Ryan releases budget touting Medicare premium support overhaul

As he did a year ago, House Budget Committee Chairman Paul Ryan (R-Wis.) outlined a premium-support model for Medicare and state block grants for Medicaid in the fiscal 2013 budget blueprint he released Tuesday.

Promising no disruptions for those in or near retirement, Ryan's plan this year proposes that Medicare would provide a payment and a list of guaranteed options that includes a traditional fee-for-service option. Ryan and Sen. Ron Wyden (D-Ore.) introduced this design last December, and Wyden promoted the idea on his website Monday.

Under the plan, workers currently under the age of 55 would be offered a choice of private health plans and the traditional fee-for-service option in a Medicare Exchange starting in 2023. All plans would participate in competitive bidding that would then determine the dollar amount of the federal contribution seniors would receive to purchase insurance coverage. The second-least expensive plan or the fee-for-service Medicare option—whichever is cheaper—would establish a benchmark for a premium-support amount for the plan.

Seniors who choose more expensive plans would pay the difference, while those opting for cheaper plans would receive a rebate. Program growth, meanwhile, would be set by the competitive-bidding process, and the per-capita cost of the program could not exceed nominal gross domestic product growth plus 0.5%.

“The president has repeatedly proposed empowering IPAB to hold Medicare to the same growth rate,” the budget noted, referring to the Independent Payment Advisory Board provision created in the 2010 healthcare law. “The difference is that this budget proposes to use competition to control costs, while IPAB under the president's proposals would use bureaucratic benefit restrictions (i.e., “value-based benefit design”) to contain Medicare's growth below GDP plus 0.5%.”

Ryan's budget also calls for repealing IPAB, which House members will consider later this week when they vote on a medical-liability reform bill that includes the IPAB repeal measure in it. The House Republicans' budget proposal states that it aims to ensure that the cost of “frivolous litigation is not passed on to consumers” through higher premiums by capping non-economic damages in medical liability lawsuits, but does not provide more details. At a news conference Tuesday morning, Ryan confirmed this section of the budget refers to the House Republicans’ medical liability reform legislation.

According to House GOP budget, Medicaid spending grew to $378.6 billion in 2009 from $400 million in 1966 (the program's first year) and is expected to rise to $804 billion by 2019. The GOP's 2013 plan suggests converting the federal share of Medicaid into block grants, indexed for inflation and population growth, which states would use to structure their own individual programs and proposes constraining Medicaid's cost growth by about $810 billion over 10 years.