House Budget Committee Chairman Paul Ryan's budget is once again full of the politically fraught health care policies that have made the publication of its two predecessors such big events. This year’s version basically sticks to last year’s script when it comes to health care. It would make big cuts to Medicaid right away, and would postpone cuts to Medicare for 10 years. Here's what Ryan's budget would mean for health entitlement programs:
No Medicare savings for 10 years. Though Ryan talks a lot about the need for entitlement savings, his budget proposals would not yield any savings from the largest health program for a decade. Last week, there was speculation about the possibility that the House budget would start tinkering with the structure of Medicare for people 55 and older. That possible change was apparently scrapped after a revolt by moderate House Republicans. That means that although Ryan’s Medicare plan will receive most of the political heat in the coming weeks—and probably the next campaign season—it actually won’t save the federal government any money immediately. It will take a while before we know how much it will save over the long term. The nonpartisan Congressional Budget Office announced Monday that it won’t be able to provide such estimates for several months.
The plan would not eliminate traditional Medicare. Democrats have gotten political mileage from accusing Ryan of wanting to “end Medicare as we know it.” That is not the same thing as ending Medicare. Ryan’s plan would give seniors a fixed amount of money that they could use to buy traditional Medicare coverage or a private plan with similar benefits. It would convert the program from a single-payer monolith into a marketplace of competing plans. But unlike his budget of two years ago, it would not remove traditional Medicare from the menu of options. Here’s where the “as we know it” part comes in: Because traditional Medicare would have to compete on price with the private plans, there’s a chance it could become too expensive for every senior who wants it to buy it. The plan, which limits how much the payment can increase each year, could also shift costs to even those seniors who buy the cheapest option in the marketplace.
The big cuts would come out of Medicaid. The Ryan budget would make significant changes to Medicaid, and those would take effect right away. Medicaid, the federal-state program for low-income and disabled Americans, is currently funded according to the size of the medical bills that come in. The Ryan plan would convert it to a block grant, meaning states would get a lump sum for their programs, no matter how many people joined their programs, how sick they got, or how much medical prices go up in a given year. The plan would allow the payment to grow slowly over time and as overall population grows, but that growth is estimated to be much lower than what states would get under the current program.
Ryan would repeal Obamacare, sort of. As he has in his past two budgets, Ryan’s budget assumes that Congress would eliminate all the parts of the president’s health reform law that subsidize insurance coverage for the uninsured. But though he says he would repeal all of Obamacare, his budgets suggest he would not eliminate the entire law. The budget is built on the assumption that new tax revenue and major cuts to the current Medicare program will stay on the books. It is worth noting that any sort of congressional repeal of Obamacare is basically impossible this year, given President Obama's re-election and the fact that Democrats still control the Senate.
Ryan says he’s open to different entitlement cuts. In a Fox News Sunday interview this weekend, Ryan said that he thinks there is room for compromise on entitlement cuts short of premium support and block grants that would get the country “closer to balancing the budget” and delay "the debt crisis from hitting this country.” Those ideas haven't found their way into his budget, but they are a new signal from Ryan, who has long been critical of the kinds of health care savings the president has proposed in the past.
This article appears in the March 13, 2013, edition of National Journal Daily.