Ryan Budget Would Make Big Changes in Medicare

March 29, 2012 at 11:31 am

House Budget Committee Chairman Paul Ryan’s new budget provides much less detail than last year’s about his proposals in Medicare and other areas — too little for the Congressional Budget Office (CBO) to estimate their impact, as Brookings economist William Gale points out.  (CBO estimated that Chairman Ryan’s Medicare proposals last year would have driven up total health care spending and doubled the out-of-pocket costs of a typical 65-year-old.) 

Nonetheless, we can piece together a fair amount about Chairman Ryan’s updated plans for Medicare.  As my new paper explains, these include:

  • Replacing guaranteed coverage with a voucher. Most notably, the Ryan budget would replace Medicare’s guarantee of health coverage with a flat “premium support” payment, or voucher, that beneficiaries would use to buy either private health insurance or a form of traditional Medicare.  This would shift substantial costs to Medicare beneficiaries — especially for low-income beneficiaries also eligible for Medicaid; the Ryan plan would eliminate the supplemental benefits and help with premium and cost-sharing they receive through Medicaid without providing an adequate replacement.

    Adopting premium support would also, contrary to Chairman Ryan’s claim, likely lead to the demise of traditional Medicare by making its pool of beneficiaries smaller, older, and sicker — and increasingly costly to cover.

  • Raising the eligibility age. Starting in 2023, the Ryan budget would raise the eligibility age for Medicare — now 65 — by two months per year until it reaches age 67 in 2034.  It also would repeal health reform.  As a result, many 65- and 66-year olds would have neither Medicare nor access to health reform’s coming health insurance exchanges in which they could buy affordable coverage.
  • Rescinding health reform’s Medicare improvements. The Ryan budget would repeal health reform provisions that strengthen Medicare benefits, such as closing the gap in Medicare prescription drug coverage (known as the “doughnut hole”) and covering preventive services with no cost sharing.  These repeals would adversely affect both current and future beneficiaries.

Republican Study Committee’s Medicaid Cuts Even Bigger Than Ryan Plan’s

March 29, 2012 at 10:46 am

The House will vote today on a budget that the House Republican Study Committee has proposed as an alternative to Budget Committee Chairman Paul Ryan’s plan.  Our new analysis finds that the RSC plan:

proposes to end Medicaid and the Children’s Health Insurance Program (CHIP), and also to repeal the Affordable Care Act (ACA).  In place of Medicaid and CHIP, states would receive a single block grant payment each year equal to the amount of federal Medicaid and CHIP funding that they received in 2012, with no adjustment for increases in health care costs or the size of the U.S. population, or even for general inflation.

Because the block grant would be frozen at 2012 levels and not adjust annually for increases in enrollment (e.g., as the population ages) or rising health care costs, the RSC budget would slash Medicaid funding by $1.1 trillion — or 30 percent — over the next ten years, relative to current law.  (This does not count the loss of the substantial additional federal Medicaid funding that states would receive under the ACA to expand Medicaid but that they wouldn’t receive under the RSC budget because it would repeal the ACA.)  By 2022, federal funding would be 47 percent below what states would otherwise receive through Medicaid that year.  These funding cuts are even larger than those required under the severe proposal to convert Medicaid to a block grant and sharply cut its funding included in the Ryan budget plan.  The Ryan block grant would cut federal Medicaid funding by $810 billion — or 22 percent — over the next ten years, with federal funding 34 percent lower by 2022 (not counting the additional cuts from repealing the ACA’s Medicaid expansion).

Click here for the full report.

Ryan Roundup: Everything You Need to Know About Chairman Ryan’s Budget

March 29, 2012 at 9:30 am

Updated: Saturday, August 11, 2012

Below is a compilation of the CBPP analyses and blog posts on the budget that House Budget Committee Chairman Paul Ryan proposed, and the House of Representatives passed, in March. At the bottom of the compilation, we also list the Center’s analysis of the Ryan “Roadmap” budget plan.

Overview/General

  • Blog post: Greenstein Statement
    March 21, 2012
    “The new Ryan budget is a remarkable document — one that, for most of the past half-century, would have been outside the bounds of mainstream discussion due to its extreme nature. In essence, this budget is Robin Hood in reverse — on steroids. It would likely produce the largest redistribution of income from the bottom to the top in modern U.S. history and likely increase poverty and inequality more than any other budget in recent times (and possibly in the nation’s history).”

62% of Proposed Cuts in Ryan Plan Come from Low-Income Programs

  • Blog post: When Is a Deal Not a Deal?
    March 22, 2012
    With defense funding well above the Budget Control Act’s funding caps in coming years, and non-defense discretionary funding very far below those caps, the Ryan budget bears little resemblance to the bipartisan agreement reached last summer.

Taxes

Millionaires Would Receive More Than One-Third of New Ryan Tax Cuts

  • Blog post: Myths on Spending, Debt, and Taxes Fuel Ryan Vision
    April 5, 2012
    Chad Stone: In my post for US News & World Report, I identify three myths about spending, debt, and taxes that conservative politicians use to justify the plan of House Budget Committee Chairman Paul Ryan — one that would set the nation on a path to end most of government other than Social Security, health care, and defense by 2050.
  • Blog post: Chairman Ryan’s Misleading Chart
    March 27, 2012
    The lead tax chart in Chairman Ryan’s budget…gives the impression that we can easily eliminate tax expenditures for the very wealthy and thereby pay for lower rates for all taxpayers — including the Ryan plan’s big reduction, to 25 percent, in the top income tax rate. The chart in question is based on data from the Urban-Brookings Tax Policy Center (TPC). But it does not show what Chairman Ryan suggests it does, for two key reasons.

Health Care

  • Blog post: Ryan Budget Would Make Big Changes in Medicare
    March 29, 2012
    House Budget Committee Chairman Paul Ryan’s new budget provides much less detail than last year’s about his proposals in Medicare and other areas — too little for the Congressional Budget Office (CBO) to estimate their impact, as Brookings economist William Gale points out. (CBO estimated that Chairman Ryan’s Medicare proposals last year would have driven up total health care spending and doubled the out-of-pocket costs of a typical 65-year-old.)

  • Analysis: Ryan Medicaid Block Grant Would Cut Medicaid by One-Third by 2022 and More After That
    March 27, 2012
    The Medicaid block-grant proposal in the Ryan budget that the House of Representatives will vote on this week would cut federal Medicaid funding by 34 percent by 2022 (on top of repealing the health reform law’s Medicaid expansion) because the funding would no longer keep pace with health care costs or with expected Medicaid enrollment growth as the population ages and employer-based health insurance continues to erode.

Safety Net

  • Blog post: The Massive Hidden Safety-Net Cuts in Chairman Ryan’s Budget
    March 21, 2012
    A key misunderstood element of the Ryan budget is its proposed cut in spending for non-discretionary programs other than Social Security, Medicare, Medicaid, and other health programs. There is no way to generate the budget’s required savings without extremely severe cuts in these programs, on which the most vulnerable Americans depend.

Analysis of Ryan “Roadmap” Budget Plan of January 2010

The Ryan Budget’s Radical Priorities — Provides Largest Tax Cuts in History for Wealthy, Raises Middle Class Taxes, Ends Guaranteed Medicare, Privatizes Social Security, Erodes Health Care
The Roadmap would give the most affluent households a new round of very large, costly tax cuts by reducing income tax rates on high-income households; eliminating income taxes on capital gains, dividends, and interest; and abolishing the corporate income tax, the estate tax, and the alternative minimum tax. At the same time, the Ryan plan would raise taxes for most middle-income families, privatize a substantial portion of Social Security, eliminate the tax exclusion for employer-sponsored health insurance, end traditional Medicare and most of Medicaid, and terminate the Children’s Health Insurance Program. The plan would replace these health programs with a system of vouchers whose value would erode over time and thus would purchase health insurance that would cover fewer health care services as the years went by.

This post was last updated Thursday March 29, 2012, 9:30am

Cooper-LaTourette Plan Not as Balanced as Bowles-Simpson

March 28, 2012 at 5:16 pm

Proponents of the Cooper-LaTourette budget plan claim that it reduces deficits through a mixture of two-thirds spending cuts and one-third tax reform — the same ratio as the Bowles-Simpson plan. But that’s not true.

Yes, the Bowles-Simpson plan had roughly two dollars in spending cuts for every dollar in tax increases — if you use a baseline that assumes that President Bush’s tax cuts for upper-income taxpayers expire (and if you count the savings from lower interest payments as a spending cut).  But, the Cooper-LaTourette budget relies on a different baseline — and that makes all the difference in the world.

Specifically, the stated revenue increases in the Cooper-LaTourette plan reflect a baseline that assumes those upper-income tax cuts are extended.  If you calculate the Bowles-Simpson tax increase on the same basis as the Cooper-LaTourette plan, its tax savings are much larger, and the ratio of spending cuts to tax increases is close to 1:1.  On the same baseline on which Bowles-Simpson is 1:1, the Cooper-LaTourette plan is 2:1 — that is, two dollars in spending cuts for every dollar in tax increases, or far more tilted toward spending cuts, and far less toward tax increases, than Bowles-Simpson.

Health Reform’s Medicaid Expansion a Plus for States

March 28, 2012 at 4:47 pm

Federal Government Will Bear Nearly All Medicaid Expansion Costs Over 2014-2022The Supreme Court today considered the Affordable Care Act’s Medicaid expansion, which health reform’s critics claim will place a heavy burden on states.  The reality is quite different.

In fact, states — and their residents — will benefit in a number of ways from the expansion, and the federal government will pick up almost all of the tab, as our report explains.

Under health reform, Medicaid and the Children’s Health Insurance Program (CHIP) will cover an estimated 17 million more low-income adults and children by 2022, most of whom are now uninsured.  States will bear little of the cost:

  • The federal government will pay 93 percent of the cost of the Medicaid expansion from 2014 to 2022, according to the Congressional Budget Office.  (By comparison, it covers an average of 57 percent of the costs of covering people in Medicaid today.)
  • States will spend just 2.8 percent more than what they would have spent on Medicaid over this period without health reform.

Health reform will also save states money in a number of ways.  States and localities pay for many health services for the uninsured:  they paid more than $10 billion toward hospital care for the uninsured in 2008, for example, and provided nearly $15 billion in funding for state mental health agencies in 2006.

In 2014, when millions of the uninsured qualify for Medicaid, the federal government will pick up a substantial share of these costs.  In fact, Urban Institute researcher John Holahan has observed that states’ savings on care for the uninsured may fully offset their new costs related to the Medicaid expansion.