The Ryan Plan that passed the House in 2011 is most famous, however, for its multiple step plan to phase out Medicare. Let us say that again so we are perfectly clear about what the Ryan Plan does to Medicare. It does not just “end Medicare as we know it” and it certainly does not “reform” Medicare.” The Ryan Plan simply ends Medicare, although it admittedly takes some time for it to achieve this goal.
Stage One, Vouchers: Ten years after the Ryan Plan takes effect, it eliminates traditional Medicare entirely and replaces it with a voucher system that seniors can use to by a private health plan. Although this proposal does produce small savings for government when it takes effect, it does so by massively increasing the out-of-pocket costs to American seniors. According to the Congressional Budget Office, total health expenditures for a typical 65-year-old “would be almost 40 percent higher with private coverage under the [Ryan] plan than they would be with a continuation of traditional Medicare” in the first year that the Ryan Plan is in effect.
Stage Two, Phase Out: After eliminating traditional Medicare, the Ryan Plan then begins to gradually phase out the Medicare program. Because Ryan vouchers do not grow in value each year at a rate that keeps up with the rising cost of health care, they effectively lose value every single year. According to the CBO, “[b]y 2080, Medicare would be cut 76 percent below its projected size under current policies.” In other words, a child born in 2015 would receive less than one-quarter of the Medicare resources that today’s seniors enjoy when that child became eligible for Medicare. And that child’s Ryan vouchers would continue to lose value during each year of their retirement.
The immediate impact of Paul Ryan’s original vision is a massive, 40 percent spike in new retirees’ health expenditures, followed by gradually increasing costs for the rest of those retirees’ lives. And because the Ryan vouchers never stop losing value, they will eventually become practically worthless, providing no meaningful assistance whatsoever to seniors struggling to pay their medical bills.