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House Budget Committee Chairman Paul Ryan

Ryan budget includes big changes to Medicare, Medicaid

By Catherine Hollander
Posted: April 1, 2014 - 2:45 pm ET

A new House Republican budget (PDF) for fiscal 2015 relies on big changes to Medicare and a repeal of the Patient Protection and Affordable Care Act to help cut government spending by $5.1 trillion over the next 10 years.

Also included is mention of a doc fix to end the constant temporary patches being applied to the unpopular Medicare sustainable growth-rate formula for physician payments. No details are given on the doc-fix alternative being considered, however.

The budget is not expected to pass the Democratic-controlled Senate, and is instead viewed as a political document outlining GOP goals ahead of the November midterm elections.

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“By cutting wasteful spending, strengthening key priorities and laying the foundation for a stronger economy, we have shown the American people there's a better way forward,” House Budget Committee Chairman Paul Ryan (R-Wis.) said in a statement that accompanied the unveiling of the budget Tuesday.

“Medicare is an open-ended, blank-check entitlement that operates under a rigid and bureaucratic fee-for-service payment system. This current structure fuels healthcare inflation, threatens the solvency of the program and creates inexcusable levels of waste in the system,” the budget document said.

Ryan's fiscal 2015 budget would cut $129 billion from Medicare over the next decade. It calls for a policy of “premium support” for Americans age 55 and under, which would give them the choice between traditional Medicare and buying private insurance on a new Medicare exchange with subsidies when they become eligible for the program in 2024. Premium-support payments would be adjusted based on individuals' health as well as their incomes.

This budget marks a change from previous Ryan plans that would have started the premium support system for those 54 and younger rather than 55. Some Republicans have voiced concerns about tampering with Medicare eligibility. Response from the White House was swift and as to be expected.

That plan “would end Medicare as we know it, turning it into a voucher program and risking a death spiral in traditional Medicare,” the White House said in a statement about the GOP proposal.

Ryan's budget also calls for a 10-year “doc fix,” or change in the unpopular Medicare sustainable growth-rate formula, which has been law since 1997 and which Congress routinely patches to prevent steep cuts to Medicare providers from going into effect. The Senate passed its 17th short-term fix Monday evening, putting off the latest scheduled cuts for one year. Ryan's budget says it “accommodates legislation” that would replace the formula with a new reimbursement system. A separate question-and-answer page on the House Budget Committee website says the changes would be made through a "deficit-neutral reserve fund."

The budget would repeal the Affordable Care Act, including specifically mentioning ending the Independent Payment Advisory Board, a 15-member group whose recommendations were intended to curb rising Medicare costs, and which has been unpopular among Republicans since it was created in the 2010 healthcare reform law; it has been referred to as a “death panel” by a number of critics.

The House GOP budget called for a "fundamental reform" of the Medicaid program for low-income Americans, the heart of which would be transforming Medicaid into a block-grant program for states, which would save $732 billion over 10 years, the committee said. It would also repeal the program's expansion under the Affordable Care Act.

“Republicans are putting our economy, seniors, the middle class and our nation's most vulnerable at risk to protect special interest tax breaks. This is unacceptable,” Rep. Allyson Schwartz (D-Pa.) said in a statement following the budget's release. Senate Democrats have said they do not plan to release their own budget this year.

The House Budget Committee is scheduled to mark up the proposal on Wednesday.

Catherine Hollander is a Washington, D.C.-based freelance writer.

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