U.S. Senate candidate Tommy Thompson unveiled a new Medicare reform plan during an interview with the Wisconsin State Journal editorial board on Friday, though he didn’t know if the proposal would reduce federal spending or substantially lower costs for beneficiaries.

Thompson’s idea, which he said has been already introduced and advanced “by somebody else,” barrows from Paul Ryan’s premium support model, and would allow seniors to find private coverage. But rather than building a new exchange of private plans, as Ryan has proposed, Thompson would give future retirees access to the Federal Employees Health Benefits Plan (FEHB) — a program through which private insurers market health plans to federal employees.

Pressed for more specifics, the former governor and Health and Human Services Secretary grew agitated and admitted that he couldn’t be sure that the proposal would reduce spending. He promised to “use the computers” in Congress to run the numbers, adding, “It’s a plan that I believe more than likely will work”:

Q: So either CBO has scored it out and you haven’t, or you…

THOMPSON: I haven’t scored it out, I have no capabilities…

Q: You’re saying that CBO has looked at your plan….

THOMPSON: They have not looked at my plan. They have looked at a plan similar to this that was put in by…Dee, I’m telling you, I have not scored it. I’m laying the plan out to save Medicare….This is a plan by Paul Ryan, I’ve modified it. I think my plan is better…. When I’m elected to the United States Senate, I have a chance to use the computers and have the access to CBO and I’ll be able to make the necessary things. I’m talking conceptually, about an idea out there that has been advanced by somebody else and I think it makes a lot of sense.

Q: So if you haven’t scored it and you don’t know how much it’s going to save, how do you know it’s going to be a big advance?

THOMPSON: Because Medicare is going broke and we have to do something about it. It’s a plan, Dee. It’s a plan that I believe more than likely will work.

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Thompson’s idea shares some similarities with Sen. Rand Paul’s (R-KY) recently introduced Congressional Health Care For Seniors Act, but closely resembles Ryan’s proposal. Ryan’s plan is estimated to significantly increase costs for existing seniors and future enrollees.

Though Thompson claimed that FEHBP could save money, traditional Medicare has done a better job of controlling costs, spending just 2 percent on administrative costs, while private plans in the FEHBP devote 7 to 12 percent to overhead. Medicare’s spending per beneficiary has also increased at a slower rate than the FEHBP’s.

During the fourth and final debate between incumbent Rep. Joe Walsh (R-IL) and his Democratic challenger, Tammy Duckworth, the Republican Congressman openly admitted that he and his GOP colleagues want to “end Medicare as we know it.”

Walsh defended the Romney/Ryan plan to turn Medicare into a voucher program, which would provide retirees with a depreciating premium support credit to purchase private insurance or traditional Medicare. Duckworth pointed out that Obamacare reforms extend the solvency of the Medicare program by a decade — and reminded Walsh of his unabashed support for Paul Ryan’s budget, which guts the core Medicare entitlement. And Walsh admitted that Duckworth’s assessment of Ryan’s plan was right:

DUCKWORTH: [Congressman Walsh] voted three times for the Ryan budget which will end Medicare as we know it. That is not my comment — that is the Wall Street Journal that says it will end Medicare as we know it. He wants to put seniors the street with a voucher. And he wants to go even further than the Ryan budget. He wants to eliminate the prescription drug benefit. Do you think that’s going to save Medicare? You want seniors to pay more for Medicare? You want seniors to pay more for prescription drugs? That’s not a single senior has come up to me and said that.

EDDIE ARRUZA (MODERATOR): Quickly, Mr. Walsh, respond.

WALSH: Ms. Duckworth says end Medicare as we know it. What the Chicago Tribune and every other responsible person has said if we don’t end it as it is, it’s going end all by itself — we won’t preserve it for future generations. We have to do that.

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Wary of public backlash and the overwhelming popularity Medicare enjoys, Republican candidates across the country — including the Romney/Ryan ticket — describe their proposal as a way to strengthen Medicare for future generations. Last night, Walsh publicly confirmed that it is actually a fundamental restructuring of the entitlement and a raw deal for seniors.

Paul Ryan and his GOP colleagues have always had the private insurance industry’s back, long advocating for health care policies — such as Ryan’s proposed budget that would turn Medicare into a voucher program — that boost insurance companies’ profits at the expense of American consumers.

According to a new Public Campaign Action Fund (PCAF) and Health Care for American Now (HCAN) analysis, insurers are returning the favor to the tune of $14 million in campaign contributions to Ryan and fellow Republican supporters of his “premium support” plan.

The report also reveals that Ryan’s running mate, GOP presidential nominee Mitt Romney, has received close to $2.7 million from the private insurance industry.

All told, the study finds that eight out of the top ten recipients of insurance industry cash during the 2012 election cycle — including every member of the House GOP leadership — are supporters of the Ryan plan.

Ryan himself has pulled in more cash from private insurance employees and their families than he has from any other businesses — totaling $815,328 over the course of his political career.

During a roundtable discussion on George Stephanoupolos’ This Week Sunday morning, GOP political consultant Mary Matalin got into a heated exchange with Nobel Prize-winning economist Paul Krugman, calling him a “liar” for previously referring to Paul Ryan’s Medicare reform plan as a “voucher” program:

MATALIN: You have mischaracterized and you have lied about every position and every particular of the Ryan plan on Medicare, from the efficiency of Medicare administration, to calling it a voucher plan, so you’re hardly credible on calling somebody else a liar.

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But this is exactly what the Ryan proposal is — turning Medicare from a “defined benefit” into a “defined contribution” plan. Seniors would get a voucher from the federal government that they could use to help pay for a selection of private plans.

Although the Romney/Ryan campaign has shied away from this phrase in favor of the euphemistic “premium support,” Ryan himself has specifically referred to his proposal as a “voucher” program in the past.

A new Urban Institute Health Policy Center study finds that premium support models, such as the proposed Romney/Ryan Medicare plan, are more likely to increase excess costs in the program.

According to the report, turning Medicare into a “premium support” program would encourage private insurers to draw less costly beneficiaries from traditional Medicare, leading to bloated per-beneficiary reimbursements. The study arrives at this conclusion by extrapolating existing trends in Medicare Advantage (MA), which has appreciably higher per-capita costs than traditional Medicare in 75 percent of counties serviced:

The debate around premium support misses the potential within Medicare’s existing structure to harness the market to promote efficiency and to do so on terms that do not put beneficiaries at risk for escalating costs…By design, MA plans have been paid above per capita costs for equivalent beneficiaries in traditional Medicare, and have used these payments to provide extra benefits that have successfully attracted more than a quarter of Medicare beneficiaries into private health plans.

Measures taken by the Affordable Care Act significantly reduce these extra payments. But they do not eliminate the long-standing bias favoring payment policies designed to attract private plans rather than to encourage lower costs. Our analysis of recent MA experience shows that most private plans are more, not less, costly than traditional Medicare. In fact, MA plans with the lowest costs have been found to serve only 10 percent of MA enrollees, despite their attractiveness in the current market, and they do not reflect the typical MA experience. Only in the highest cost areas for traditional Medicare do typical MA plans deliver care at lower costs than the public program. Even this difference is likely exaggerated, given continuing evidence of favorable risk selection (that is, disproportionate enrollment of low cost enrollees) in private plans. In short, overpayment, not lower costs, drives most of MA plans’ success in competing with the public program for enrollees.

The GOP defends premium support models like the Romney/Ryan plan by claiming that they will exert downward pressure on providers and encourage competitive bidding in the insurance industry. The logic is that seniors, whose Medicare subsidies would stagnate relative to the rising cost of health care, will look for the best deals on the market and thus force insurers to compete, lowering overall health care costs.

But as the Urban Institute report demonstrates, private insurance competition is unlikely to yield much in the way of savings since providers would simply adapt their business models to pick up the least costly beneficiaries. Studies have repeatedly shown that this is the exact kind of adverse selection and cost-shifting that occurs in Medicare Advantage plans. Transitioning traditional Medicare away from its current defined-benefit model into a premium support one would exacerbate the problem, leading to increased premiums, more overpayments to private insurers, and even higher costs in the health care industry.

MOUNT PLEASANT, Wisconsin — At a town hall meeting last Friday, Rep. Paul Ryan (R-WI) was confronted by a constituent over his endorsement of “premium support,” a plan that would give future retirees a voucher with which to purchase coverage from private insurers or traditional Medicare. When asked whether he would alter the plan in light of experts “backing away” from it, Ryan claimed that prominent scholars – including Henry Aaron – still supported the general framework of his proposal:

CONSTITUENT: The two men that were your co-creators of your privatization of Medicare plan, Robert Reischauer and Henry Aaron, were on the hill last week. I think they spoke to the House Ways and Means Committee. [...] What’s interesting though, Brennan was on and they’re backing away from your plan, privatization of Medicare, basically because they’re saying it’s going to cost more and give us fewer services than the traditional plan. [...] Are you going to change your plan or how do you stand on that?

RYAN: Hank [sic] Aaron is an economist at Brookings Institute who has been in favor of a different version of what we call “premium support.” [...] Henry Aaron doesn’t agree with the way we’re doing it, but these other Democrats that have been working on the Medicare law for literally a couple of decades, would come to agreement on the best way to save and strengthen Medicare.

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Ryan claims that his differences with Aaron are only in the implementation of the policy. In fact, Aaron has said that he no longer believes “premium support” is good policy at all. In testimony before the House Ways and Means Committee on April 27, Aaron conceded that there is no strong evidence the plan would lower the growth of health care costs; in fact, he claimed, private “Medicare Advantage plans are more expensive than is traditional Medicare.” Last year, he also said that “gains from being able to choose among competing insurance plans have been exaggerated.” In an email to ThinkProgress, Aaron confirmed that he has totally backed off the plan.

Instead, Aaron now believes that the Affordable Care Act can do a better job reducing costs and protecting beneficiaries. As he told the Ways and Means Committee, “The passage of the Affordable Care Act means we have put in place a key element of the premium support idea for the rest of the population, namely health insurance exchanges.” Aaron noted that those exchanges are similar to what advocates of “premium support” want to see for Medicare, except these do not put “the burden of cost control on beneficiaries.”

ThinkProgress intern Zachary Bernstein contributed to this post.

Our guest blogger is Topher Spiro, the Managing Director of Health Policy at the Center for American Progress.

Earlier this week the Center for American Progress released an analysis of the Republican budget’s Medicare plan, which would provide vouchers to beneficiaries to purchase either a private health insurance plan or the traditional Medicare plan. We pointed out that new beneficiaries could end up paying as much as $1,200 more per year by 2030 and $5,900 more per year by 2050. Here’s a detailed explanation of where those numbers come from.

The nonpartisan Congressional Budget Office analyzed the Republican budget and estimated its effect on average Medicare spending per beneficiary. Under current law, or CBO’s “baseline scenario,” CBO projects that average spending will rise from $5,500 today to $8,600 in 2030 and to $17,000 in 2050. (CBO converted all dollar figures to 2011 dollars to remove the effects of inflation and ensure appropriate comparisons over time.) These numbers reflect the projected trend in health care costs over time.

But the Republican budget would limit the growth in Medicare spending per beneficiary to growth in the economy plus 0.5 percentage points. That growth rate is much slower than the projected growth rate under current law. As a result, under the Republican budget, CBO projects that average spending would rise to only $7,400 in 2030 and to only $11,100 in 2050. Since the Republican budget would convert Medicare spending into vouchers, these dollar amounts would be the amounts of the vouchers, on average.

In other words, CBO projects that government spending per beneficiary would be $1,200 lower in 2030 (the difference between $8,600 under current law and $7,400 under the Republican budget) and $5,900 lower in 2050 (the difference between $17,000 under current law and $11,100 under the Republican budget).

The key question is: where would these cuts in government spending per beneficiary come from?

For all its self-congratulation for specificity, the Republican budget never specifies how its cap on Medicare spending would be enforced. Under current law, the Affordable Care Act limits growth in Medicare spending to growth in the economy plus 1 percentage point. That cap is enforced by a specific mechanism—an independent expert panel—that creates a strong incentive for Congress to act. But Republicans have disavowed any such mechanism.

And in the absence of any other enforcement mechanism, it’s likely that the cap would be enforced by limiting the amount of vouchers provided to beneficiaries. After all, we know that capping the vouchers is the clear policy goal of Republicans—we need look no further than the budget they proposed last year. What’s more, converting all Medicare spending into vouchers means that it would be difficult to limit Medicare spending by any other means.

The vouchers, therefore, would likely be capped at CBO’s projected spending per beneficiary under the Republican budget: $7,400 in 2030 and $11,100 in 2050. And since these amounts would be much lower than actual costs, beneficiaries would be left to pay the difference.

Of course, Republicans would argue that competition under premium support would lower actual costs below current law levels. But there’s scant evidence that competition alone would lower health care costs substantially. Why? Simply increasing competition among insurers would have little effect without addressing underlying health care costs and competition among health care providers. And even if competition did lower costs, it would only lower the level of costs—not the growth in costs over time.

The upshot is that it’s highly unlikely that competition would come anywhere close to lowering actual costs to the amount of the vouchers. And if competition doesn’t end up lowering costs at all, beneficiaries would be on the hook for $1,200 by 2030 and $5,900 by 2050.

House Budget Chairman Paul Ryan (R-WI) has released a new version of his ‘Path To Prosperity’ budget that makes significant concessions from Ryan’s original plan to privatize the Medicare program, but would still take us down a fairly bumpy road that could throw many seniors out of the car altogether.

Like last year’s Ryan/Wyden reform plan, beginning in 2023, the guaranteed Medicare benefit would be transformed into a government-financed “premium support” system. Seniors currently under the age of 55 could use their government contribution to purchase insurance from an exchange of private plans or — unlike Ryan’s original budget — traditional fee-for-service Medicare. That annual government contribution will no longer be indexed to an arbitrary indicator of inflation plus 1 percent, but would increase with health care costs and rely on market competition to control health care spending. Individuals who choose a plan that costs more than the benchmark would pay the difference, while those who enroll in a lower-cost plan would receive a rebate. Lower-income seniors would also be eligible for additional assistance.

Finally, the budget adopts President Obama’s a per capita cost cap of GDP growth plus 0.5 percent (while repealing the ACA’s Independent Payment Advisory Board), which would act as a “fallback to assure the federal government budgetary savings” and encourage providers to adopt greater efficiences. But since it’s unclear how this cap would be enforced, it’s likely that the cap would limit the government contribution provided to beneficiaries. Since the proposed growth rate is much slower than the projected growth in health care costs, CBO estimates that new beneficiaries could pay up to $1,200 more by 2030 and more than $5,900 more by 2050.

But that’s not the only problem with Ryan’s plan:

1. Ryan breaks up the large market clout of Medicare and pushes seniors into less efficient private insurers. As Rick Foster, Medicare’s chief actuary, admitted during a recent House Budget Committee hearing, since traditional Medicare is far better at advancing delivery system reforms, securing lower reimbursement rates with health care providers, and operating under minimal administrative overhead, transferring Medicare beneficiaries from free-for-service Medicare into the private health market would not contain overall health care spending. It would only shift costs.

2. Seniors who enroll in traditional Medicare will likely pay more for their benefits. That’s because under Ryan’s budget, private plans will be able to cherry-pick the healthiest beneficiaries from traditional Medicare and leave sicker applicants to the government. The budget states that enrollees would be “guaranteed a plan that is at least the value of the traditional fee-for-service Medicare option,” but private insurers could still attract a healthier population by simply ratcheting down services that sicker beneficiaries rely on (like chemotherapy) and building up coverage for healthier applicants (like preventive services). Should they succeed, traditional Medicare costs will skyrocket, forcing even more seniors out of the government program. Seniors who are priced out of traditional coverage over time would enroll in private plans and receive care through more restricted provider networks relative to what they currently enjoy (where nearly all hospitals, doctors, nursing homes participate). Ryan pledges that “CMS would also conduct an annual risk review audit of all insurance plans participating in the Medicare Exchange,” but as the experience with Medicare Advantage demonstrates, existing tools are still insufficient to address cherry picking.

3. The “premium support” credits won’t keep up with health care costs. Fortunately, the vouchers seniors will receive are no longer indexed to inflation. They instead rely on actual average bids in any given geographic area and would do a better job of keeping up with health care costs every year than the original Ryan proposal. But seniors in high cost Medicare areas could still experience a cost-shift and would be responsible for the difference between the amount of the premium credit and the actual cost of the policy.

So there, in a nutshell, is the problem — at least from a policy perspective. Despite its concessions, the new budget moves the health care system closer to the Ryan ideal, in which future Congresses would be able to reduce federal costs by eating away at the premium credit seniors receive. The plan does little to address the root of the cost problem — changing how we pay doctors and hospitals by moving away from fee-for-service payments — and instead limits the government’s commitment by shifting more costs to beneficiaries.