Sunday, March 25, 2012

CBO: Ryan policies would cut Medicare spending, increase number of uninsured

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By Sam Baker

Medicare benefits would likely shrink under Rep. Paul Ryan’s (R-Wis.) latest proposal, the nonpartisan Congressional Budget Office said Tuesday.

The budget office also said the number of people without health insurance could be “much higher” under Ryan’s plan because it would repeal President Obama’s healthcare law.

Ryan’s Medicare plan would convert some of the program’s funding into subsidies for private insurance. Seniors could choose between the traditional single-payer program or a private plan.

Ryan argues consistently that healthcare spending will eventually swallow the entire economy unless Congress makes bold changes to Medicare and Medicaid. Democrats say Ryan’s plan would shift costs to seniors without doing anything to actually control those costs.
CBO said it’s possible that seniors would face higher costs under the Ryan plan, and said other possible side effects include “reduced access to health care; diminished quality of care; increased efficiency of health care delivery; less investment in new, high-cost technologies; or some combination of those outcomes.”
The budget office did not make specific projections about any of those possibilities, though it noted that some would “necessarily” be heightened under the Ryan plan because federal spending would be so much lower.

CBO emphasized that its initial analysis of Ryan’s policies is not an official cost estimate. The loose estimate was not based on firm legislative proposals, but rather on policy scenarios that Ryan’s staff asked CBO to evaluate. CBO also used Ryan’s assumptions of government revenue and spending.

CBO compared those scenarios to its own estimates for the existing Medicare program, including estimates that assume Congress will continue to avoid certain automatic Medicare cuts. By 2030, average government spending on each new Medicare enrollee would be about $2,000 less under Ryan’s plan than the status quo. In 2050, Medicare’s per-person spending would be about 42 percent lower under Ryan’s proposals.

Under the same assumptions — the existing program remains in place and Congress doesn’t let certain cuts take effect — Medicare would account for 5 percent of the gross domestic product in 2030. The Ryan plan would cut that to about 4.25 percent, CBO said.

Ryan’s new Medicare program would not take effect immediately, so its savings would grow over time as more seniors enter the new system. By 2050, according to CBO, Ryan’s plan would hold Medicare spending to 4.75 percent of GDP, compared with 7.25 percent if the existing program remains intact.

Ryan’s budget proposal also calls for deep cuts to Medicaid and the Children’s Health Insurance Program. And it would repeal President Obama’s healthcare law, which provides subsidies to help low-income people buy private insurance.

The proposals that Ryan asked CBO to analyze would cut spending on those three programs in half over the next 10 years. Federal spending would fall by more than 75 percent by 2050.

CBO said it’s hard to predict how states would respond to Ryan’s proposals for Medicaid, which would determine how many people the program would cover. But the number of uninsured would be “much higher” without the subsidies in Obama’s healthcare law, according to CBO’s analysis.

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