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GOP’s Fiscal Year 2012 Budget Plan Triggers Contentious Debate

A fiscal year 2012 federal budget plan proposed by House Budget Committee Chair Paul Ryan (R-Wis.) on Tuesday has sparked a contentious debate about health care spending, particularly on Medicare and Medicaid, CQ Today reports (Krawzak/Schatz, CQ Today, 4/5).

Proposal Background

The proposal would make $6 trillion in federal spending cuts over the next decade, attempt to repeal and defund the federal health reform law and overhaul Medicare and Medicaid.

It would provide Medicare beneficiaries with lump-sum vouchers to buy private insurance and turn Medicaid into a block-grant system. The Medicaid overhaul would provide states with fixed annual block grants of $11,000 per beneficiary to use as they choose.

The plan likely will go through markup on Wednesday and receive a vote one week later. The House is expected to pass the proposal and send it to the Senate (California Healthline, 4/5).

Democrats' Reaction

Many Democrats criticized the plan for targeting entitlement programs.

Senate Budget Committee Chair Kent Conrad (D-N.D.), a member of the bipartisan Gang of Six that is working on its own budget proposal, criticized the Ryan proposal for not cutting defense spending or seeking higher tax revenue while being "financed by draconian reductions in Medicare and Medicaid."

Senate Finance Committee Chair Max Baucus (D-Mont.) said the plan would "end Medicare as we know it and funnel Medicare dollars directly into private insurance companies' pockets." According to Baucus, Medicare "benefits would no longer be guaranteed" under the proposal and "seniors' costs would skyrocket."

Response From Republicans

Certain Republicans praised Ryan for releasing the proposal but did not endorse the details. Senate Minority Leader Mitch McConnell (R-Ky.) said the plan is a "credible proposal to deal with the debt crisis" but withheld an endorsement.

Meanwhile, Sen. Saxby Chambliss (R-Ga.), another member of the Gang of Six, said that the plan is "interesting" but that he is uncertain whether Senate Republicans would approve it (CQ Today, 4/5).

Rep. Jim Jordan (R-Ohio), chair of the Republican Study Committee, withheld support because he thinks the plan does not move fast enough to implement its changes (Dennis/Palmer, Roll Call, 4/6).

CBO Scores Proposal

A Congressional Budget Office analysis of the Ryan budget proposal found that most future Medicare beneficiaries would pay more for health care under the plan. CBO cited two reasons for this:

  • Private plans would cost more than traditional Medicare because of higher administrative costs and other factors; and
  • Federal contribution would grow more slowly than health care cost inflation, leaving beneficiaries to pay the rest (Alonso-Zaldivar, AP/San Diego Union-Tribune, 4/6).

Democrats Pledge Alternative

Rep. Chris Van Hollen (D-Md.) on Tuesday said that the Democratic caucus will offer an alternative to the GOP proposal. He said the Democratic alternative "will reduce the deficits in a serious and predictable and steady way, and it will demonstrate a very different approach going forward." However, Van Hollen did not provide specifics for the proposal (Brady/Palmer, Roll Call, 4/6).

Conrad said he will hold back Senate Democrats' budget plan until the Gang of Six releases its proposal, which is based on recommendations by President Obama's National Commission on Fiscal Responsibility and Reform. According to Conrad, if the Gang of Six does not reach a deal, he will incorporate part of the NCFRR's proposal into the Democratic plan (Bolton, The Hill, 4/6).

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