House Republicans Release FY 2015 Budget Proposal

On Tuesday, Rep. Paul Ryan (R-Wis.) unveiled House Republicans' fiscal year 2015 budget proposal, which aims to curb government spending by $5.1 trillion over the next 10 years by privatizing Medicare and repealing the Affordable Care Act, among other provisions, Modern Healthcare reports (Hollander, Modern Healthcare, 4/1).

The House Budget Committee is scheduled to mark up the bill on Wednesday (Lillis, The Hill, 4/1). The bill should reach the House floor within the next week. However, it is unlikely to be considered by the Senate, especially given that Senate Budget Committee Chair Patty Murray (D-Wash.) does not intend to introduce a budget this year after she and Ryan successfully passed a two-year bipartisan budget agreement in 2013 (French, Politico, 4/1).

Instead, the proposal serves mostly as an outline of Republican goals as the party heads into the 2014 midterm election, Modern Healthcare reports.  

Medicare Details

Among other provisions, the budget would cut $129 billion from Medicare over the next decade by converting the program into a premium-support system starting in 2024. Beneficiaries would be eligible for federal premium support at age 55, which they could use to select either traditional Medicare or a private plan via a new Medicare insurance exchange. The premium subsidies would be adjusted according to beneficiaries' health and income, Modern Healthcare reports (Modern Healthcare, 4/1).

Medicare would remain the same for current beneficiaries, although they could opt into the new program starting in 2024. In addition, the plan gradually would increase the Medicare eligibility age starting in 2024.

In addition, the plan would maintain the ACA's $716 billion in Medicare savings over the next 10 years, and it does not set any spending caps for Medicare's per capita costs. It also would change the Medicare fee-for-service benefit, creating a single deductible and altering supplemental Medigap plans. The budget also increases Medicare Part B and D premiums for higher-income beneficiaries, increasing both the amount of premiums and the number of beneficiaries paying those higher amounts.

Other Health-Care Related Provisions

In addition, the plan would:

• Save $732 billion in Medicaid spending over 10 years by consolidating Medicaid and the Children's Health Insurance Program into one program and converting Medicaid into a block-grant system, under which each state would receive a set amount from the federal government to provide coverage for low-income residents;
• Repeal nearly all of the ACA, including the politically unpopular Independent Payment Advisory Board, Medicaid expansion, and all of the law's taxes and premium subsidies designed to offset the price of purchasing private coverage via the law's insurance exchanges;
• Make several changes to medical liability laws (Ethridge, CQ Roll Call, 4/1); and
• Replace Medicare's sustainable growth rate formula with a new reimbursement system made through a "deficit-neutral reserve fund" (Modern Healthcare, 4/1).

In the budget proposal, Ryan wrote that in place of the ACA, the plan calls for "patient-centered health care reforms that  actually bring down the cost of care by empowering consumers" (Easley, "Healthwatch," The Hill, 4/1). However, the budget does not specify any details on that proposed replacement plan (CQ Roll Call, 4/1).

Overall, the plan's proposed cuts to Medicare and repeal of the ACA would save roughly $3 trillion in government spending, Politico reports.

Reaction

Ryan in a conference call with reporters on Tuesday said the plan shows voters that Republicans are not simply an "opposition party." He said, "We believe that it is not enough for us just to be an opposition party, we need to be a proposition party ... the alternative party" (Politico, 4/1).

House Majority Leader Eric Cantor (R-Va.) defended the plan, which he said "helps create jobs, grows our economy and puts more money back into people's pockets." He added, "Working middle class families live within their means, and they should expect nothing less from their government."

Meanwhile, Democrats criticized the proposal, calling it "reckless" and "unrealistic."

House Minority Leader Nancy Pelosi (D-Calif.) said the budget was a "vision for a less prosperous America."

Rep. Steny Hoyer (D-Md.) said, "The nation's fiscal challenges deserve ... an honest and serious budget," adding, "This is not going to be one."

Rep. Chris Van Hollen (D-Md.) said the "reckless" plan "casts a dark shadow over the American dream" (Lillis, The Hill, 4/1). He added that the "budget is the Republican declaration of class warfare -- it protects the elites at the expense of the rest of the country" and "violates the fundamental promise that every hardworking American should have a fair shot at success" (Politico, 4/1).

Meanwhile, the White House also voiced disapproval for the plan, noting in a statement that the proposed cuts to Medicare would "end Medicare as we know it, turning it into a voucher program and risking a death spiral in traditional Medicare" (Modern Healthcare, 4/1).