With the GOP holding 24 of 34 Senate seats up for grabs in the next election, the Republican-controlled Senate wisely snubbed the House-backed budget resolution last week.
But it's worth taking a closer look at the draconian cuts at the heart of the lower chamber's healthcare spending plan since an electoral sweep by Republicans in 2016 will make their proposed overhaul of federal entitlement programs the starting point for replacing what they unaffectionately call Obamacare.
The plan issued by the House Committee on the Budget, now chaired by Rep. Tom Price, a physician from Georgia, is not much changed from the plan issued by Rep. Paul Ryan (R-Wis.) in the last session of Congress. To summarize briefly:
- It guts Medicaid by turning the federal contribution into state block grants drawn from a rapidly shrinking budget that would either throw millions of people off the rolls, sharply reduce benefits, or both;
- It provides no mechanism for providing health insurance to the tens of millions of people who gained it through Obamacare on the federal and state exchanges;
- And it transforms Medicare from a guaranteed benefit into financial aid (premium support) to purchase private insurance (Democrats dub this a voucher program) for seniors entering the program a decade from now. While the plan allows seniors to remain in traditional Medicare, it is silent on the scope of required benefits, instead allowing future Medicare beneficiaries “to choose from a range of guaranteed-coverage options to find a plan that best fits their needs.”
The budget resolution makes no mention that the projected date for exhausting Medicare's trust fund was 2017 just before the passage of the Affordable Care Act, choosing instead to warn that Medicare will go “bankrupt” in 2030. Those extra 13 years of trust fund life are a direct result of the ACA and cost savings that have already been achieved by providers, according to the nonpartisan Congressional Budget Office.
There's a huge irony at the heart of the House budget's Medicare plan. It calls for seniors to buy plans with their premium support on a “carefully monitored exchange.” Apparently, there will be mothballs in the closet where they plan to stick HealthCare.gov.
There are some House plan features that make sense. It calls for combining Medicare's various parts into a single insurance program with a single deductible and a cap on out-of-pocket expenses. But to make that workable, all seniors will need to be in the same risk pool. Otherwise, no insurance company will come forward to cover the sickest (and usually oldest) beneficiaries, who will then default to the government-run fee-for-service program. That fund will require ever-growing subsidies to remain viable. Down that path lies a two-tier Medicare system that puts the oldest, sickest and poorest patients under constant political risk.
The real target of the House budget cutters isn't the seniors program, however. It's Medicaid. They project slashing $913 billion from federal outlays over the next decade. Most of the cuts are front-loaded.
They would cut federal Medicaid spending in 2017 to $306 billion, down from the $386 billion projected by CBO in its most recent budget update. By 2025, that would grow to $365 billion in the GOP plan, more than $200 billion less than current CBO projections.
The plan claims this underfunded “state flexibility fund” would be able to cover both current Medicaid beneficiaries and the Children's Health Insurance Program by giving states “the flexibility to tailor their Medicaid programs.” It wouldn't include low-income adults earning up to 138% of poverty who were allowed into Medicaid under Obamacare.
Similarly, the plan makes no allowance for the tens of millions of privately insured Americans who would lose their plans when the subsidies under Obamacare get repealed. Rather, it states that the reforms would “allow individuals to join together to pool risk so no person is priced out of the market, even if they have a pre-existing condition.”
That sounds suspiciously like the dysfunctional individual insurance market that left millions of people underinsured and tens of millions of people uninsured prior to Obamacare.