Ryan’s Budget Proposal Would Repeal the ACA, Alter Health Programs
House Budget Committee Chair Paul Ryan (R-Wis.) on Tuesday unveiled a fiscal year 2014 budget proposal that would achieve a balanced budget over the next decade by repealing the Affordable Care Act, transitioning Medicare to a premium-support program and turning Medicaid into a block-grant system, USA Today reports (Davis, USA Today, 3/12).
Overall, Ryan's 10-year spending blueprint calls for $4.6 trillion in savings, with about $2.7 trillion coming from federal health care programs (Montgomery, Washington Post, 3/12). The plan also would overhaul the tax code to simplify it from seven individual tax brackets to two (USA Today, 3/12).
Cuts to Medicaid Under Ryan's Plan
The proposal would generate immediate savings from Medicaid by turning the program into a block-grant system, in which states receive a fixed amount of money for their programs. According to National Journal, the amount of money states receive would not vary based on the size of each state's program or how sick enrollees are.
The plan also would not take into account annual increases in medical prices. Instead, it would allow payments to grow at the rate of overall population growth (Sanger-Katz, National Journal, 3/12). Ryan's budget estimates that the provision would save about $756 billion over the next decade (Zigmond, Modern Healthcare, 3/12).
Turning Medicare Into Premium-Support Model
Meanwhile, Ryan's spending blueprint would not generate any savings from his plan to turn Medicare into a premium-support system, National Journal reports (National Journal, 3/12).
Under Ryan's plan, beginning in 2024, beneficiaries age 65 and older would receive a federal subsidy that they could use to purchase either a private insurance plan or traditional Medicare in a marketplace of competing plans. The proposal would require private plans to cover at least the actuarial equivalent of the benefit package offered by traditional Medicare.
The budget also would require every plan in the marketplace to participate in an annual bidding process to control costs. The benchmark plan would either be the second-least costly private plan or traditional Medicare, whichever is less costly. Beneficiaries who choose a more costly plan would cover the difference between the subsidy and the monthly premium, while those who choose a less costly plan would receive a rebate for the difference (Modern Healthcare, 3/12).
However, the price of Medicare could become too costly for some individuals because it would have to compete with private plans, National Journal reports. The plan also could shift costs to beneficiaries, regardless of the price of the plan they choose (National Journal, 3/12).
Ryan's Budget Proposal and the ACA
Ryan's FY 2014 budget proposal assumes that Congress would repeal the majority of the ACA, which is highly unlikely given Obama's re-election and the fact that Democrats maintained control of the Senate, National Journal reports (National Journal, 3/12).
Ryan's spending plan eliminates ACA revenues and provisions that Republicans opposed, such as the Independent Payment Advisory Board, the tax on medical devices and the penalty for not obtaining insurance coverage.
However, the budget plan would keep the law's $716 billion in Medicare savings, as well as the ACA's 0.5% growth cap for Medicare spending, which IPAB was meant to enforce (Haberkorn/Norman, Politico, 3/13).
Reactions, Prospects for the Plan
Ryan's plan is expected to pass the House next week but likely will be voted down in the Senate and rejected by the White House, USA Today reports. The Obama administration yesterday criticized the plan, arguing that it would undercut benefits to Medicare beneficiaries and increase their out-of-pocket costs (USA Today, 3/12).
Meanwhile, Democrats and some lobbying groups also criticized the proposal, The Hill's "Healthwatch" reports.
House Minority Leader Nancy Pelosi (D-Calif.) in a statement said, "The Republican budget is nothing more than more of the same. â¦ It still undermines the health and economic security of the elderly and disabled." She added, "It still ends the Medicare guarantee and shifts costs to seniors" (Baker, "Healthwatch," The Hill, 3/12).
Rep. Chris Van Hollen (D-Md.) called Ryan's proposal a "hoax" for claiming that it will repeal the ACA and produce a balanced budget in a decade. "It is a total hoax to say that you are repealing 'ObamaCare' and at the same time to say that you're balancing the budget in 10 years," Van Hollen said. He added, "Despite all the demagoguery in the last presidential campaign about the Medicare savings that we achieved as part of the Affordable Care Act, they've included all those savings in their budget" (Lillis, The Hill, 3/12).
Meanwhile, AARP Executive Vice President Nancy LeMond in a statement said, "Chairman Paul Ryan's proposed budget fails to address the high costs of health care and instead shifts costs onto seniors and future retirees." She added, "Removing the Medicare guarantee of affordable health coverage seniors have contributed to through a lifetime of hard work is not the answer" ("Healthwatch," The Hill, 3/12).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.