third rail of U.S. politics, Medicare could be the electrical transformer -- and it's about to blow.

There is no question action must be taken to shore up both the Social Security and Medicare trust funds. The most recent report from the trustees indicates if no action is taken, Medicare will run out of money by 2024; Social Security less than a decade later.

Ryan has become a lightning rod on the issue as a result of the budget he crafted and pushed through the GOP-controlled House earlier this year -- twice.

The Ryan plan raises the eligibility age for Medicare from 65 to 67 by 2034 and caps spending for the program at a half-percentage point higher than gross domestic product growth.

For those younger than 55 now, Ryan would phase out the current system, which pays providers directly, and instead beginning in 2022 issue vouchers that would allow seniors to apply the money toward the premiums of policies -- either private or a government-run program -- they find for themselves.

The problem, opponents of the Ryan plan say, is the government program would attract the sickest seniors, pushing up costs to untenable levels, while relatively healthy seniors would go into cheaper, private plans.

The Ryan plan would repeal President Obama's signature healthcare reform law, the Affordable Care Act, which closes the so-called "doughnut hole" in prescription-drug coverage, an issue that affects current Medicare recipients.

By contrast, Obama would restrain Medicare cost growth through an Independent Payment Advisory Board, which would not be able to propose anything that smacks of rationed care, change benefits or reduce subsidies for drug coverage. The cost controls would be placed largely on providers.

Senior fellow Robert Moffit of the conservative Heritage Foundation, however, said placing constraints on providers will inevitably lead to cutbacks in care, citing in particular the looming 31 percent cut in doctor reimbursements.

"All Medicare reform proposals differ in details. While details are vitally important, they are less important than the economic incentives at the core of the reform: a fixed dollar payment with enrollee freedom to purchase above or below that amount in an intensely competitive environment," he said in a recent lecture. "This would create a program that is sustainable for seniors and taxpayers."

Seniors take their Social Security and Medicare seriously. Remember what happened to former Rep. Dan Rostenkowski, D-Ill., the once-powerful chairman of the House Ways and Means Committee, when he suggested in the early 1990s reforming the two entitlement programs by increasing Social Security and Medicare payroll deductions and reducing benefits. Angry seniors surrounded his car during a Chicago district office visit, demanding he leave their benefits alone and refusing to allow him to leave.

Will something similar happen during a Ryan campaign stop? We'll see.

A Washington Post-Kaiser Family Foundation poll released earlier this month indicated 58 percent of all adults and 59 percent of registered voters say they think Congress should not tamper with the current Medicare program while 36 percent of adults and a like proportion of registered voters would opt for the voucher system.

During a press briefing last week, White House spokesman Jay Carney took a swipe at Ryan's proposals, saying the "Republican approach to Medicare is one that ends it as we know it over time." Moffit argues so does the ACA.

Carney noted the non-partisan Congressional Budget Office has estimated Ryan's budget proposals will cost seniors $6,200 a year in additional healthcare costs.

"And what happens when you voucherize the program, as a matter of policy, is that, as [campaign spokeswoman] Jen [Psaki] mentioned, younger, healthier seniors take advantage of private plans, ... and private plans don't want older, less healthy seniors, and they remain in traditional Medicare creating a situation where traditional Medicare is not financially stable, and it creates what's called in the business a 'death spiral' for Medicare. That is not a happy message, I think, to take to America's seniors," Carney said.

Psaki told the same briefing, the Ryan plan would push Medicare into insolvency in four years rather than the 12 estimated by the annual trust fund report.

"After the Ryan plan kicks in, Medicare would be completely destabilized," she said.

During a campaign stop in Iowa, Obama contended: "My plan already extends Medicare by more than a decade. Their plan ends Medicare as we know it."

The Milwaukee Journal Sentinel threw its editorial support behind Ryan as Romney's vice presidential choice, praising the Janesville congressman as a man of ideas, but qualifying its support by acknowledging the Medicare voucher scheme likely "would not be enough to keep up with ever-increasing healthcare spending."

Romney has said he and Ryan are "on the same page" when it comes to Medicare.

The Romney campaign released a television ad last week warning the ACA takes money from Medicare and will contribute to its demise. The ad warns those who have paid the most into the system won't see the benefits they were promised because Obama's plan trims Medicare by $716 billion.

"The Romney-Ryan plan protects Medicare benefits for today's seniors and strengthens the plan for the next generation," the ad says.

"And my campaign has made it very clear: The president's cuts of $716 billion to Medicare, those cuts are going to be restored if I become president and Paul Ryan becomes vice president," Romney pledged on a CBS "This Morning" interview.

"The president, when he was campaigning in Denver ... four years ago, said that Medicare was on a pathway to become bankrupt. And yet, he's taking $716 billion from the Medicare trust fund to finance Obamacare, a new risky federal takeover of healthcare.

"My commitment is, if I become president, I'm going to restore that $716 billion to the Medicare trust fund, so that current seniors can know that trust fund is not being raided and we're going to make sure and get Medicare on track to be solvent long-term on a permanent basis."

Ellen Shaffer, co-director at the Center for Policy Analysis on Trade and Health, a left-leaning research group based in San Francisco, said, however, Ryan's "new plan to end Medicare is basically the same old plan to end Medicare, exposing seniors to enormous financial instability at a time in life when our incomes and our health are already risky.

"It would slash federal financial contributions to Medicare from 6.5 percent of GDP to 4.5 percent of GDP, and make up the difference out of our individual pockets. Instead of improving the guaranteed coverage we now enjoy at age 65, Ryan would roll back eligibility to age 67, and then set us loose with limited dollars to negotiate individually with insurance companies. This isn't 'patient-centered' anything; it's a direct attack on seniors, a financial austerity program dressed up with a fantasy of creating a free market in healthcare," she said in a release.

Robert Kraig, executive director of Citizen Action of Wisconsin, said Ryan's voucher plan would put seniors at the "mercy of the health insurance industry."

"The result would be millions of seniors in their early retirement years forced to go without coverage when they are likely to need it most, greatly increasing their risk of early death or losing all of their hard earned retirement savings to medical bills," Kraig said. "This is much too high a price in freedom and security to pay for unnecessary and undeserved tax cuts for the wealthiest among us."