GOP Proposal for Radical Medicare Change Passes in House

April 15, 2011

April 15, 2011 — After finishing its battle over the fiscal 2011 budget yesterday, Congress promptly returned to the ring today for the fight over the 2012 budget, with the Republican-controlled House approving a controversial plan that would turn Medicare into a subsidy program.

The measure, which passed 235 to 193, faces almost certain defeat in the Democratic-controlled Senate. President Barack Obama, who wields a veto pen, is on record opposing it as well.

House Budget Committee Chairman Rep. Paul Ryan, R-Wis. gestures during a news conference on Capitol Hill in Washington, Wednesday, April 13, 2011. Source: AP Photo/Carolyn Kaster

The business of Capitol Hill continues to be about deficit reduction. Yesterday, both the House and Senate passed a measure that funds the government through the end of fiscal 2011 and cuts $38 billion from current spending in the process. The 2012 budget resolution approved today by the House is even more ambitious. In fiscal 2012, which begins October 1, federal spending would decrease by $110 billion, using a baseline determined by the nonpartisan Congressional Budget Office. Over the course of 10 years, the GOP plan would cut outlays by $5.8 trillion — relative to current spending policies — and the deficit by $4.4 trillion.

The budget resolution, authored by Rep. Paul Ryan (R-WI), the chair of the House Budget Committee, dries up red ink in part by giving Medicare beneficiaries who turn 65 in 2022 and beyond a subsidy to buy health coverage from a private insurer. The Congressional Budget Office states that this change would shift more costs to seniors, who would spend 2 to 3 times more on healthcare than they do now. The Ryan plan also gradually would raise the eligibility Medicare age from 65 to 67 by 2033.

In addition, Ryan would trim federal contributions to state Medicaid programs by turning them into block grants, which would give states more leeway in running their programs.

Obama introduced his budget proposal for fiscal 2012 in February and followed up this week with a long-range plan that would reduce the deficit by $4 trillion over the course of 12 years or less. Except for their deficit-reduction goals, the Ryan and Obama proposals contrast sharply. Unlike Ryan, Obama would end the Bush-era tax cuts for the wealthiest Americans, and he also would preserve Medicare and Medicaid in their present forms, while seeking major cost savings in both programs.

Meanwhile, a bipartisan group of 6 US senators calling themselves the Gang of Six is set to release a budget blueprint that will likely stake out middle ground between Obama and Ryan. The gang consists of Sen. Tom Coburn (R-OK), Sen. Mike Crapo (R-ID), Sen. Saxby Chambliss (R-GA), Sen. Dick Durbin (D-IL), Sen. Kent Conrad (D-ND), and Sen. Mark Warner (D-VA). All but Warner and Chambliss served on the fiscal commission that Obama created last year to attack the problem of federal debt. Eleven of its 18 members supported a package of spending cuts and tax increases that would reduce the deficit by $3.9 trillion through 2020.

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