By Tom Curry National affairs writer
updated 2/1/2010 1:24:54 AM ET 2010-02-01T06:24:54

Claim: A leading GOP Medicare redesign proposal would cap benefits while medical costs kept going up.

Meeting Friday with Republican House members, President Obama engaged in a debate with Rep. Paul Ryan, R-Wisc., the top Republican on the Budget Committee, over his proposal to redesign the Medicare program that covers nearly 50 million Americans. Obama said Ryan's plan would "hold Medicare cost per recipient constant as a way of making sure that (spending) doesn't go way out of whack." Obama said a problem with Ryan's proposal is that "if recipients are suddenly getting a plan that has their reimbursement rates going like this" -- he made a flat-line gesture with his hand -- "but health care costs are still going up like that" -- he made an upward-line gesture with his hand, "then over time the way we're saving money is essentially by capping what they're getting relative to their costs." Was Obama correct?

Fact or fiction?
Fiction. Ryan's plan wouldn't apply to current beneficiaries or to those becoming eligible in the next 10 years. The plan would gradually increase the eligibility age from 65 (for people born before 1956) to 69 years and 6 months, for people born in 2022 and later. Starting in 2021, enrollees get a voucher with which to buy private insurance. The voucher is adjusted annually to reflect enrollees' age and health status. Contrary to Obama's statement that Ryan would "hold Medicare cost per recipient constant" the plan indexes the voucher to grow in step with the general and medical inflation rates. The Congressional Budget Office says the voucher's value "would grow significantly more slowly" than spending per enrollee would grow under the current Medicare system. Result: "less use of health care services and less use of technologically advanced treatments," but huge taxpayer savings.

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