March 20, 2012
House Budget Committee Chairman Paul Ryan, a rising star within the Republican ranks, roiled the waters a year ago when he introduced a budget calling for deep spending cuts and a proposal to privatize Medicare. The highly controversial Medicare plan got his party into political hot water and became a campaign rallying cry for Democrats who claimed the Republicans were attempting to destroy the federal health care system for the elderly.
Today, Ryan is again calling for a Medicare overhaul, but this year’s iteration is a bipartisan proposal that Ryan worked out with Sen. Ron Wyden, D-Ore., that would give the elderly the option of sticking with Medicare or purchasing private health insurance with a government subsidy. “Our budget’s Medicare reforms make no changes for those in or near retirement,” Ryan said. “For those who will retire a decade from now, our plan provides guaranteed coverage options financed by a premium-support payment. And this year, our budget adds even more choices for seniors, including a traditional fee-for-service Medicare option."
The new GOP budget plan sharply defines Republican fiscal policy heading into a crucial election and will likely set the stage for another Congressional impasse. Senate Majority Leader Harry Reid, D-Nev., has already ruled out a Senate vote this year on a formal budget plan.
While seniors could keep the current form of Medicare under Ryan’s new plan, younger workers would look to a time when the government would provide them with a Medicare payment and a list of guaranteed coverage options – including a traditional fee-for-service option – from which recipients could choose a plan that best suits their needs, according to a House Budget Committee document.
Those future Medicare beneficiaries would be able to select a plan the same way that members of Congress do, according to the document. Medicare would provide additional assistance for lower-income beneficiaries and those with greater health care needs.
Both the Ryan plan and the administration’s approach to Medicare reform are geared to trying to slow the growth of those health care costs slow to just 0.5 percent faster than growth in the overall economy, but they go about it very differently.
Rather than pegging the Medicare spending growth rate to a predetermined formula, the Ryan plan would use competitive bidding among hospitals and doctors to contain costs. By contrast, President Obama’s 2010 health care reform legislation created a 15-member Independent Payment Advisory Board, to contain Medicare spending growth.
“The difference is that this budget proposes to use competition to control costs, while IPAB under the President’s proposals would use bureaucratic benefit restrictions,” according to Ryan’s budget document, which calls for the repeal of the Obama health care law.
Rep. Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, said “Today the House Republicans released a budget that simply represents more of the same – abandoning the economic recovery and ending the Medicare guarantee while continuing tax breaks for special interests and the very wealthy.”
Rep. Sander Levin of Michigan, the senior Democrat on the House Ways and Means Committee, said that : “Medicare is a 47-year-old commitment to seniors that Democrats refuse do away with. Ending it will not bring down health costs, but in fact add to the problem – all the while significantly raising costs for American seniors.”
According to a preliminary Congressional Budget Office’s analysis of Ryan’s health care proposals released today, a “much higher” number of people would be without health insurance under his plan since it would repeal Obama’s signature health care law.
CBO also found that by 2030, government spending on each new Medicare recipient would be about $2,000 less than under current law. A more comprehensive CBO review of last year’s Republican budget proposal concluded that although the national debt would shrink over four decades, insurers and senior citizens would end up paying on average an additional $500 per year in out-of-pocket medical costs.
Ryan’s fiscal 2013 budget strategy includes steep program cuts that would set spending below the $1.047 trillion cap that was set by the budget deal negotiated by President Obama and Republican and Democratic congressional leaders last summer. The House Republicans lower that spending cap to $1.028 trillion – or about $19 billion less in allowable domestic discretionary spending.
The Democratic chairmen of the Senate Budget and Appropriations Committee warned House leaders on Monday that if they move ahead with Ryan’s proposals, they would undermine last summer’s hard-won agreement and risk a government shutdown.
“Should the House back out of last summer’s agreement and attempt to lower the fiscal year 2013 discretionary level, the House would delay consideration of the appropriations bills,” wrote Budget Committee Chairman Kent Conrad of North Dakota and Appropriations Chairman Daniel K. Inouye of Hawaii. “This delay would significantly increase the likelihood of omnibus legislation – denying the majority of members of both the House and the Senate the opportunity to participate in a meaningful way in FY 2013 spending decisions. Importantly, the House’s action would risk a government shutdown.”
Conrad and Inouye also charged that Ryan’s efforts to essentially rewrite the terms of last summer’s Budget Control Act is a “breach of faith” that “will make it more difficult to negotiate future agreements.”
This budget move – which has the blessing of House Speaker John Boehner, R-Ohio, and Majority Leader Eric Cantor, R-Va., is upsetting House and Senate Democrats who believe in the old adage that “a deal is a deal.” Some moderate Republicans on the House Appropriations Committee who are facing tough reelections also want to honor the agreement forged with Obama as part of the deal to raise the debt ceiling.
“We voted for it. That’s the number we should use,” Rep. Charles Bass, R-N.H., said recently. A spokesman for Boehner said House leaders always viewed the spending cap as an “an upper limit,” which did not preclude Congress from cutting spending below that level.
Boehner and Ryan may be feeling the heat of some conservative House members and tea party activists who want to be able to show their constituents further progress in bringing down the $1 trillion annual deficit. But one need only recall the painfully chaotic and bitterly partisan months of negotiations leading up to the debt ceiling and deficit reduction deal last July to have second thoughts about a do-over.
The Budget Control Act that emerged from those tough negotiations established 10 years of binding discretionary spending levels, reducing the deficit by a total of more than $900 billion over the coming decade. Moreover, the agreement is forcing $1.2 trillion of additional automatic cuts in domestic and defense spending or revenue increases over the coming decade after a “Super Committee” of House and Senate Democratic and Republican negotiators couldn’t agree on how to make those savings.
The legislation had other benefits, such as allowing the fiscal 2012 appropriations process to move ahead and avoiding the threat of a government shutdown. Congress was able to enact all 12 spending bills for fiscal 2012, an unusual feat.
“Rather than trying to tear down the BCA, we should be holding it up as an example of what can be accomplished if we are willing to set aside our differences and work hard to find bipartisan solutions to our nation’s challenges,” Conrad and Inouye said in their letter to Boehner.