CBO: Seniors would pay much more for Medicare under Ryan plan

Original Link: http://www.mcclatchydc.com/2011/04/06/111639/cbo-seniors-would-pay-much-more.html

By Julie Appleby, Mary Agnes Carey and Laurie McGinley

Seniors and people with disabilities would pay much more for Medicare under a new plan by Republicans in the House of Representatives that's aimed at curbing the nation's growing budget deficit, a Congressional Budget Office analysis shows.

For example, by 2030, typical 65-year-olds would be required to pay 68 percent of the cost of their coverage, which includes premiums, deductibles and other out-of-pocket costs, according to the CBO. They'd pay 25 percent under current law, the CBO said.

The GOP budget proposal also would raise the eligibility age for the popular program and repeal big chunks of the health care overhaul law that Congress approved last year.

House Budget Committee Chairman Paul Ryan, R-Wis., unveiled the fiscal 2012 budget proposal Tuesday.

Coming amid growing concern over the federal budget deficit, it's part of an overall GOP effort to reduce federal spending by at least $5 trillion over the coming decade.

"Washington has been making empty promises to Americans from a government that is going broke," Ryan said. Unless something is done, "the red ink is going to destroy our economy."

Besides overhauling Medicare, his 10-year budget proposal would give states more control over Medicaid, the state-federal program for the poor, but it would cut the amount that states receive from federal coffers for that program by hundreds of billions of dollars over a decade.

Americans also wouldn't be required to buy health insurance, and employers wouldn't have to offer it. States wouldn't be on the hook to set up new insurance marketplaces as they are under the 2010 health care act, which Ryan would scrap.

The proposed changes drew criticism from Democrats and advocates for the elderly and the poor. Many zeroed in on the changes to Medicare. The Ryan proposal would do away with the traditional Medicare program and shift beneficiaries into private insurance plans in 2022 with federal subsidies under a model called "premium support."

Medicare enrollees would get a set amount from the government to purchase private plans. Those plans would cost considerably more than traditional Medicare, the CBO said, partly because private plans pay hospitals, doctors and other providers more and have higher administrative costs. At the same time, enrollees would pay a higher percentage of the overall cost of their coverage.

"What CBO is saying is beneficiaries would pay much less under traditional Medicare for two reasons: The overall cost of the plan would be much cheaper, and they would pay a lesser share of that less-costly plan," said Edwin Park of the Center on Budget and Policy Priorities, a liberal research center.

Ryan's proposal, dubbed "The Path to Prosperity," also would scrap the health care law's Medicaid expansion, repeal a voluntary long-term-care insurance program and cancel an advisory board the law created to recommend changes to Medicare spending.

Ryan appears to retain the health law's Medicare payment cuts to hospitals and Medicare Advantage plans.

Chip Kahn, the president and chief executive officer of the Federation of American Hospitals, which represents for-profit hospital and health care systems, said Ryan's plan to repeal the law's coverage expansions but keep the provider cuts "will severely impact access to essential medical care for seniors, as well as the lowest-income Americans."

In last November's elections, Republicans criticized Democrats for the Medicare provider cuts, saying they'd jeopardize seniors' access to care.

"They've taken those savings — the same ones that they've criticized — in their plan," said Rep. Chris Van Hollen of Maryland, the top-ranked Democrat on the House Budget Committee, adding that "the health care reforms enacted in the Affordable Care Act, which they say they're repealing, they're not repealing at all."

Ryan said Wednesday in an emailed statement, "Those who criticize plans to save Medicare, while offering none of their own, only ensure that the program continues on a path to insolvency. And those who compare plans to save Medicare with the status quo are comparing real solutions with a false reality. In its analysis of 'The Path to Prosperity,' the nonpartisan Congressional Budget Office confirms that Medicare as currently structured is unsustainable."

The CBO highlighted key features of the proposal, based on information from Ryan's staff and its own analysis, including:

•Starting in 2022, the eligibility age for Medicare would increase by two months per year until it reached 67 in 2033.

•The so-called "doughnut hole" in the Medicare prescription-drug benefit — a period in which beneficiaries pay 100 percent of drug costs — would continue under the Ryan plan. The health law passed last year calls for the coverage gap to end by 2020.

•The private plans offered to Medicare enrollees starting in 2022 would have to comply with a standard for benefits set by the Office of Personnel Management, and would have to charge the same premiums for all enrollees of the same age.

•The premium-support payments would vary depending on the health status and incomes of the beneficiaries. Enrollees who are sicker than average, for example, would get larger payments. Wealthy enrollees would get less: Those among the top 2 percent of earners would get 30 percent of the premium support, while the next 6 percent would get half.

The CBO report said that the average government payment for a 65-year-old in Medicare in 2022 would be $8,000. In each successive year, it would increase to reflect inflation and the enrollee's age. Patients' share would rise sharply, since health care costs are expected to continue to increase faster than the inflation rate. Higher-income beneficiaries would get lower premium-support payments.