US Rep. Ryan's V. President Obama's Medicare Cuts: A Primer

The Obama campaign is warning that newly-minted vice presidential candidate Paul Ryan's Medicare proposal will "end Medicare as we know it." Mitt Romney has vowed to shield Medicare from what he calls a ruinous cutbacks imposed by the Affordable Care Act.

"If any person in this entire debate has blood on their hands in regard to Medicare, it's Barack Obama," Republican National Committee Chairman Reince Priebus said Sunday on NBC's "Meet The Press." "He's the one that's destroying Medicare."

Who Is Telling The Truth?

Which campaign is being accurate? The short answer is that they both are. Ryan's plan and Obama's plan -- achieved through provisions in the health care overhaul -- have similar targets for holding down the escalating cost of Medicare. Both seek to restrict the program's growth rate to 0.5 percent of annual GDP. The difference is how they get there.

Obama's plan relies on making Medicare payments more efficient by linking them to the quality of health care delivered rather than the sheer number of procedures performed. This wouldn't affect the benefits elderly Medicare recipients draw, but would curtail the amount of Medicare dollars flowing to health care providers. The savings would be used to pay for other parts of the Affordable Care Act (ACA).

That method has sparked Republican outrage about health care rationing and has fueled exaggerations like the concept of "death panels." The Affordable Care Act has numerous mechanisms for reducing costs -- opponents often invoke the 15-member Independent Payment Advisory board as a sinister panel of unaccountable bureaucrats presiding over decisions about what treatments are available, but the law also tightens data collection and lowers payments for hospitals that readmit too many patients, among other measures.

The Congressional Budget Office has estimated the Obama administration plan will save about $700 billion over the past decade. Republicans have portrayed that as an attempt by the Obama administration to rob seniors of an earned entitlement.

Ryan's plan would "preserve and protect Medicare," in Romney's words, by giving future retirees a choice between the traditional government-run Medicare model and vouchers that they can put towards purchasing private insurance. If medical costs rise faster than the value of those vouchers, seniors would need to pay the difference out of pocket.

Major Difference Between The Plans: How They Try To Reduce Medicare Costs

Hence, the Ryan plan and the Obama plan differ chiefly in where they try to find savings: Obama's plan seeks more efficiency in how providers are reimbursed, while Ryan is focused on seniors having more choices in how they pay for health care, allowing the free market to drive down costs and lessening the taxpayer's burden.

But here's a key detail: the budget Ryan conceived, for which he was alternately pilloried or lauded as the intellectual lodestar of the Republican Party, sought to repeal most of the Affordable Care Act -- but it kept in place the reductions in reimbursements to health care providers, i.e. the cost-saving mechanism championed by President Obama. Most Republicans voted for those budgets.

So when Mitt Romney was repeatedly unable on Monday to name a difference between his budget plan and Ryan's, he was omitting the fact that his plan calls for undoing the Affordable Care Act in its entirety, whereas Ryan sought to preserve a central piece.

That gap could undercut Romney's attacks on Obama now that Ryan's selection has catapulted the Medicare issue into the campaign spotlight.

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