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Ryan’s plan for Medicare, Medicaid is game-changer in benefits debate

- The Washington Times - Tuesday, April 12, 2011

As the House begins debate this week on the Republicans' budget plan for the upcoming fiscal year, provisions that call for massive cuts to Medicare and Medicare will dominate - a precursor to the battles over entitlement spending expected to define the 2012 elections.

House Budget Committee Chairman Paul Ryan ramped up a contentious battle regarding the nation's health care system by proposing in his 2012 budget blueprint last week to end Medicare's status as a fully guaranteed benefit for seniors.

The Wisconsin Republican's plan also calls for deep cuts to the Medicaid health care program for the poor and disabled.

Democrats said it would dismantle the popular entitlement programs, leaving many seniors, the poor and disabled without proper health care. Republicans countered that the expensive taxpayer-subsidized programs soon will collapse on their own without drastic cuts and reforms.

Under Mr. Ryan's proposal, the government no longer would cover seniors' health care expenses as Medicare has since the 1960s, shifting more of the rising medical costs from the government to the program's recipients.

Starting in 2022, Medicare would convert to a voucher-style system in which the government would provide payments for private health insurance plans. Seniors covered by Medicare at the time would be allowed to stay.

The payment scheme would be adjusted so that wealthier beneficiaries would receive a lower subsidy, the sick would receive a higher payment if their conditions worsened and lower-income seniors would receive additional assistance to cover out-of-pocket costs.

The plan in some ways is similar to the government-regulated private insurance "exchanges" established in President Obama's 2010 health care law - a system vilified by Republicans as "socialized medicine." But seniors wouldn't be required to participate in the plan.

A Congressional Budget Office analysis shows Mr. Ryan's plan would leave in place an estimated $500 billion in Medicare cuts included in the president's health care law. Republicans also criticized those cuts during the 2010 campaign season.

As for Medicaid, Washington would send each state a lump sum to spend on medical care, nursing homes and other health services for the poor and disabled.

While all sides of the political spectrum agree that reforms are needed to keep the popular taxpayer-subsidized programs viable, the Ryan plan has received mixed reviews - lauded by some as an ambitious approach to drive down costs and criticized by others as achieving those goals on the backs of vulnerable Americans.

"If you're a Medicare or Medicaid enrollee, this plan is very bad news indeed," said Henry J. Aaron of the Brookings Institution, a liberal-leaning Washington think tank.

An analysis for the Ryan plan by the nonpartisan Congressional Budget Office shows that by 2030 Medicare recipients would be responsible for 68 percent of their medical costs, with the government picking up the other 32 percent. Under current law, most beneficiaries are responsible for about 25 percent to 30 percent of their medical bills.

"This is a fundamental change in the program in that it's providing a payment for the cost of insurance and limited the government's share in order to reduce how much federal government is spending," said Tricia Neuman, vice president of the Kaiser Family Foundation, a nonprofit health care foundation.

"The flip side is it shifts costs to seniors."

But supporters of the Ryan plan say that there is so much waste, redundancy and duplication of services in Medicare and Medicaid that significant cuts wouldn't hurt the level of care.

"Medicare is so incredibly wasteful that a key part of providing better health care to seniors is spending less on them," said Michael F. Cannon, director of health policy studies at the Cato Institute, a free-market Washington think tank. "That's how far into the land of too much health care we are, it's how wasteful Medicare is."

Mr. Cannon said the CBO figure, while accurate, is misleading because seniors wouldn't be spending money on unnecessary medical procedures, prescriptions and doctor visits - extras critics say are common because of Medicare's guaranteed doctor reimbursements.

Seniors "are not going to be shelling out that much more out of pocket" than under the current Medicare plan, he said. "They'll just decide to go without some stuff that they don't need, including choosing another health plan that help them avoid waste in care."

The president will lay out a Democratic alternative that includes entitlement programs during a scheduled Wednesday address to the nation.

Because Mr. Obama mostly ignored entitlement reform in his 2012 budget blueprint, some critics have suspected his strategy was to wait until the GOP addressed the issue before criticizing them for drafting an unworkable plan.

"What remains to be seen is on Wednesday night is the president going to say, 'Hey, I'll work with you guys, I just wanted to see where you were going to come out first?' " Mr. Cannon said. "Or is he going to vilify them and use it as a campaign issue and bludgeon Republicans?"

c This article is based in part on wire service reports.

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