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News June 2012

Washington Watch

The Budget Battles Begin: Seniors Firmly in the Crossfire

By Alan M. Schlein

Depending on how you see it, the Ryan plan is either a path to prosperity or a road to ruin. The Democrats say it destroys “Medicare as we know it,” and the Republicans say you may not like it all, but their plan will get the country to fiscal survivability, while the Democrats push the tough deficit-balancing issues off into the future.

c_stingerjune12bWASHINGTON –The Republican-controlled U.S. House of Representatives approved Wisconsin Republican Rep. Paul Ryan’s deficit-cutting budget plan recently, including a dramatic revamping of Medicare to curb costs for future retirees, but the measure faces certain death in the Democratic-controlled U.S. Senate.

While it will not be enacted into law, the Ryan plan will frame the two parties’ election-year debate on fiscal issues. The plan cuts $5.3 trillion over the next decade — entirely through deep cuts in entitlements and agency spending.

The intensity of the House floor debate crystallized the nation’s political divide and forecasts the political battle in the upcoming November election. What is increasingly likely as a result of the partisan nature of the fight, are the prospects of a government shutdown at year’s end over an array of scheduled spending cuts and tax increases which will happen unless a budget deal is agreed to.

Even with the election in the crossfire, the fiscal 2013 budget fight is really about governing after the November elections. Each side is counting on the fall elections to retain or take control of the White House and to gain or retain control of Congress, in order to give them enough political power to push through their partisan solution to the fiscal mess. Instead of working toward a middle-ground compromise, both parties simply want to steamroll the other side.

Depending on how you see it, the Ryan plan is either a path to prosperity or a road to ruin. The Democrats say it destroys “Medicare as we know it,” and the Republicans say you may not like it all, but their plan will get the country to fiscal survivability, while the Democrats push the tough deficit-balancing issues off into the future.

The Ryan budget plan for 2013, which proposes to cut taxes and slow the growth of federal debt at the expense of social programs including Medicare and Medicaid, won approval on a strict party-line vote of 228-191. Ten Republicans voted against it, largely because these fiscal conservatives wanted even deeper spending cuts than Ryan’s budget called for.

Ryan would convert Medicare from a system that covers a defined set of benefits – no matter the cost to a premium support model – that would provide a set amount of money for future Medicare beneficiaries, those currently under the age of 55. They would purchase either a private health plan or the traditional government-administered program through a newly created Medicare exchange.

House approval of the budget proposal came within hours of the U.S. Supreme Court’s three days of oral arguments on the constitutionality of the Affordable Care Act, the Obama administration’s health care reform law at the end of March. The Supreme Court will decide on the constitutionality of the individual mandate and the overall health care reform law in June.

That decision will throw a grenade in the middle of the political campaign regardless of which way the High Court decides. But it will hardly be the only major health care fight in this fall’s elections.

Seniors in the Crosshairs

The budget battle will focus on seniors and near seniors who could face deep cuts in both Medicare and Medicaid. Ryan bristles at the suggestion that his plan would unravel the social safety net. He says it is unraveling of its own accord. “The poor would be hurt worst in a debt crisis,” he says, when spending cutbacks would be sudden, drastic and indiscriminate. Reform is required to “make the safety net work, to make it unsustainable”

Democrats see it completely differently. They counter that Ryan’s plan –which has been warmly embraced by Republican presidential frontrunner Mitt Romney, would cripple vital programs.

Ironically, Democrats point out, the recent House budget vote coupled with another on repealing the health care law’s only Medicare-spending backstop means Republicans have actually voted to make Medicare's fiscal woes worse.

Early in March, the House voted to repeal a Medicare cost-control board that has yet to be named but is called for in President Barack Obama’s health care overhaul law. The GOP has branded the Independent Payment Advisory Board (IPAB) a rationing panel, some use the phrase “death panels,” and Republicans hope the symbolic 223-181 vote to repeal it will persuade seniors that they, and not the Democrats, are the best stewards of Medicare.

But this vote, coupled with the budget ones, turn the tables on the GOP, which has long accused Democrats of being out-of-control spendthrifts. Repealing IPAB, which is charged under the new health law with finding ways to cut Medicare costs without sacrificing quality or coverage, leaves Republicans in the unusual position of supporting unlimited entitlement growth, even though they paid for the IPAB repeal by medical malpractice caps that would reduce eventually health care spending.

The Ryan budget plan would also affect poor seniors by deeply cutting the Medicaid healthcare program for the poor by turning it into block grants for states, and it reprises his effort last year to prevent Medicare from "going bankrupt."

Ryan’s new budget would provide a set amount of money for future Medicare beneficiaries – those currently under the age of 55 --- to purchase either a private health plan or the traditional government-administered program through a newly created Medicare exchange. That would begin in 2023.

All plans, including traditional Medicare, would submit bids for how much they would charge to cover a beneficiary's health care costs. The government would pay the full premium for the private plan with the second lowest bid, or for traditional Medicare, whichever is lower. Beneficiaries would have to pay the difference if they chose a plan that set rates higher. There could be one less-expensive plan option, and beneficiaries who chose it would get a rebate for the difference.

Private health plans would have to be at least actuarially equivalent to the coverage offered in the traditional, government-administered option. That means that the benefits could vary, but the value of the plan would have to remain the same.

When Ryan proposed a similar budget idea last year, he was bombarded with criticism for proposing to change Medicare as we know it. Last year’s plan would have left Medicare intact for people 55 or older but dramatically changed the program for everyone else by privatizing it and providing government subsidies. Under that plan, future beneficiaries would be given a credit and invited to shop for an approved plan on a Medicare insurance exchange.

This year, Ryan’s budget has one slight change – it would allow seniors to choose to stay in traditional Medicare as one of the plan options they can select. Ryan agreed to that change after working with Oregon Democratic Senator Ron Wyden in an effort to develop a bipartisan Medicare reform proposal.

Ryan 2.0, which is what most people call the new Ryan budget version would keep the current Medicare system intact for current seniors but would gradually hike the eligibility age from 65 to 67. Workers younger than 55 would receive a government payment to either apply toward private insurance or to a government-run program similar to today’s Medicare. As for Medicaid, the federal government would no longer pay a fixed portion of states’ costs and would instead provide them a fixed dollar amount to be indexed annually for inflation and population growth. Food stamp, welfare, and farm subsidy programs would be cut by about $2 trillion.

Republicans acknowledge the House-approved budget is in many ways a campaign document rather than a bill that might become law this year. Ryan angered Democrats by including a proposal to repeal Obama's health-care law in his budget.

Rhetorical Standoff

A slice of the lengthy House floor debate demonstrates the politically-charged demagoguery on both sides of the issues. The Republican budget would cap the growth of Medicare, and Democrats say that guarantees the program won't keep up with the annual increase in health-care costs, leaving the elderly an ever-bigger share of the expense and risk.

"I have a 98-year-old mother," said Rep. Rosa DeLauro, D-Conn. "We're going to hand her a voucher and say, 'Go figure it out'? That's what you're saying: 'Go figure it out' on Medicare. Unbelievable."

Republicans called that an unfair charge. Medicare, they say, is on perilous footing unless it is completely restructured. They suggest that their plan is a much better option than President Obama’s creation of the IPAB Board, which sets up a panel of experts to cut Medicare’s costs without cutting coverage or quality.

"Your mother will in no way be affected by the budget we're voting on today," Rep. Rob Woodall (R., Ga.) said to Ms. DeLauro. "The alternative is to take our 98-year-old mothers and turn them over to IPAB."

 

Also contributing to this report were: Reuters, the Washington Post, the Christian Science Monitor, the Wall Street Journal, Associated Press, PBS Newshour, Roll Call, the Fiscal Times and Kaiser Health News.

Alan Schlein has been covering the national Washington beat for Senior Wire News Service for over two decades.

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