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Republicans' revised Medicare plan seen as tough sell

By Donna Smith and David Lawder

WASHINGTON (Reuters) - In a new Internet video previewing his upcoming budget plan that aims to slash spending and overhaul the Medicare healthcare program for the elderly, Republican lawmaker Paul Ryan warns of a coming debt crisis if U.S. lawmakers fail to act.

It is part of the latest effort by Ryan, the influential chairman of the House of Representatives Budget Committee, to project bold ideas for reining in huge budget deficits.

But Republican strategists warn that Ryan's plan to partially privatize Medicare is fraught with political danger for the party in its bid to maintain control of the U.S. House of Representatives in the November 6 election.

"It helps Republicans project long-term thinking on how to deal with Americans that are getting older. At the same time, it can be politically devastating to light up seniors during an election year," said one of the strategists, who asked not to be identified. "It doesn't make a lot of political sense."

Medicare is the U.S. government health insurance program for the elderly and disabled.

An aging population and rising healthcare costs have put Medicare on a path toward consuming an even greater share of the federal budget. But a recent Kaiser Family Foundation poll found that 70 percent of Americans, including 53 percent of Republicans, wanted Medicare to stay just as it is.

Still, Ryan is expected to include in next week's budget outline a proposal similar to the plan he included last year that would have ended Medicare for people under 55. Those future retirees would get an allowance to purchase medical coverage from private insurers on a special exchange.

In an attempt to moderate the proposal, and the possible political backlash, Ryan might weave in a compromise he crafted with Senate Democrat Ron Wyden, which would keep traditional fee-for-service Medicare as a choice on the exchange.

Republican Senator Roy Blunt said the revised proposal would take "the starch out" of critics. Republicans will be able to claim bipartisan support and argue they are keeping traditional Medicare as an option, he said.

"We are setting out ambitious goals that clearly are giving people a choice," a Republican aide said in defense of the plan.

But some analysts believe it will be a tough sell for Republicans to make to a skeptical public and they suggest Ryan might have trouble selling it to his own party.

"House Republicans will be split on the issue. There will be those who believe it will be politically unsustainable versus Republicans who believe it is simply the right thing to do and let the politics fall where they may," said the Republican strategist.

"They may have to go to whipping this," a second Republican analyst said, referring to the procedure party leaders use to try to pressure members to stay in line with their party elders and support controversial legislation.

DEMOCRATS PREPARE CAMPAIGN ADS

Many Republicans are expected to be reluctant to support the plan. Voting data show that the elderly go to the polls in greater numbers than any other group, and Democrats already are producing campaign ads accusing Republicans of voting to reduce benefits.

Republican Representative David McKinley, who voted against Ryan's Medicare reform proposal last year, said he would prefer a different approach.

"Let's come up with another way of approaching this problem that eliminates the threat that people say we're ending Medicare as we know it," McKinley said. "That is campaign rhetoric and all it does is upset people."

A House vote on Ryan's plan last year sparked a firestorm of criticism and a number of Republicans found themselves on the defensive against angry senior citizens at local town hall meetings. It was blamed for costing Republicans a seat in a special New York congressional election.

Even though lawmakers acknowledge a need to shore up Medicare, the revised plan is unlikely to advance this year either since it has no chance of being considered by the Democratic-led Senate.

Ryan argues his plan will not only rein in budget costs but save the Medicare program for future generations. He argues that controlling federal spending on Medicare and other health and retirement programs is essential to cutting budget deficits and avoiding big tax increases that Republicans argue would devastate economic growth.

Democratic critics say they want to protect the current system and argue the Republican alternative would increase out-of-pocket expenses for the elderly.

The Democrats see in Ryan's Medicare plan a major opportunity to attack vulnerable Republicans in congressional races and are honing their line of attack.

"It is the defining issue between House Democrats and House Republicans," said Representative Steve Israel, who heads the House Democratic campaign committee.

In anticipation of the Democratic attack against the Ryan plan, Republicans have launched a counter-offensive to highlight $500 billion in spending cuts to providers that were part of President Barack Obama's healthcare overhaul. Polling data show that the 2010 law, which is now being challenged in the U.S. Supreme Court, remains unpopular with voters.

(Reporting By Donna Smith; Editing by Peter Cooney)

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