Saving Medicare

"These are all politically unattractive," Rother says, especially as the Republican leadership has drawn the line at any tax increase, including eliminating the Bush tax cuts for the highest income groups. "But," Rother adds, "something does need to be done."

Medicare and the larger health care system

More sweepingly, Rivlin and other analysts believe Medicare should be viewed as part of a flawed health care system that needs to run more efficiently as a whole. Robert Reischauer, president of the Urban Institute and a former director of the Congressional Budget Office, says to make Medicare more efficient "you have to change the system that provides health care for all of us. And that can't be done simply by changes within Medicare."

Central to that idea is altering its payment system by rewarding doctors and other providers for the quality of care they give instead of, as now, for the number of procedures they perform. This change — proposed for years by the Medicare Payment Advisory Commission, which advises Congress on Medicare financing — was written into the new health care law.

The new law also sets up an Independent Payment Advisory Board with the power to assess medical treatments and change reimbursements to health care providers to keep costs down. Republicans view the board as a means of rationing health care and often represent it as the Democrats' only "solution" for curbing costs, although the law specifically prohibits rationing.

The law aims to slow the growth of Medicare costs by giving health care providers smaller annual payment increases, a measure estimated to save $500 billion over 10 years without cutting benefits. If that happens — and Congress does not back down in the face of intense lobbying from providers — the Medicare trustees and Medicare's chief actuary, Richard Foster, predict a rosier future for the program's long-term solvency. They also say Medicare will consume far less of the nation's income than it would otherwise.

The new law "makes some very significant [cost] reductions in the program, and the [current] debate seems to totally ignore that fact," says Reischauer. Similarly, he says, the Ryan plan includes "many of those things that the Republicans argued against in the Affordable Care Act," such as health insurance exchanges.

What of Ryan's contention that nothing in his plan would change Medicare for people now over age 55? Not wholly true, experts say. In repealing the health care law, his plan would eliminate popular new Medicare benefits such as free health screenings and would no longer close the gap in prescription drug coverage known as the doughnut hole. And over time, beneficiaries in traditional Medicare would see their premiums rise as fewer people remain in that risk pool to share the costs of the program.

The political tug-of-war continues

In the end, Medicare's future inevitably comes down to politics rather than policy. Ryan's plan "is just another battle in a 50-year war," says Jonathan Oberlander, professor of social medicine and health policy at the University of North Carolina, Chapel Hill, and a historian of Medicare politics. "It's déjà vu all over again."

Ever since Medicare became law in 1965, Democrats and Republicans have fought ideologically over its design — with liberals favoring it as a government-run social insurance system and conservatives preferring a private insurance alternative.

That's why the GOP stoked opposition among older Americans to President Obama's health care law in 2010, just as the Democrats are now trying to put a match to Ryan's Medicare plan, which also has earned the wrath of a majority of seniors, according to recent polls.

Oberlander says Ryan's plan is the most radical change ever proposed because "it would eviscerate the value of Medicare" by requiring beneficiaries to pick up far more of the cost than they do now. It also would reduce choice by eliminating traditional Medicare as an option for future seniors, he says.

Currently three out of four beneficiaries choose the traditional program — in which they can receive health care from any provider that accepts Medicare patients, anywhere in the country — instead of the local or regional private plans that are offered as alternatives. These other plans, known collectively as Medicare Advantage, were promoted by Republicans during an earlier time in power in the hope that the lower costs and extra benefits they provided would wean beneficiaries away from traditional Medicare — allowing that program to "wither on the vine" in Newt Gingrich's famous phrase.

But the better deals were made possible only by the government paying the plans more for each enrollee than it did for people in the traditional program — and the Democrats, through the new health law, are reducing those excess payments as another way of lowering Medicare's costs.

The ideological divide yawns just as wide among think tanks that study health care issues. While most liberal think tanks say Ryan's plan is too extreme, their conservative counterparts say it doesn't go far enough.

So the philosophical war intensifies, but is unlikely to be resolved before the 2012 elections, if then. "My guess is that we're in for at least a decade of repeated clashes over Medicare," Oberlander says. "This isn't a settled issue."

Marsha Mercer is a freelance writer who covers political and policy issues in Washington. Patricia Barry writes about Medicare for the Bulletin.