President Obama and challenger Mitt Romney have different ideas on how to fix Medicare
NEW YORK (CNNMoney) -- Medicare is likely to take center stage at Thursday's vice presidential debate as Vice President Joe Biden and opponent Paul Ryan battle over cutting costs while protecting seniors.
The two parties have vastly different approaches for fixing the massive senior health insurance program, which politicians have long been loathe to touch, even as its costs soar and drain the federal government's coffers.
Nearly 50 million Americans are enrolled in Medicare, which is projected to eat up 3.7% of the economy in 2012 and 5.3% by 2030. By 2024, the portion of Medicare that funds hospital care will not take in enough revenue to meet all its bills.
The differences between President Obama and Republican candidate Mitt Romney revolves around how to slow the entitlement's rate of growth.
Here's where they stand:
Obama: The president points to his signature healthcare reform law, the Affordable Care Act, as the main way he's strengthened Medicare. Before the law, the program was expected to run short of funding to cover all its costs by 2016.
The act calls for cutting $716 billion out of the program by slashing payments to hospitals, skilled nursing facilities, home health care agencies and, in particular, private insurers who provide Medicare Advantage managed care plans. It also created an independent board charged with keeping costs under control if they exceed a preset cap. The law specifies that benefits cannot be cut to reduce expenses, though Romney has repeatedly said that Obama's plan to limit provider payments will hurt seniors.
Seniors with high prescription drug bills are particularly helped by the plan because it gradually closes the so-called donut hole, where these costs aren't covered. An estimated 3.6 million beneficiaries saved on average $600 each in 2011 thanks to this provision, according to the Department of Health and Human Services.
Related: Medicare funding runs short by 2024, trustees say
Romney: The Republican nominee instead wants to open Medicare to the private market, which he says will cut costs through increased competition. The changes would not affect those in or near retirement.
Seniors will receive a voucher to purchase an insurance plan. If they pick a more expensive plan, they have to cover the difference. But if they opt for a less expensive one, they can use the leftover funds to cover expenses such as co-pays and deductibles.
Traditional Medicare will remain an option, though the voucher may not cover the premium cost and the plan may be left with the sickest seniors.
And he would repeal most, if not all, of the Affordable Care Act, which would eliminate the additional coverage of prescription drugs.
Romney's plan is very similar to his running mate's budget plan, but with one key difference: It will not cap the growth of the voucher. Experts have criticized this move, saying that it will be hard to control costs without a cap.
Obama has attacked the Republican proposal, saying it would "end Medicare as we know it." But the president's accusation that seniors would have to pay $6,400 more is not valid because it was based on a plan put forth by Ryan, which did not contain the traditional Medicare option. 
First Published: October 11, 2012: 10:59 AM ET
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