G.O.P. Blueprint
Would Remake Health Policy
Published: April 4, 2011 - New York Times
WASHINGTON — The proposal to be unveiled by House Republicans on Tuesday to
rein in the long-term costs of Medicaid
and Medicare
represents a fundamental rethinking of how the two programs work, an ambitious
effort by conservatives to address the nationfs fiscal challenges, and a huge
political risk.
House Republican aides said the budget blueprint to be issued by the chairman
of the Budget Committee, Representative Paul
D. Ryan of Wisconsin, would slice more than $5 trillion from projected
federal spending in the coming decade. Health care accounts for much of the
savings.
But while saving large sums for the federal government, the proposals on
Medicaid and Medicare could shift some costs to beneficiaries and to the states.
Under the proposal, Medicaid would be transformed into a block grant, with a
lump sum of federal money given to the states to care for low-income people.
States would be given more discretion over use of the money than they have under
the current federal-state partnership.
For future Medicare beneficiaries — people now under 55 — Mr. Ryanfs proposal
calls for the federal government to contribute a specified amount of money
toward the premium for private health coverage. Under the traditional Medicare
program, the government reimburses doctors and hospitals
directly.
Although many House Republicans see a need to revamp Social
Security, too, they are not expected to press this week for comprehensive or
specific changes in that program.
Democrats signaled that they would fight the health proposals, and the clash
could well become a defining issue for both parties in the 2012 elections.
Republicans say the health care proposals would help the federal government
predict and control its costs under Medicaid and Medicare, which insure more
than 100 million people and account for more than one-fifth of the federal
budget.
But if, as many economists predict, health costs continue to rise at a rapid
clip, beneficiaries of these programs would be at risk for more of the costs.
Mr. Ryan said his Medicare proposal was similar to one he advanced in
November with Alice
M. Rivlin, a budget director in the Clinton administration. Analyzing that
plan, the Congressional
Budget Office said, gFederal payments would tend to grow more slowly under
the proposal than projected costs per enrollee under current law.h As a result,
the budget office said, genrolleesf spending for health care — and the
uncertainty surrounding that spending — would increase.h
Medicaid and Medicare are now open-ended entitlements. Anyone who meets the
eligibility criteria is entitled to benefits defined in detail by federal law.
The federal government and the states must pay the additional cost if more
people become eligible for Medicaid, as happened in the recent recession.
Likewise, Medicare bears the cost if doctors perform more numerous, more
complex and expensive tests and procedures. Some of those additional costs are
passed on to beneficiaries in the form of higher premiums.
Republicans say they are taking the initiative on Medicaid and Medicare
because President
Obama has done nothing to put the programs on a solid fiscal footing. In his
2012 budget, Mr. Obama did not propose significant savings in Medicaid or
Medicare, even though he and many fiscal experts say the programs are
unsustainable in their current form.
Mr. Ryan and fellow House Republicans are wading into tricky waters, where
many other politicians have run aground.
But with the nationfs fiscal problems looming larger, Republicans say the
politics of the issue have shifted. They expect to receive credit from the
public for trying to hold down the deficit and the debt.
gWe have a moral obligation to the country to do this,h Mr. Ryan said in an
interview last week.
Representative Jan Schakowsky, a Democrat and a former executive director of
the Illinois State Council of Senior Citizens, said she was incensed by such
claims. gMr. Ryan and the Republicans are declaring war on entitlements — and
war on the elderly and the poor,h Ms. Schakowsky said. gBeneficiaries will end
up paying more.h
About half of Medicaid recipients are children. Nearly two-thirds of the
money spent on Medicaid benefits is for low-income people who are 65 and older
or disabled.
The government shutdown in 1995-96 stemmed, in part, from a conflict between
President Bill
Clinton and Congressional Republicans over what he described as gdevastating
cutsh in Medicaid and Medicare.
In his veto message in December 1995, Mr. Clinton listed 82 gobjectionable
provisionsh of the Republicansf budget bill. He complained that it gconverts
Medicaid into a block grant with drastically less spending.h
The Congressional Budget Office recently estimated that a Medicaid block
grant, of the type proposed by Mr. Ryan and Ms. Rivlin, could save $180 billion
over 10 years. House Republicans could save an additional $434 billion by
eliminating the expansion in Medicaid eligibility scheduled to take place in
2014 under the new health care law.
Mr. Ryan said he was not cutting Medicaid and Medicare, but rather slowing
their growth rate.
In addition, he insists he is not trying to convert Medicare to a voucher
program because the money would be paid to insurance companies and health plans,
not directly to beneficiaries. If health costs for a group of patients exceeded
the federal payment in a given year, the insurer would have to absorb the cost.
Finally, Mr. Ryan says his proposal is equitable because Medicare would pay
less on behalf of higher-income beneficiaries, and they would pay more of the
cost of their health coverage.
But high-income Medicare beneficiaries already pay higher premiums, with an
annual surcharge of more than $3,800 in premiums for some of the most affluent
ones this year.
What Mr. Ryan and his committee plan to do this week is to approve a budget
resolution, setting goals for spending and revenues. If approved by the House
and the Senate in the same form, such a resolution would bind Congress in its
deliberations, but it would not be presented to the president and would not
become law.
There is almost no chance the Democratic-controlled Senate would adopt a
resolution along the lines Mr. Ryan is proposing, although his counterpart in
the Senate, Kent
Conrad, Democrat of North Dakota, the chairman of the Senate Budget
Committee, is working on a bipartisan plan to address entitlement spending as
part of a broader package to reduce the budget deficit.
The budget resolution typically assumes changes in federal programs like
Medicaid and Medicare. But those assumptions do not bind the House committees
with power over those programs, which could choose to save the same amounts in
other ways.