Medicare is a hot topic in the election because it accounts for 15 percent of the federal budget and is expected to grow at least 6 percent each year until 2019. Plus, the trust fund financing Medicare Part A, hospital insurance, is projected to run out of money by 2024.
With a week to go before the election, uncertainty remains over how the presidential candidates will respond to the crisis.
President Obama's solution was included in his Affordable Care Act, passed in March 2010, commonly referred to as "Obamacare."
The president plans to improve solvency by trimming government dollars dedicated to traditional Medicare by $716 billion over the next 10 years, mostly by reducing payments to doctors, hospitals, drug companies and insurers.
Republican challenger Mitt Romney has a much different vision on how to resolve the issue.
The GOP plan, proposed by Romney's running mate, Rep. Paul Ryan, is to transform Medicare into a premium-support system, often described as a "voucher system." Starting in 2023, it will offer beneficiaries a fixed spending amount to purchase either traditional Medicare or a private plan. The Romney-Ryan plan would also raise the Medicare eligibility age to 67 by 2034.
Before implementing anything, Romney has said he would repeal Obamacare. The GOP claims Obama's $716 billion cut amounts to "gutting" Medicare, despite Ryan's 2013 budget proposal, which includes similar cost-cutting measures, according to the Congressional Budget Office.
The Romney plan will remove only sections of the Affordable Care Act that created the Independent Payment Advisory Board to assist the president with spending and savings options, as well as the plan to close the "donut hole" in the Medicare prescription plans by 2020.
Bill Rosenberg, professor of political science at Drexel University, said the primary issue with Romney's plan is whether the money distributed through the voucher system will be enough for an individual to buy adequate coverage, especially after the first year.
"Are those plans going to keep pace with increases in health care costs?" he asked.
If the voucher stipends cannot keep up with rising health-care costs, Rosenberg said, Medicare recipients will be "at the mercy of the market" to decide which plan best accommodates their situation. Given the already-limited income for a retiree, he fears some may trade health care for other necessities.
"People have to make a choice," he said. "They have to decide what future they'd rather have."
Contact Sean Collins Walsh at 215-854-5745 or firstname.lastname@example.org.