Ryan’s Rx for Medicaid Would Add Millions to the Uninsured and Underinsured

March 20, 2012 at 3:51 pm

House Budget Committee Chairman Paul Ryan’s new budget again proposes to radically restructure Medicaid by converting it into a block grant and to slash federal funding by about one-fifth over the next decade (as well as to repeal health reform’s Medicaid expansion).  All told, it would add tens of millions of Americans to the ranks of the uninsured and underinsured.

Repealing the Affordable Care Act’s Medicaid expansion means that 17 million people would no longer gain Medicaid coverage, while the large and growing cut in federal Medicaid funding would almost certainly force states to sharply scale back or eliminate Medicaid coverage for the millions of low-income people who rely on it today.

Ryan Budget Would Slash Federal Medicaid Funding by About One-Third in 2022Under the Ryan plan, the federal government would no longer pay a fixed share of states’ Medicaid costs.  Instead, states would get a fixed dollar amount that would rise annually only with inflation and population growth.

  • The block grant would cut federal Medicaid spending by $810 billion over the next ten years (2013-2022).  That would be a cut of about 22 percent compared to current law.  (This doesn’t count the loss of the large additional funding that states would receive to expand Medicaid under health reform.)
  • Block grant funding amounts would fall further and further behind state needs each year.  The annual increase in the block grant amounts would average more than 3.5 percentage points less than Medicaid’s currently projected growth rate over the next ten years, which accounts for factors like rising health care costs and an aging population.  In 2022, we estimate that federal Medicaid funding would be about 34 percent less than states would receive under current law.  And the cuts would keep growing after 2022.  The Congressional Budget Office (CBO) expects that, under the Ryan plan, federal Medicaid (and CHIP) spending as a share of the economy would fall by half by 2040, compared to spending levels in 2011.
  • The loss of federal funding would be even greater in years when enrollment or per-beneficiary health care costs rose faster than expected, such as during a recession or after the introduction of a new health care technology or treatment.  Currently, the federal government and the states share in those unanticipated costs; under the Ryan plan, states alone would pay them.

As CBO concludes, “the magnitude of the reduction in spending . . . means that states would need to increase their spending on these programs, make considerable cutbacks in them, or both.  Cutbacks might involve reduced eligibility . . . , coverage of fewer services, lower payments to providers, or increased cost-sharing by beneficiaries — all of which would reduce access to care.”  In making these cuts, moreover, states would likely use the expansive new flexibility that the Ryan plan would give them.  For example, the plan would likely let states cap Medicaid enrollment and turn eligible people away from the program; under current law, they must accept all eligible individuals who apply.  It also would likely let states drop certain benefits that people with disabilities and special health care problems need.

The Urban Institute estimated that Chairman Ryan’s block grant proposal of last year would lead states to drop between 14 million and 27 million people from Medicaid by 2021 (outside of the effects of repealing health reform’s Medicaid expansion) and cut reimbursements to health care providers by 31 percent.  There’s no reason to think that this year’s proposal would result in cuts that are any less draconian.

The Case for IPAB

March 19, 2012 at 5:21 pm

The goal of the Independent Payment Advisory Board (IPAB) — a cost-control mechanism that the health reform law created — is to make sure that promising ideas to control health care costs “don’t fall on deaf ears,” former Office of Management and Budget Director Peter Orszag explained on a conference call we held for journalists today.  The House is scheduled to vote this week on whether to repeal IPAB.

“Congress can act [to control costs], but if Congress doesn’t act, [IPAB ensures] there is some other mechanism to increase the odds that we can move in the right direction,” Orszag added.

Orszag, Princeton economist and leading health care economist Uwe Reinhardt, and CBPP Senior Fellow Paul Van de Water discussed IPAB’s potential to rein in cost growth and corrected misconceptions about the board, such as that it will ration health care.  (Health reform specifically prohibits IPAB from rationing health care, raising Medicare’s premiums or cost sharing, cutting benefits, or restricting eligibility.)

Click on the button below for the audio of the presentation portion of the call.

Click here for the Center’s report on the issue.

 Download as mp3


No Big Changes in Latest Estimates of Health Reform Law

March 19, 2012 at 4:14 pm

Opponents of the Affordable Care Act claim that the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) have substantially revised their estimates of the law and now predict it will cost more, and reduce the deficit less, than originally expected.

These claims are false.  As CBO Director Douglas Elmendorf explains on his blog, the CBO and JCT estimates of the Affordable Care Act (ACA) released last week are essentially unchanged from earlier estimates:

  • “Some of the commentary on those reports has suggested that CBO and JCT have changed their estimates of the effects of the ACA to a significant degree. That’s not our perspective.”
  • “For the provisions of the Affordable Care Act related to health insurance coverage, CBO and JCT’s latest estimates are quite similar to the estimates we released when the legislation was being considered in March 2010. . . .  Although the latest projections extend the original ones by three years (corresponding to the shift in the regular 10-year projection period since the ACA was first being developed), the projections for each given year have changed little, on net, since March 2010.”
  • “The estimated budgetary impact of the coverage provisions has also changed little. . . .  Again, the latest projections extend the original ones by three years, but the projections for each given year have changed little, on net, since March 2010.”
  • “CBO and JCT have not updated their estimate of the full budgetary impact of the legislation this year. . . .  Our projections made last February (our most recent ones for all the provisions of the law) extended the original ones by two years, but again changed little, on net, from the original projections for each given year.”

The basic facts about health reform remain the same as when President Obama and Congress enacted the law two years ago:  it will expand health coverage to tens of millions of uninsured Americans, reduce deficits, and take critical steps toward reining in health care costs.

The Problems with the Ryan-Wyden Medicare Proposal

March 19, 2012 at 2:51 pm

The budget that House Budget Committee Chairman Paul Ryan (R-WI) will unveil tomorrow is expected to include a Medicare “premium support” proposal that he and Senator Ron Wyden (D-OR) announced last year.  Our new paper explains the serious problems with the Ryan-Wyden plan.

Premium support would replace Medicare’s guarantee of health coverage with a flat payment, or voucher, that beneficiaries would use to buy private health insurance or traditional Medicare.  Although billed as a kinder, gentler form of premium support, the Ryan-Wyden plan has the same basic features as earlier proposals.  It is similar to a 1995 proposal from then-House Speaker Newt Gingrich that Gingrich said would have caused traditional Medicare to “wither on the vine.”

The Ryan-Wyden proposal would:

  • Shift substantial costs to Medicare beneficiaries rather than protect them from cost increases — in part because the value of the voucher would likely fail to keep pace with health care costs.
  • Likely lead to the gradual demise of traditional Medicare by making the pool of Medicare beneficiaries smaller, older, and sicker — and increasingly costly to cover.
  • Produce few budgetary savings beyond those that the health reform law already calls for, since both plans have the same target growth rate for Medicare costs.

Some advocates of premium support falsely claim that it is necessary to keep Medicare from going bankrupt.  In reality, health reform has significantly improved Medicare’s long-term financial outlook, and the program is not on the verge of  shutting down.  Medicare’s trustees estimate that, even without any changes to the program, Medicare’s Hospital Insurance trust fund can pay 100 percent of the program’s hospital insurance costs through 2024; at that point, the payroll taxes and other revenue deposited in the trust fund will be sufficient to pay 90 percent of those costs.

The American people — a large majority of whom oppose premium support, according to a recent Kaiser Family Foundation poll — shouldn’t let scare tactics frighten them into supporting radical and harmful Medicare changes.

In Case You Missed It…

March 16, 2012 at 4:36 pm

This week on Off the Charts, we focused on the federal budget and taxes, the economy, health policy, safety net programs, and housing policy.

  • On the federal budget and taxes, we debunked the claim that roughly half of Americans pay no taxes.  Kelsey Merrick noted that Pell Grants are doing less to help low- and moderate-income people afford college.
  • On the economy, Chad Stone explained that while the jobs market is doing better, it needs to improve further to address the nation’s large jobs deficit.
  • On health policy, Paul Van de Water countered arguments for eliminating the health reform law’s cost-cutting Independent Payment Advisory Board.  Sarah Lueck noted that the Administration’s new rules for the health insurance exchanges that health reform calls for include important improvements.  Jesse Cross-Call explained why Rhode Island’s experience under a Medicaid waiver is not a good indicator of how a Medicaid block grant would affect states.
  • On safety net programs, LaDonna Pavetti showed that Temporary Assistance for Needy Families (TANF) has become much less effective as a safety net over time, and we updated our map showing how many weeks of unemployment insurance benefits are available across the country.
  • On housing policy, Douglas Rice cautioned that the President’s 2013 budget doesn’t fully renew housing assistance for low-income households.

In other news, we released reports on why repealing the Independent Payment Advisory Board (IPAB) would be a mistake, TANF’s decreasing role as a safety net, the President’s 2013 budget for the Department of Housing and Urban Development, factors that states should consider regarding health reform’s Basic Health option, and claims that Rhode Island’s cap on federal Medicaid funding has generated large state savings.