Ryan budget would overhaul Medicare and Medicaid, repeal the ACA

To the dismay of Democrats, a top House GOP leader has again proposed big changes to Medicare and Medicaid, along with full repeal of Obamacare, to help cut government spending by $5.1 trillion over the next 10 years.

The fiscal 2015 budget submitted by House Budget Committee chairman Paul Ryan (R-Wis.) last week also included a mention of a long-term solution to the Medicare physician payment issue to end the annual temporary patches for the sustainable growth-rate formula. But the document offered no details on that.

“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,” Ryan said in a prepared statement.

His budget is seen as a political statement ahead of the November congressional elections and a possible presidential run by the 2012 GOP vice presidential candidate. It was immediately criticized by Senate Democrats. And House GOP leaders were scrambling to secure votes from Republicans angry about their leaders' parliamentary moves to pass the temporary doc-fix bill last week.

Ryan's budget would cut $129 billion from Medicare over the next decade. It calls for a policy of “premium support”—which Democrats call a voucher system—for Americans who currently are 55 and younger when they qualify for Medicare at age 65. That would give seniors the choice between traditional Medicare and buying a private plan on a new Medicare exchange. Premium-support payments would be adjusted based on individuals' health as well as their incomes.

Some Republicans have opposed Ryan's similar Medicare proposals in the past. Critics have said the proposal would significantly raise out-of-pocket costs for seniors.

“Medicare is an open-ended, blank-check entitlement that operates under a rigid and bureaucratic fee-for-service payment system,” Ryan's budget document said. “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 also called for a “fundamental reform” of the Medicaid program for low-income and disabled Americans. It would eliminate the ACA's Medicaid expansion to adults earning up to 138% of the federal poverty level. The heart of the proposal, though, is to transform Medicaid into a block-grant program for states and cap federal Medicaid spending based on population growth and inflation, saving $732 billion over 10 years.

Response from the White House was swift. Ryan's 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 written statement. Senate Democratic leaders said the Ryan budget plan gives them a fat political target going into the November elections.

Ryan's budget also calls for a 10-year “doc fix,” or change in Medicare's unpopular sustainable growth-rate formula. 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 said the changes would be made through a “deficit-neutral reserve fund.”

The budget would repeal the Patient Protection and Affordable Care Act. But it retains nearly all the healthcare reform law's $700 billion in Medicare cuts over 10 years, which Republicans have criticized.

“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 written statement.

Congress approved a two-year budget agreement late last year. Ryan said he went ahead and drafted a 2015 budget anyway because the current agreement does not do nearly enough to slash spending.

During a conference call with reporters last week, Ryan said the nearly $700 billion in Medicare savings he kept from the ACA would be funneled back into Medicare through a reserve fund, according to the Huffington Post. “By repealing Obamacare, we stop (the) raid and that money stays within Medicare,” he said. “So it actually helps make Medicare stronger and more solvent, more secure.” —with Harris Meyer

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