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How the Ryan Budget Impacts Seniors

Marty Robertson, Bernadette Winko

SOURCE: AP/Amy Sancetta

Marty Robertson unpacks food from the Chagrin Falls Meals on Wheels program for recipient Bernadette Winko, 90, in her Bentleyville, Ohio, home, Wednesday, March 14, 2012. The Ryan budget’s additional $900 billion in nondefense discretionary spending cuts would further impede the ability of Meals on Wheels to combat senior hunger.

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Budget resolutions often appear on their face to be nothing more than a list of program names with numbers next to them. But behind each of those numbers is a statement of our priorities: What do we believe is important? What do we value as a society? How do we want to invest?

For the past two years, House Budget Committee Chairman Paul Ryan (R-WI) has offered budget resolutions that show how little he values protecting the vital safety net that has allowed American seniors to live a healthy and secure retirement. Under the guise of reducing the deficit and saving entitlements, Rep. Ryan’s budget would make seniors pay more for their health care and more for prescription drugs while threatening other important supports such as Medicaid and senior nutrition programs. Cost-savings measures that would preserve Medicare’s promise of guaranteed benefits—such as the lowering of Medicare drug prices—are not found in Ryan’s budgets. Line after line and program after program, the theme of the past two Ryan budgets is clear: Make seniors pay more.

Even though American voters had the chance to examine the priorities laid out in Rep. Ryan’s past two budgets during the 2012 election and soundly rejected them in November, Rep. Ryan has appeared to learn very little from defeat. Instead, he is doubling down on his conservative agenda and trotting out the same stale policies that would shift massive costs to seniors. Many on the right praise Rep. Ryan for being brave enough to stick to his guns, but there is nothing brave about making our most vulnerable seniors sacrifice and pay while millionaires and billionaires reap the benefits of even more free tax handouts.

Increases in health care premiums

Similar to the last two installments of the Ryan budget, the third installment would increase the cost of health care premiums for seniors and dismantle traditional Medicare. The Ryan budget once again does this by replacing traditional Medicare with a voucher system—the so-called premium-support plan.

Under the Ryan budget, instead of receiving the guaranteed benefits promised by traditional Medicare, seniors would receive a voucher to purchase either traditional Medicare or private insurance. Seniors would also be required to pay any costs not covered by the voucher. Rep. Ryan’s budget would limit Medicare spending to the rate of growth in the economy plus 0.5 percent, which may be enforced by capping the amount of the vouchers. By limiting Medicare growth to a rate below the estimated growth in health care costs after 2022, the value of the vouchers would not keep up with rising costs, forcing seniors to have to pay more and more out of pocket to cover health care costs. As illustrated in the Center for American Progress’s analysis of last year’s nearly identical Ryan plan, the premium-support plan would force seniors to pay $1,200 more each year by 2030—and as much as $5,900 more each year by 2050. The first seniors impacted by these changes could pay up to $59,500 more during retirement, while seniors who reach eligibility in 2050 could pay up to $331,200 more.

Increases in prescription drug costs

Rep. Ryan doesn’t stop at making seniors pay more in health care premiums. As he did in the past, he takes it a step further and calls for repealing the Affordable Care Act. By calling for the repeal of the Affordable Care Act, Rep. Ryan is showing that he has no interest in stopping the fights of the past and bringing people together—even after the Supreme Court affirmed the act’s constitutionality. But this should come as no surprise from a man who doesn’t appear to have learned anything from the past election.

By calling for the repeal of the Affordable Care Act, Rep. Ryan is calling to raise the cost of prescription drugs for seniors. Under the Affordable Care Act, in 2012 Medicare beneficiaries who hit the Part D coverage gap—also known as the donut hole*—received a 50 percent discount on covered brand-name drugs and 14 percent on covered generic drugs. Since January 2011 about 6.1 million seniors and people with disabilities have saved more than $5.7 billion on prescription drugs. The U.S. Department of Health and Human Services estimates that Medicare beneficiaries will save an average of $5,000 each through 2022. Medicare beneficiaries reaching the “donut hole” would save about $13,000 on average between 2014 and 2022. These savings would be lost entirely under the Ryan budget.

A threat to long-term care

Like the two prior Ryan budgets, the new Ryan budget would convert traditional Medicaid into a block-grant program. In other words, the federal share of all Medicaid payments would be converted into block grants for states. The amount of the grants, however, would not keep pace with the projected growth in the federal share of Medicaid costs under the traditional system. In all, states would lose $810 billion in Medicaid funding over 10 years, which would impact middle-class families, women, children, and seniors.

The cuts to Medicaid would impact millions of Americans. Medicaid is a vital social safety net for middle-class families, helping millions of families avoid financial disaster when they are faced with medical and long-term care bills that exceed what their savings and insurance will cover. Medicaid is especially important for seniors, as about 4.6 million low-income seniors are enrolled in Medicaid. Medicaid is also the primary payer for long-term care services: It pays for more than 40 percent of total long-term care costs in the nation.

As the need for long-term care rises in the coming years, the need for Medicaid will only increase. Currently, there are about 9 million seniors who need long-term care. This figure will increase by 33 percent by 2020, when about 12 million seniors will need long-term care. The Ryan budget’s $810 billion in cuts will severely impact Medicaid’s ability to meet this growing demand, threatening long-term care for vulnerable seniors.

A threat to vital social services

Rep. Ryan is not content, however, with making seniors pay more for health care and prescription drugs and threatening their long-term care. The Ryan plan also takes a hatchet to nondefense discretionary spending, cutting $900 billion in all. And these cuts are on top of the sequester cuts. This hurts the ability of federally assisted programs such as Meals on Wheels to continue serving vulnerable populations.

Programs such as Meals on Wheels help combat hunger by providing meals to frail seniors at home or at congregate places such as senior centers. In 2010 8.3 million seniors faced the threat of hunger—that’s one in seven seniors. This figure has increased by 78 percent since 2001. Meals on Wheels combats hunger by providing about 1 million meals per day to needy seniors. The sequester will cause Meals on Wheels to serve far fewer meals to seniors; the Ryan budget’s additional $900 billion in nondefense discretionary spending cuts would even further impede the ability of Meals on Wheels to combat senior hunger.

Conclusion

On every front, the Ryan budget is an assault on seniors—from the health care and prescription drugs they need to stay healthy, to the care they need in their twilight years, to the very meals they eat. The conservative right has constantly bemoaned entitlement programs such as Medicare and fought to strip other vital social safety networks such as Medicaid. They seem to forget, however, that it is the network of programs such as these that have helped reduce senior poverty rates from a high of 35 percent in the 1960s to its current rate of 15 percent. The drastic changes that the third Ryan budget continues to advocate would threaten to undo all the progress that we’ve made on behalf of the nation’s elderly population.

The American voters agreed that our seniors deserve better than the Ryan budget. But from the looks of the recent House Republican budget, it doesn’t seem as if Rep. Ryan heard the message.

Anna Chu is the CAP War Room Policy Director at the Center for American Progress.

* The “donut hole” refers to the gap in drug coverage for Medicare Part D beneficiaries that occurs after beneficiaries spend a certain amount of money for covered drugs but before they hit catastrophic coverage. When beneficiaries hit the catastrophic level, they are responsible only for a small percent of their drug costs. See: Centers for Medicare & Medicaid Services, “The Affordable Care Act: A Stronger Medicare Program” (2012), available at http://www.cms.gov/apps/files/MedicareReport2012.pdf.

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