Proposed Budget Would End Current Medicare and Medicaid Programs

Proposed Budget Would End Current Medicare and Medicaid Programs

House Budget Committee Chairman Paul Ryan’s budget proposal, released this past Tuesday, would end the Medicare and Medicaid programs as we know them today and pass significant extra costs on to consumers and states. Starting in 2022, the current Medicare program would be replaced by a “premium support” or voucher program that would provide a limited government contribution to Medicare consumers, who would use the payment to buy coverage from private insurance companies. This would result in far higher out-of-pocket costs for consumers, according to multiple analyses. The payments would grow more slowly than increases in spending in the health care sector overall, making them insufficient to purchase coverage as good as what is currently provided under Medicare. The Congressional Budget Office (CBO) estimates that Medicare consumers will be responsible for a considerably higher percentage of their health insurance costs under the scheme. A significant increase in out-of-pocket costs could be devastating for the Medicare population, half of whom have household incomes below $20,000. And many in the next generation of Medicare consumers are not projected to be in considerably better financial situations: half are estimated to have household incomes below $26,400. In addition, the proposal would gradually raise the age of Medicare eligibility from 65 to 67. 
The program would also establish “block grants” for Medicaid, meaning that the government would provide a capped amount of funding to states for the program beginning in 2013, cutting over $1 trillion. According to the CBO, the costs of medical services for Medicaid enrollees would grow faster than the block grant amount, leading to severe shortfalls that would have to be covered by states, which could raise taxes in order to cover the extra costs, or that would cause states to reduce payments to doctors, cut benefits, increase cost-sharing, or cut entire populations from the program. One such population could be Medicare consumers, who rely on Medicaid to cover extra cost-sharing under Medicare and long-term care, since Medicare does not provide coverage for long-term care facilities or services. 
Regrettably, the House budget does little to address the underlying problem that causes growth in Medicare spending: growth in spending in the health care sector overall. The House budget repeals the Affordable Care Act (ACA), which attempts to bend the Medicare cost curve not through shifting greater costs to consumers, but through cracking down on waste, fraud, and abuse and enacting delivery system reforms that increase the quality and coordination of care for people with Medicare while increasing efficiency within the program. In fact, the ACA is estimated to increase the life of the Medicare trust fund by 12 years without shifting new costs to consumers.
Take action to prevent cuts to Medicare and Medicaid.
Read Medicare Rights Center President Joe Baker’s statement on the House budget.
Read the Medicare Rights Center’s “Medicare and Medicaid: Essential Partners for Older Americans and People with Disabilities.”
Read the CBO’s analysis of the House budget.
Read the Leadership Council of Aging Organizations’ letter to Congress on the adverse effects of cuts to Medicaid on people with Medicare.