Background

House Republicans introduced a budget resolution that fundamentally restructures Medicaid and Medicare, and leaves open the possibility of future assaults on Social Security. The Ryan budget converts Medicaid into a block grant to the states, resulting in deep cuts to vital services that seniors and individuals with disabilities depend. Starting in 2022, Medicare would cease to exist in its current form and become a voucher program. Ryan's plan also raises concerns about the solvency of Social Security.

Impact of 2012 House Budget on Medicaid

• At least 15 million Americans could lose Medicaid coverage under the Ryan block grant. Medicaid offers essential healthcare coverage for nearly 60 million of the most vulnerable Americans including seniors, individuals with disabilities, low-income families and children. It is the nation's main source of payment for long term care, covering a million nursing homes residents and paying for 41 percent of all long term care expenditures in the country.
• Optional Medicaid services, such as home- and community-based care, will be scaled back, if not eliminated based on the priorities and the budget constraints facing the states. Medicaid provides assistance with co-pays, deductibles and long term care services for low-income Medicare beneficiaries age 65 and older. About one in six Medicare beneficiaries are also covered by Medicaid. Medicaid also helps pay for services not covered by Medicare, including long term care services such as home- and community-based services.
• The proposal would cut Medicaid by $1 trillion over the next decade by turning it into a block grant to the states and repealing the Affordable Care Act. Currently, federal Medicaid financing is tailored to provide coverage to eligible populations, whether the size of those populations grows or shrinks, making it responsive to economic conditions. If a state's Medicaid expenditures increase due to an economic downturn when more families rely on Medicaid, the federal government shares in the increased costs. Under a block grant, the federal government would provide each state with a fixed dollar amount and states would be responsible for all remaining Medicaid costs, forcing state and local governments to either slash benefits or raise taxes to cover the shortfall. States are more likely to cap enrollment, scale back eligibility, and reduce benefits rather than raise taxes. Making matters worse, the block grant would be adjusted each year by inflation, far below the level of healthcare cost growth, placing greater pressure on states to reduce eligibility and benefits.

Impact of Ryan 2012 House Budget on Medicare

• 20 million near-elderly will not have Medicare when they retire. Starting in 2022, Medicare will be eliminated for new beneficiaries and converted into a voucher program. There are more than 20 million near-elderly Americans who are now ages 50-54 who would not get Medicare when they retire but instead only get a coupon to purchase private health insurance. This approach would transfer control of Medicare to private health insurance companies, essentially ending Medicare as we know it. Coverage under these plans will actually cost more due to insurance companies' considerably higher administrative costs, but will provide no more value to beneficiaries.
• Voucher proposal will double healthcare costs for seniors. The voucher fails to keep pace with increases in the cost of healthcare. As a result, seniors will be forced to pay even higher premiums to access the same benefits they would receive under the current system. According to the Congressional Budget Office (CBO), a typical senior will spend more than twice as much of his or her own income on healthcare services under the Ryan proposal as compared to the current Medicare system.
• 65- and 66-year-olds lose Medicare and face a discriminatory private insurance market. Ryan's plan raises the eligibility age for Medicare from 65 to 67, at the same time it repeals the protections in the Affordable Care Act for individuals approaching Medicare eligibility. Fifty-five to 65-year-olds struggle in the individual health insurance market, facing astronomical premiums, pre-existing condition exclusions, denials and inadequate coverage. Ryan's Medicare proposal would roll back the protections of healthcare reform and throw even more people to the discriminatory individual health insurance market.

Impact of the 2012 House Budget on Social Security

• The proposal would require the President to recommend changes to Social Security when a shortfall in Social Security arises--even if that shortfall does not appear for 75 years. Ryan rules out raising new revenue (i.e., raising the payroll tax cap so the wealthier pay their fair share toward Social Security) to achieve long-term solvency.
  
  Ryan's plan also specifically endorses the Bowles-Simpson recommendations to cut future Social Security benefits for everyone who is earning more than $22,000 a year right now (while they're working)--the vast majority of Americans.