What’s in Store for Medicare?

En español | Politicians are eyeing Medicare as a spending program ripe for cuts to help reduce the nation's deficit. And so it follows that the future of Medicare looms as a key battleground issue in the 2012 general election. But proposals to change the popular program tend to alarm older Americans, who see Medicare as part of their retirement security. And these same older Americans vote in large numbers. So stand by to hear all candidates claim that they want to "save" Medicare for future generations — but often in very different ways.

See also: How would you strengthen Medicare?

Proposed changes to the program include raising the eligibility age to 67, raising payroll taxes and requiring better-off beneficiaries to pay more. The most politically contentious plan, devised by Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, would limit federal spending on Medicare and alter the way the government pays for benefits. Republicans say this plan is a fiscally responsible way of extending Medicare's viability as millions of boomers enter the program. Democrats call it "the end of Medicare as we know it" and a way to shift more costs to beneficiaries.

Polls show that most Americans prefer to keep Medicare as it is. "Ryan's plan is a fundamental change in the structure of the program," so it makes older voters more nervous than lesser proposals do, says Robert Blendon, professor of health policy at Harvard's School of Public Health. But whoever gains the upper political hand in November, he adds, will have to wrestle with the budget deficit — and some of those decisions will likely affect Medicare.

With that in mind, AARP asked policy experts from across the political spectrum — Henry Aaron, senior fellow of the economic studies program at the Brookings Institution; Stuart Butler, director of the Center for Policy Innovation at the Heritage Foundation; and experts at Avalere Health, a Washington health care policy and research company — to give arguments for and against some Medicare proposals. (Read these in full and contact the experts at earnedasay.org.) Here are summaries of their opposing positions on seven options that most directly affect beneficiaries:

Changing the way Medicare pays for benefits

Medicare now offers two ways to receive benefits. If you're in traditional Medicare, the government pays directly for each covered medical service you use. If you're in a Medicare Advantage private plan, the government pays a set annual amount to the plan for your care. Under the Ryan plan — known as "premium support" to its proponents and as a "voucher system" to its critics — the government would allow you a certain sum of money to buy coverage from competing private plans or from a revised version of traditional Medicare.

For: This would put Medicare on a budget to hold down spending and reduce the tax burden on future generations. You'd receive a share of this budget to help you purchase your health care and have more flexibility to make choices. For example, if you wanted more generous coverage (such as seeing any doctor of your choice), you'd pay the premium difference out of your own pocket, and if the difference became too high, you could switch to a less expensive plan.

Against: The value of the voucher would be tied to some economic index — not to actual health costs, which generally rise faster than other costs. So there is a high risk that benefits would become increasingly inadequate and more out-of-pocket costs would be shifted to the consumer. Medicare already has competing private plans, through the Medicare Advantage and Part D drug programs, yet the hoped-for savings from them have not yet materialized.

Next: Should the Medicare eligibility age be raised to 67? »