Romney's Medicare plan raises cost questions

WASHINGTON (AP) — Mitt Romney’s Medicare plan won’t try to control costs by limiting the payments that future retirees would use to buy private health insurance, aides say. Budget experts are questioning how the Republican candidate will be able to get savings without caps.

Reining in costs is vital to keeping Medicare affordable, and in their plans both President Barack Obama and Romney’s running mate, Paul Ryan, set limits on the growth of future spending. Romney’s approach is different.

Romney campaign officials say Medicare savings will come through competition among health insurance plans. But independent experts say they doubt that Romney’s plan can succeed without some kind of hard spending-limit.

“It sounds like Romney is trying to have it both ways,” said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group advocating to reduce government deficits. “It’s a really important point whether there will be a cap. It will help determine whether the health care savings he’s touting are credible.”

For example, a President Romney would not be able to get credit for assumed savings through competition under the procedures currently used to analyze legislation by the all-important Congressional Budget Office. The nonpartisan budget referees might rule such a plan out of bounds, forcing Romney to accept a cap.

“This is pure Romney-speak,” said Rep. Chris Van Hollen, D-Md., ranking Democrat on the House Budget Committee. “Everybody knows the way they achieve savings through their voucher plan is to impose a cap. Otherwise it’s laughable to claim any savings.”

In the world of private business, competition hasn’t solved the health care cost problem for employers, who increasingly have been shifting costs to workers and their families in the form of higher premiums and copays. “Competition alone is very speculative,” Bixby said.

Bixby was a member of a Bipartisan Policy Center group that last year produced a deficit reduction plan that, like Romney’s, called for shifting Medicare from an open-ended benefit to a program that gives future retirees a fixed amount of money for health insurance. It included a cap on the growth of spending.

Medicare covers nearly 50 million retirees and disabled people. Since its creation in 1965, it has been an open-ended benefit program, with taxpayers basically paying all the bills that come in.

Obama’s health care law begins to change that, creating a board with the power to force payment cuts on the health care industry if Medicare costs rise above certain limits.

Ryan’s budget, passed by the House this year, also would limit the growth of total Medicare spending, using a formula that links to economic growth.

Romney has charged that Obama’s approach would eventually lead to rationing.

Obama has “an unelected board … to decide what kind of treatment you ought to have,” Romney said during Wednesday night’s presidential debate in Denver. The board is prohibited by law from rationing care.