GOP Proposals on Medicare Could Shift Costs to
Senior Citizens, other Beneficiaries
This is week when Republicans show their hand for
cutting Medicare, Medicaid; yesterday House Budget Chairman Paul
Ryan (R-Wis) gave a glimpse of what's to come; GOP hits elderly in
Mary Agnes Carey, Kaiser Health News Staff Writer
Also Slash States' Spending on Elderly
Texas Dishonors Elders
While the Republicans in Congress
are attacking programs for seniors from Washington, the GOP is
also making big cuts in the states. The Texas House, for
example, on Sunday slashed funding for nursing homes (Abilene
Reporter-News). Texas also slashed funding for public
schools, college aid (San
Antonio Express-News). The AARP, however, said the House
bill “dishonors Texas’ elders.” (Read statement below in
April 4, 2011 - Amid the buzz
about a possible government shutdown over this year's budget looms a
more difficult question: What to do about entitlement programs,
Politicians of all stripes
have been decrying the nation's soaring debt and say that taming
entitlements is crucial to curbing spending. So far, President Barack
Obama hasn't proposed big changes.
But some Republican leaders
have called for a major overhaul of Medicare, a $520 billion program
that covers nearly 47 million older and disabled Americans. Given the
political peril involved in tampering with Medicare, the question is:
How serious are the Republicans?
The answer: Plenty serious.
This week, House Budget
Committee Chairman Paul Ryan of Wisconsin unveils his proposed budget
for 2012. In an appearance on
Fox News Sunday, Ryan refused to give final details of his proposal
but said he would dramatically slow the growth rate of Medicare by
adopting a fundamental change called "premium support." Ryan also said
he would propose turning Medicaid, the state-federal program for the
poor, into a
block grant program. Altogether, he said, his budget save more than
$4 trillion over 10 years.
House Majority Leader Eric
Cantor, R-Va., said last week: "Most of us, 54 and younger, are not
going to be able to enjoy the same type of programs that are in
Slashing funding by one-third would deny critical services,
putting seniors’ lives at risk
AUSTIN, TEXAS -- The preliminary budget just passed by the House
Appropriations Committee would balance the state's finances on
the backs of Texas’ most vulnerable seniors, AARP officials said
today. House Bill 1 would cut one-third or more from the current
funding levels for critical long-term care programs, including
cost-effective community care services and nursing homes.
Ollie Besteiro, President of AARP Texas, said the proposed cuts
to Medicaid-funded nursing homes and community-based long term
care are unacceptable. Under the proposed budget, home health
care agencies would struggle to even pay minimum wage to
attendants, causing many agencies to go out of business. Since
two-thirds of Texas seniors in nursing homes rely on Medicaid to
partially fund their care, many nursing homes would struggle
under the cuts to hire quality staff or to even stay in
“Long term care support for our seniors, already stretched to
the limit, simply cannot withstand cuts of this magnitude,”
Besteiro said. "It adds insult to injury."
Besteiro said that for the more than 125,000 seniors in
community-based long-term care services – such as the Primary
Home Care Program and the Community Attendant Services – the
funding cuts would severely reduce the supply of home care
workers, pushing more frail seniors into inadequately funded
"Texas has done a good job of developing cost-effective
alternatives to nursing home care," added Besteiro. "Since these
community programs cost less than a third of nursing home care,
the rate cuts proposed by the committee make no sense at all,
either from a financial or human perspective."
Direct care workers in Texas often make about minimum wage for
what is typically very demanding and intensely personal work.
Because of this, it will be much more difficult for seniors who
need care at home to find reliable attendant services, funneling
them into already underfunded nursing homes. Texas already pays
the second lowest nursing home reimbursement rates in the
country and AARP maintains there is a strong relationship
between the number, skill level and longevity of nursing home
staff and the safety and dignity of Texans in nursing homes.
“The proposed Medicaid provider rate cuts would force nursing
homes to cut staff, placing the lives of more than 54,000
vulnerable Texas nursing home residents at risk,” Besteiro said.
Earlier this year, AARP surveyed its members on the state budget
shortfall and found that three out of every four members (76%)
oppose cutting health and human services, including long-term
care services for older persons. The opposition to such cuts
came across party lines (Democrats, 77%; Independents; 68 %;
Republicans, 57%). The survey of 1,501 members has a sampling
error of plus or minus 2.5%.
With a presidential election
coming up next year, some observers say it's unlikely anything big will
happen involving entitlements before 2013, at the earliest, but that
won't stop the debate. Here is a guide to some of the
ideas being discussed, especially in Republican circles, on changing
RAISING THE ELIGIBILITY
The age for full Social
Security benefits is now 66 and will reach 67 in 2027. Some analysts –
including Ryan and Alice Rivlin, who was budget director for President
Bill Clinton -- argue that it makes sense to slowly raise the Medicare
eligibility age from 65 to 67. People are living longer and retiring
later so they don't need Medicare as early as their parents did, they
How Much Would It Save?
According to an
analysis by the Congressional Budget Office, gradually increasing
the Medicare eligibility age would save the federal government $125
billion over the next decade.
The Gain: People who
are still working at 65 and get health insurance at work could stay on
their employers' plans for another two years, thus slowing Medicare
spending. Assuming the health law survives, people without job-related
insurance would have more alternatives than they do now: They could buy
coverage -- even if they are sick -- on the new exchanges being set up
under the health law and may qualify for subsidies to help purchase
Or, if they are lower income,
they might be eligible for Medicaid, the state-federal program for the
poor that will be expanded sharply in 2014. A gradual phase-in of the
higher age requirement means that current beneficiaries and those near
retirement would not be affected. "The impact of that takes a long time
to hit," said Joe Antos of the conservative American Enterprise
The Pain: Health care
costs that are now borne by Medicare for people 65 and 66 would be
shifted to individuals, employers and states, according to a new
report by the Kaiser Family Foundation. (KHN is an editorially
independent program of the foundation.)
If the health care law were
repealed, some people without employer insurance might not be able to
afford coverage or get insurance at any price, especially if they had
pre-existing medical conditions. Those people might delay needed
treatments, which could eventually increase Medicare's cost to treat
"MORE SKIN IN THE GAME":
Republicans, and some
Democrats, have long thought that spending could be slowed if patients,
including Medicare beneficiaries, had "more skin in the game" – in other
words, put up more of their own money for health services. Some have
suggested raising seniors' share of the Medicare Part B premium (which
covers doctor visits and other outpatient services) from 25 percent to
35 percent and imposing co-payments for home health services or the
first 20 days of a skilled nursing facility stay.
How Much Would It Save?
The home health co-payment would save $40 billion over the next decade
for the federal government; the skilled nursing co-pay would save $21.3
according to the CBO. Increasing the beneficiary's share of Part B
would save $241 billion over 10 years.
The Gain: Raising
beneficiaries' share of Part B premiums would bring the program closer
to its original 50-50 split between the federal government and
beneficiaries, proponents say. And greater cost-sharing for services
would discourage overuse of care, they add.
The Pain: Opponents say
beneficiaries already spend a big chunk of their incomes on medical
care. In 2006, one in four spent 30 percent or more of their incomes on
health expenses; one in 10 spent more than half, according to the Kaiser
Requiring seniors to pay more
could discourage people from getting needed medical care. "When you
think about this population, which is sicker and uses health care more,
what does it mean that they have to pay more and are living on a fixed
income?" said Vicki Gottlich, senior policy attorney with the nonprofit
Center for Medicare Advocacy.
MEDICARE VOUCHERS OR
Rep. Ryan, in a
blueprint for entitlement overhaul he wrote in 2008 and continues to
update, calls for a sharp, fundamental change: Transforming Medicare
into a voucher program for future beneficiaries, starting with people
who are now 54 and younger. Instead of being entitled to a specific
package of benefits, beneficiaries would be given a voucher to spend on
On Fox, however, he said he
would instead propose "premium support" plan to overhaul the seniors'
program. Ryan says that under that proposal, beneficiaries would choose
Medicare coverage they like and the government would pay a specific
percentage toward the premium. The beneficiary would be responsible for
In his comments, Ryan drew a
sharp distinction between vouchers and premium support. There are
technical differences. For example, vouchers tend to be a specific
dollar amount with growth pegged to an inflation gauge or the growth in
the economy plus one percentage point. Under premium support, enrollees
would likely get a certain percentage of their premiums covered by the
government. But how different the two approaches are depends on how they
are designed. They are both geared toward curbing government spending.
How Much Would It Save?
says Ryan's earlier Medicare proposal would reduce federal spending,
it has not estimated a specific dollar amount.
The Gains: Ryan has
said that switching to vouchers would give Medicare financial stability.
His goal would be same with premium support. The voucher idea has also
gained the backing of Rivlin, who is now a senior fellow at the
The Pain: Critics see
danger ahead. Most voucher proposals peg the growth in value of the
voucher to general inflation or economic growth. But the cost of
Medicare benefits is likely to be higher. That raises concerns that
costs will slowly be shifted to beneficiaries. Some health analysts say
the same could occur under a premium support model, depending on how
it's designed. Ryan says, under his plan, wealthy beneficiaries would
pay more for Medicare than less-affluent seniors.
DEDUCTIBLE AND MEDIGAP COVERAGE:
Medicare charges beneficiaries
separate deductibles for their hospital care (Part A) and for outpatient
and physician services (Part B). This year, in Part A, beneficiaries pay
$1,132 for each hospital stay, and enrollees also pay daily co-payments
for extended hospital and skilled nursing care. For Medicare Part B, the
annual deductible this year is $162. According to CBO, 30 percent of
beneficiaries in Medicare's fee-for-service program have supplemental
insurance known as Medigap coverage to help with those costs.
Some proposals, including one
advanced by the president's deficit panel chaired by former GOP Sen.
Alan Simpson and former Clinton chief of staff Erskine Bowles, have
suggested combining the Part A and B deductibles into one $550 yearly
deductible. That could reduce beneficiaries' costs for hospital care but
be more expensive for seniors who mostly use Part B. In addition, some
proposals suggest a 10 to 20 percent co-payment for all services until
beneficiaries reach a catastrophic limit. Others argue for making that
$550 deductible ineligible for Medigap coverage so that beneficiaries
are responsible for covering the cost of those initial services.
How Much Would It Save?
Instituting the change in deductibles, co-pays and Medigap rules would
save about $93 billion over the next decade, CBO
The Gain: Medicare
would save money, but not just because beneficiaries were putting up
more of their own. If Medigap plans were less generous, analysts believe
beneficiaries would be more careful about spending and that could help
lower Medicare costs.
The Pain: Once again,
this proposal would shift costs to individuals.
The head of the House Budget
Committee, Rep. Paul Ryan, says President Barack Obama is "punting on
the budget and not doing a thing to prevent a debt crisis." Ryan tells
"Fox News Sunday" that GOP budget-writers are looking at cutting $4
trillion-plus in spending over the next decade (Daniel, 4/3).
CNN: House GOP Budget To Call For Big Changes To Medicare, Medicaid
The plan, to be released
Tuesday, calls for a controversial overhaul of Medicare, the health care
program for seniors, and imposes deep cuts in Medicaid, which provides
health benefits to low-income Americans, according to House Republican
sources with knowledge of the proposal. ... The GOP aims to save
billions of dollars in revamping Medicare, a large contributor to the
massive federal deficit and debt (Bash and Walsh, 4/3).
Fox News: GOP Budget Plan to Cut More Than $4 Trillion Over Decade,
Rep. Ryan Says
[The proposal] would serve as
the Republicans' official response to President Obama's proposed $3.7
trillion budget for 2012. ... Ryan said Sunday that the GOP proposal
would reform the tax code but focus on spending cuts and entitlement
reform to achieve savings. Though the plan is expected to mostly leave
Social Security reform for another day, Ryan proposed big changes to
Medicare and Medicaid. For Medicaid, he called for a system of block
grants to the states, so the states can "customize" coverage for the
Responding to criticisms that
he is cutting and not reforming health care entitlements, Ryan says
"Yes, we do increase and grow Medicare and Medicaid spending, albeit not
the at the pace they're growing at [now], because they're
unsustainable." (Fernholz and Madigan, 4/3).
Politico: Ryan On GOP Budget: We Are Giving Dems A Weapon
Ryan elaborated on the
Republican-proposed reform to Medicare reform, distinguishing it from
his Roadmap voucher program as "more along the lines of what I proposed
with Alice Rivlin, the Democrat in the Obama administration, which is a
premium support system. It’s very different from a voucher system…it
works like the Medicare prescription drug benefit similar to Medicare
advantage that we have today, which means Medicare puts a list of plans
out there that competes for your business and seniors pick the plan of
their choosing, and then Medicare subsidizes the cost of that plan,"
while not changing the entitlement program for those 55 or
older (Cogan, 4/3).
Under his plan, Mr. Ryan said,
Medicare would offer a "list of plans out there that compete against
each other for your business, and seniors pick the plan of their
choosing. And then Medicare subsidizes that plan" (Barkley, 4/3).
Reuters: Factbox: Republican Ryan's earlier budget plan has clues
A bold proposal by Ryan last
year, dubbed a "roadmap for reform," advocated keeping federal taxes at
no more than 19 percent of gross domestic product ... Ryan's [earlier]
plan would de-link healthcare from employment, where most U.S. citizens
now get their health insurance, by repealing the tax exclusion for group
health insurance. It would give individuals and families a refundable
tax credit to buy insurance (Dixon, 4/3).
The plan ... will be the most
ambitious Republican effort since the November elections to put a
conservative stamp on economic and domestic policy. It involves far
greater stakes for Congress and for President Obama — substantively and
politically — than the current fight over spending cuts. ... House
Democrats, who are preparing an alternative budget, say the Republican
approach would cut off aid to some of the neediest Americans ... Some
Republicans had wanted to delay putting forward Mr. Ryan’s plan until
this year’s negotiations were completed. They were worried that
introducing another set of proposals might confuse the debate and give
Democrats two targets to exploit in their effort to persuade voters that
Republicans were going too far in slashing programs (Hulse, 4/2).
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