House Dismantles Medicare in Latest Budget Proposal

Representative Paul Ryan, House Budget Committee Chairman, introduced a budget proposal on Tuesday that would convert Medicare into a voucher (or premium support) program beginning in 2024, significantly increasing costs for people with Medicare. Under the proposed model, people with Medicare would receive a set payment to purchase coverage from a private insurance company or from Original Medicare. The amount of the voucher is unlikely to cover rising health care costs, meaning people with Medicare would be forced to pay the difference. Moreover, Original Medicare would likely be severely weakened. Experts predict that older, sicker beneficiaries would remain in Original Medicare, while younger, healthier beneficiaries would enroll in private plans. Consequently, those with Original Medicare, including beneficiaries in the program today, would be subjected to higher premium costs as Original Medicare serves a population that is older, sicker and more costly.

Many people with Medicare cannot afford added health care costs. Half of all Medicare beneficiaries—almost 25 million Americans—have annual incomes below $22,500, and Medicare households spend, on average, 15 percent of their incomes on health care. The Ryan plan also proposes to raise the Medicare eligibility age from 65 to 67 for those who are currently under the age of 55. Raising the Medicare eligibility age saves the federal government money by shifting costs to older adults and employers, and estimates suggest the increase in costs for beneficiaries would be two times the cost savings for the federal government.

Additionally, like previous proposals introduced by Representative Ryan, the budget would establish block grants for Medicaid, in which the government would provide a capped amount of funding to states for the program. Block granting Medicaid would severely limit access to care for low-income Medicare beneficiaries and their families who rely on Medicaid to cover Medicare costs and necessary long-term care services and supports.

Once again, the Ryan budget does little to address the real cause of increased Medicare spending—rising costs in the health care sector overall. In fact, Medicare spending per enrollee grows more slowly than its private counterparts, because it is more efficient. Savings are possible without shifting costs to people with Medicare. The Affordable Care Act (ACA) exemplifies this: the law bolsters Medicare’s finances while also investing in new benefits, such as closing the Medicare prescription drug coverage gap, or doughnut hole, and providing Medicare beneficiaries with free preventive services.

Finally, proposals to eliminate wasteful spending on pharmaceutical drugs, such as restoring Medicare drug rebates, do not shift costs onto beneficiaries. Proposals like these are well-aligned with the framework set forth by the Senate budget proposal released by Senator Patty Murray. According to the Senate plan, “Rather than shifting the burden of costs onto states, seniors and the most vulnerable, this budget builds on the responsible changes made in the Affordable Care Act with $275 billion in new health savings.” Congress must similarly look to credible options that do not increase health care costs for older adults and people with disabilities.