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Thursday, August 16, 2012

SPECIAL REPORT: Obamacare and Ryancare - What's The Difference?

Obamacare Vs. Ryancare
Illustration by Mark Hammermeister
Obamacare and Ryancare are basically the Democrat vs. Republican health care reform proposals. Each program is designed to slow the growth of health care costs and offer more affordable health insurance to American families.

Obamacare refers to the Patient Protection and Affordable Care Act (PPACA) and is President Barack Obama's health care reform legislation. Democrat Mitt Romney's vice presidential running candidate Paul Ryan from Wisconsin has also proposed a health care plan, Ryan's Path to Prosperity,which is referred to as Ryancare.Both programs have similar objectives, to make health care more affordable to Americans. However, each plan proposes different paths to accomplish this objective.

Making Health Insurance Affordable

Obamacare, Romneycare and Ryancare
Obamacare + Ryancare = Obryancare?
Obamacare: The Obamacare mandate states that all individuals must have some type of health care insurance program or pay a penalty. The law does allow exceptions on the penalty that includes anyone whose income is too low to file a federal income tax return and those whose cost for purchasing health insurance would exceed more than 8 percent of their income. Low-income families would be eligible for government subsidies to help them pay for their insurance; the amount is on a sliding scale based on income. Obamacare also proposes extending Medicare to people 55 and older but also cuts Medicare expenses through extension of Medicare taxes and increasing the Adjusted Gross Income on medical deductions.

Ryancare: Ryancare proposes a voucher system that would phase out Medicare and issue vouchers to senior citizens to help them pay for health coverage. The value of the vouchers would be similar to what Medicare would cover. The vouchers would increase at a slower rate than the rising cost of health care, resulting in people absorbing a greater share of health care costs.

Similarities and Differences: Both programs are geared toward not only making health insurance affordable but also exposing Americans to the true cost of health care. The penalty suggested by Obamacare for those who do not purchase health insurance is vague as to how the penalty will be monitored and/or enforced. The voucher system recommended by Ryancare leaves many concerned that senior citizens will suffer due to the decreasing value of their vouchers. Since both Obamacare and Ryancare also propose a cap on the catastrophic coverage in lower-priced insurance plans, seniors will again be impacted as their insurance plans may not be enough to cover their health care costs.

There are huge concerns by many with the Ryancare plan to phase out Medicare, and this is a major difference between Obamacare and Ryancare. Proponents of Obamacare believe Medicare is a sound program and that rising costs are addressed with Obama's proposed cuts. Proponents of Ryancare believe the only way to control costs is to eliminate Medicare.

Finally, many believe Obamacare is more specific in its design to control costs by using a sliding scale based on income for paying out subsidies for health insurance. Ryancare, on the other hand, simply issues vouchers.

Offering Health Insurance Options

Obamacare:  Insurance exchanges would be created at the state level to offer a marketplace exchange where people have choices in private policies and premium levels. In addition, low-income families with incomes up to 400% of the poverty level could qualify for a government subsidy to purchase insurance coverage from the state exchange. Families will have a choice to purchase lower-cost insurance (and receive a subsidy) or more expensive plans for which they would pay the difference.

Ryancare: The government would review insurance proposals from private plan providers and determine the amount of support, in the form of vouchers, to give senior citizens for health care insurance. Seniors have the option of using their vouchers on Medicare, a less expensive private plan (and receive a rebate), or a more costly plan for which they would pay the difference.

Similarities and Differences:  Under both plans, subsidies and rebates are given for less expensive insurance plans only; families must pay the difference if they want more. Both plans offer insurance choices through either a private insurance market or a government-managed exchange. More families will be able to purchase insurance, but some families may be left under insured by purchasing what they can afford, not what they need. Although the competitive bidding process proposed by Ryancare has demonstrated some success, there are also concerns that similar bidding within Obamacare's exchanges might be too heavily regulated by the exchanges. In addition, some are concerned that private plan  bidding could lead to monopolies.  Others feel that competition could keep costs down.

Take a look at the chart below:
Obamacare Vs. Ryancare

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