New Ryan Budget Would Transform Medicare And Medicaid
By Marilyn Werber
Serafini
KHN Staff Writer
Mar 20, 2012 - Kaiser Health News
The Republican chairman of the House Budget Committee surprised no one today
when he released a spending blueprint that would drastically reshape the
Medicare and Medicaid programs for the elderly and poor in an attempt to rein in
their soaring costs.
Rep. Paul Ryan, R-Wis., presents the GOP budget and takes
questions Tuesday on Capitol Hill (Photo by Jessica Marcy/KHN).
Democrats predictably pounced on the proposal by Rep. Paul Ryan of Wisconsin,
making clear they would make it a major campaign issue.
The GOP document projects an estimated $205 billion in Medicare savings
over President Barack Obamafs proposed budget over ten years.
The plan would gradually raise the eligibility age to 67 by 2034 and cap
Medicare spending growth at gross domestic product growth plus 0.5 percent.
It would turn Medicaid over to the states in the form of a federal block
grant, "constraining Medicaidfs growing cost trajectory by $810 billion over ten
years," according to the document, which said:
gIf Congress wants to avoid defaulting on federal health and retirement
programs, it must adopt a program of gradual adjustment now – one that frees the
nation from the shadow of debt, strengthens its health and retirement safety
net, protects those in or near retirement from any disruptions in their
benefits, and supports robust economic growth and job creation. Otherwise, the
nation will face more significant, unpopular and immediate overhauls later.h
In Ryanfs 2012 budget resolution, which the House approved, the growth of
federal spending on Medicare would have been limited to the growth of GDP plus 1
percent. Since then, President Barack Obama proposed a tighter cap, at GDP plus
0.5 percent, which is the same as Ryanfs plan today.
Ryanfs Medicare proposal is nearly identical to a premium
support idea that he put forward in December with Sen. Ron Wyden,
D-Ore., and to one that GOP presidential hopeful Mitt Romney crafted a month
earlier in November. Ryanfs new budget would provide a set amount of money for
future Medicare beneficiaries – those currently under the age of 55 - to
purchase either a private health plan or the traditional government-administered
program through a newly created Medicare exchange. That would begin in 2023.
Health in the new GOP Budget
Read the health portion of the new GOP budget:
All plans, including traditional Medicare, would submit bids for how much
they would charge to cover a beneficiary's health care costs. The government
would pay the full premium for the private plan with the second lowest bid, or
for traditional Medicare, whichever is lower. Beneficiaries would have to pay
the difference if they chose a plan that set rates higher. There could be one
less expensive plan option, and beneficiaries who chose it would get a rebate
for the difference.
Private health plans would have to be at least actuarially equivalent to the
coverage offered in the traditional, government-administered option. That means
that the benefits could vary, but the value of the plan would have to remain the
same.
In a presidential election year, proponents welcomed the Ryan-Wyden promise
of traditional Medicare as more politically palatable than Ryanfs proposal from
last year, which would have allowed only private plan options. And they expected
that Ryan would include it in the 2013 budget.
But some critics are already arguing that the government-administered
option would not be affordable and that it could cause doctors to leave the
program. Critics have argued that the government-run plan would attract the
sickest people, driving up its costs, while private plans would lure the
healthiest.
Ryan makes it clear in his proposal that the cost to beneficiaries would be
determined solely by competitive bidding between the private and public plans.
If Medicare spending exceeded GDP plus 0.5 percent, then, other savings would
have to be found in the program, and politicians have a long history of cutting
payments to doctors, hospitals and other medical providers.
Democrats – ignoring Wyden's role – vowed to launch a sweeping campaign against the Medicare
proposal. A "Medicare Madness" graphic topped the website of the Democratic
Congressional Campaign Committee Tuesday, which in a memo said it would "hold
targeted Republicans accountable with automated and patch-through phone calls,
citizen phone banks, earned media events, op-eds, letters to the editor, a new
online Medicare Action Center, and paid advertising to be announced later in the
Medicare March campaign."
The White House criticized the budget blueprint as providing tax breaks for
wealthy Americans, oil companies and Wall Street on the backs of seniors. "All
of these tax breaks would be paid for by undermining Medicare and the very
things we need to grow our economy and the middle class – things like education,
basic research, and new sources of energy," said White House Communications
Director Dan Pfeiffer. "And instead of strengthening Medicare, the House budget
would end Medicare as we know it, turning the guarantee of retirement security
into a voucher that will shift higher and higher costs to seniors over time."
Wyden, anticipating backlash from his own party, defended his partnership
with Ryan in a column on Huffington Post Monday even as he distanced
himself from the overall GOP budget proposal – "I can't imagine a scenario where
I would vote for it."
He said "unless Congress enacts meaningful Medicare reform in the near
future, seniors will be faced with inevitable cost-shifting and eventual benefit
cuts until Medicare doesn't look anything like the program does today."
Even if the House passes the budget resolution, the Senate is unlikely to
follow suit. And even if it did, budget resolutions are non-binding and don't
establish law. However, the process lays an important foundation for positioning
over Medicare, which is already proving contentious in presidential and
congressional campaigns.
Both houses of Congress are unlikely to consider legislation to overhaul
Medicare or Medicaid until a new Congress – and possibly a new president – are
seated in 2013. But Congress is expected to return to Washington after the
election to consider major deficit reduction legislation. If lawmakers fail to
reach agreement, automatic spending decreases will take effect starting in 2013,
and Medicare spending would be cut by 2 percent – all from payments to hospitals
and other care providers.
Today's budget proposal also would prohibit Congress from using spending
reductions in Medicare for other purposes. That would "stop the raid on the
Medicare trust fund that was going to be used to pay for the new health care
law. Any current-law Medicare savings must go to saving Medicare, not the
creation of new open-ended health care entitlements," according to the document.
Ryan would attempt to lower health care costs by capping non-economic damages
(pain and suffering) awards in medical malpractice law suits.
The proposal also would repeal the Independent Payment Advisory Board that the health law
created to hold Medicare spending to GDP plus 1 percent. Ryan calls it "the
unaccountable panel of 15 unelected bureaucrats empowered by the President's
health care law to cut Medicare in ways that would lead to denied care for
seniors."
Marilyn Werber Serafini is the Kaiser Family Foundationfs Robin Toner
Distinguished Fellow based at Kaiser Health News. The fellowship honors the late
Robin Toner, The New York Times' long-time health and politics reporter whose
work often framed the public debate on health issues. KHN is an editorially
independent program of the foundation.
© 2012 Henry J. Kaiser Family Foundation. All rights
reserved.