House Budget Committee Chairman Paul Ryan (R-Wis.) proposed on Tuesday a spending blueprint that would repeal the 2010 healthcare overhaul and make fundamental changes to Medicare and Medicaid as part of an ambitious plan to balance the federal budget in 10 years.
The ideas are familiar ones. Proposals to turn Medicare into a premium-support program and Medicaid into a block-grant program were part of the House GOP's last two budget proposals, neither of which moved beyond the House floor after the lower chamber passed the measures.
And former Gov. Mitt Romney (R-Mass.), with Ryan as his running mate, lost his bid for the White House after campaigning on a platform outlined in those budgets. Addressing reporters Tuesday in the Capitol, Ryan said the loss in November is no reason to surrender one's principles. He also said Americans won't like the Patient Protection and Affordable Care Act when they see what the law entails as policymakers working on oversight committees have seen already.
“This is why we're not only repealing this law, because we don't think we can afford to borrow $1.8 trillion in extra spending this law entails,” Ryan said. “We think we can replace it with a better healthcare system, and that's also something we're going to be proposing,” he continued. “Not only are we saying: Here's how you save and strengthen Medicare for current and future generations, but here's a better patient-centered system to replace Obamacare.”
His budget proposal offered scant details on those patient-centered reforms, except to note that they should include enacting medical liability reform, ensuring Americans can buy insurance across state lines and expanding access to consumer-directed healthcare options.
In repealing the Affordable Care Act, Ryan's plan would repeal the insurance subsidies for the state health insurance exchanges as well as states' Medicaid expansion, which is set to begin next year.
Ryan's plan proposes to transform Medicaid into a block-grant program similar to the State Children's Health Insurance Program. Together, the programs would be unified and grown together for population growth and inflation. Ryan's budget estimates about $756 billion in savings to the Medicaid program over the next decade.
Consumer health advocacy group Families USA released a statement saying the budget will cause "enormous harm" to seniors with chronic conditions, children needing to see doctors and low-wage working families.
"The House Republican plan to decimate Medicaid flies in the face of actions by key Republican governors who have extolled, and proposed to expand, their programs," Ron Pollack, the group's executive director, said in the statement.
For Medicare, Ryan's panel has again proposed a premium-support model for the decades-old program. Starting in 2024, workers born in 1959 or after would have the choice between private plans or traditional Medicare fee-for-service in a Medicare Exchange. The program would provide a premium-support payment to either cover or offset the premium in the plan that the senior would choose.
According to the budget—called The Path to Prosperity: A Blueprint for American Renewal (PDF)
—every plan in the Medicare Exchange would participate in an annual bidding process to determine the federal contribution that seniors would receive to buy coverage. The benchmark plan would be either the second-least expensive private plan or traditional fee-for-service Medicare, whichever is less expensive. So, if seniors opt for a plan that is more expensive than the benchmark, they would pay the difference between the subsidy and monthly premium. If they choose a less expensive plan, they would receive a rebate for the difference. Ryan's plan would also require private plans to cover at least the actuarial equivalent of the benefit package that the fee-for-service plan offers.
"Instead of pegging the growth rate to a predetermined formula, Medicare would increase premium subsidies according to a competitive-bidding process," the budget resolution noted. "As a backup, the per-capita cost once the program has begun could not exceed nominal GDP plus 0.5%," it continued. "The president has proposed to empower the Independent Payment Advisory Board to hold Medicare growth to the same rate. Unlike IPAB, this proposal would use competition—not bureaucratic fiat—to control costs."
Tom Nickels, senior vice president for federal relations at the American Hospital Association, said the AHA was “clearly disappointed” with the House GOP proposal because of the large cuts to Medicaid and also because Ryan's plan would keep all of the healthcare cuts outlined in Affordable Care Act, but not provide the coverage expansions that groups like the AHA fought to include.
"Those cuts would continue, but not to off-set coverage--but for deficit reduction," Nickels said.
Following the release of Ryan's budget, White House Press Secretary Jay Carney released a statement saying President Barack Obama believes both political parties can still reach agreement on a way to lower the deficit and growing the economy—but that Ryan's plan is not the way.
"By choosing not to ask for a single dime of deficit reduction from closing tax loopholes for the wealthy and well-connected, this budget identifies deep cuts to investments like education and research—investments critical to creating jobs and growing the middle class," Carney said in his statement. "And to save money, this budget would turn Medicare into a voucher program—undercutting the guaranteed benefits that seniors have earned and forcing them to pay thousands more out of their own pockets."