Rep. Paul Ryan’s budget plan gets a lot of attention for the drastic changes it makes to the beloved federal health program for the elderly. The Wisconsin Republican wants Medicare to eventually compete with private insurance to cover seniors, giving them a choice between traditional Medicare and a commercial plan. (He would tie the amount of money that the federal government pays for seniors’ health insurance to the second-cheapest plan in a given area.) The budget passed last week with 228 House Republican votes, 10 internal dissents, and no support from Democrats, who say it shifts costs to seniors.
But Ryan’s proposal isn’t just an overhaul of the way Medicare works; it also calls for less-noticed but still-enormous cuts (up to $750 billion over 10 years) to the existing system. Problem is, the GOP won control of Congress in 2010 in part by criticizing President Obama’s plan—they accused him of “gutting” Medicare—when he enacted the same cuts. And now they seek to go even further.
When Democrats pushed through the Affordable Care Act, they cut $500 billion from Medicare providers to cover the cost of insuring an additional 30 million people. But smaller payments to doctors and hospitals are offset by the increased volume—all of those newly insured people. Despite Republicans’ pledges to repeal the law, Ryan’s plan last year assumed that those cuts would go into effect. It also would have eliminated subsidies for private insurance coverage in state exchanges and extra money to expand Medicaid coverage to childless adults. The upshot is that hospitals and doctors would have taken a big hit with no new revenue stream to make it up. Republicans again backed those same policies in this year’s version of Ryan’s budget.
Republicans say that if they roll back the Affordable Care Act, they’ll come up with the Medicare savings some other way. Ryan insists in his budget blueprint that he would use the savings not to expand health insurance coverage but to “shore up” Medicare by putting the money back into the Medicare trust fund. Yet it’s unclear exactly where the Republicans would find the money. A recent stumble by Mitt Romney exemplifies the problem. When the Ryan budget came out, the GOP presidential front-runner called it an “excellent piece of work.” A few days later, however, he pledged that he wouldn’t slash Medicare as Obama did. “There’s only one president in history who’s cut $500 billion out of Medicare, and that’s your guy, Barack Obama,” Romney said.
Ryan’s budget doesn’t even stop at cutting the same sum; it also trims up to $150 billion more from Medicare to put off the automatic cuts to defense spending triggered by the super committee’s sequester. His plan gives the House Ways and Means, and Energy and Commerce committees the job of chopping that sum from entitlement programs over 10 years. (Those committees have jurisdiction over Medicare and Medicaid.) Ryan’s budget suggests that the committees cap awards under medical-malpractice lawsuits and require wealthier seniors to pay higher Medicare premiums and co-pays.
Although both committees have gleefully held hearings to bash the health law, they’re unlikely to spend much time finding health-entitlement savings to stave off the defense sequester: Doing so would put them on record as “gutting” Medicare in an election year. Asked when the committee expects to take up this new task, Energy and Commerce press secretary Debbee Keller simply said: “The committee has already advanced several bills to reduce the deficit by tens of billions of dollars, and we intend to build on that work begun last year to reduce spending and support responsible budgeting.” The Ways and Means Committee said it would offer guidance in the “coming weeks.”
Perhaps that’s because pledging to find $750 billion in Medicare savings in a budget resolution is like playing with Monopoly money. Budget proposals get to say that a cut will happen without having to authorize it or explain exactly how. Things get ugly only in the details: “Everything is possible. All you have to do is vote and not get reelected,” jokes Thomas Miller, a resident fellow at the conservative American Enterprise Institute and a health economist formerly with the Joint Economic Committee. “You can always resort to the easy, old standby of reimbursement-rate cuts,” he says. But if you want to make the hard changes that bring down Medicare’s cost, “that requires both execution and the political will.” And it hasn’t been a good year for political will.
This article appears in the April 7, 2012, edition of National Journal.
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