Republican plan for Medicare could face years of hurdles: experts

Republican presidential candidate and former Massachusetts Governor Mitt Romney speaks at a campaign rally in Mansfield, Ohio September 10, 2012.

WASHINGTON (Reuters) - Republican presidential candidate Mitt Romney wants to turn Medicare into a voucher system and President Barack Obama hopes that fact alone will help him win votes among senior citizens and baby boomers.

But health policy experts, including two analysts who first floated the idea of Medicare vouchers 17 years ago, say no such plan is likely to become legislation - let alone law - until after the next presidential election in 2016.

That is because the mere notion of fundamentally revamping the $590 billion-a-year healthcare program, which serves 50 million elderly and disabled Americans, raises a multitude of policy issues that no politician or policymaker has addressed publicly.

Medicare voucher plans call for converting the popular safety-net program from one that offers healthcare benefits to a system that provides a fixed amount of money that beneficiaries can use to purchase coverage from a menu of private insurance plans.

"Could we enact legislation in the next year or so and implement it two or three years from now? My simple answer to that question is 'no,'" said Robert Reischauer, a former director of the nonpartisan Congressional Budget Office, which reviews legislation with budgetary implications.

That may come as news to voters, particularly in battleground states like Florida, Ohio and Iowa, where the Medicare reform plan adopted by Republicans, including Romney and running mate Paul Ryan, is a main target for Democrats who say it would "end Medicare as we know it."

Reischauer and Henry Aaron of the Brookings Institution proposed a voucher or "premium support" mechanism for Medicare in a 1995 article in the journal Health Affairs widely seen as the first suggestion of such a reform.

On Monday, they spoke at a Washington conference hosted by America's Health Insurance Plans, an industry trade group. The two men agreed that the Republican plan and others like it that have been floated by independent groups in recent years were not "ready for prime time."

"I don't think any of the premium support plans on the table now has gone an inch beyond the specifications that we laid out back then. And I will tell you, we did not design legislation," Aaron said.

No experts in either the public or private sectors of the $2.8 trillion U.S. healthcare system have said in detail how a voucher system might work. The task require better insurance risk-adjustment mechanisms than are available now, as well as a deeper understanding of geographic variations in medical costs.

'A ZILLION ISSUES'

"There are a zillion specific issues. And there's plenty of research, a lot of it unsatisfactory. There's a lot of practical experience, most of it unsatisfactory," said Joseph Antos of the conservative American Enterprise Institute, who appeared with Reischauer and Aaron.

"You can't do this in the next three years," he added. "Maybe in the next five."

Ryan, who chairs the House of Representatives Budget Committee, has proposed a version of a voucher plan that includes traditional Medicare as an option for future retirees and caps annual per- capita Medicare spending at 0.5 percent above the rate of U.S. economic growth.

Romney has proposed a similar plan, which appears on his campaign website. Republicans largely adopted the Ryan plan as part of the party platform at their national convention last month in Tampa, Florida.

Critics say Ryan's main objective is to limit Medicare's ability to widen the federal deficit by shifting costs to seniors and the disabled. He says the plan would strengthen Medicare for generations to come.

Reischauer and Aaron warned it was not clear the strategy would contain costs, saying political pressure could mount on Congress to do away with spending caps, while private insurers could have difficulty fielding plans that cost less than traditional Medicare.

They said the best route could be to combine a voucher mechanism with reforms being implemented under Obama's Patient Protection and Affordable Care Act, better known to voters as "Obamacare," which Republicans have vowed to repeal if they win control of the White House and U.S. Senate in the November 6 election.

The law, which comes fully into effect in 2014, is supposed to move Medicare away from its current fee-for-service format that offers healthcare providers incentives to drive costs up. It also calls for state insurance exchanges that would offer consumers federally subsidized private coverage.

Reischauer said the exchanges would provide vital lessons for any future voucher system for Medicare.

(Reporting by David Morgan; Editing by Peter Cooney)