RELEASE: New Ryan Budget Threatens Medicare and Shreds Safety Net

Washington, D.C. — Today, as the Republican leadership in the House of Representatives unveiled their latest budget proposal, the Center for American Progress released an analysis detailing the ways in which the plan fundamentally alters the future of the nation’s health care programs.

“The House Republican budget once again threatens Medicare and shreds the safety net for the middle class and the most vulnerable people in our society,” said Topher Spiro, author of the analysis and Managing Director for Health Policy at the Center for American Progress. “Instead of reducing health care costs, this plan would shift costs to seniors, health care providers, businesses, and states. Just like last year the House Republican blueprint sets the country on a path that would have dangerous consequences for tens of millions of Americans.”

Championed by House Budget Committee Chairman Paul Ryan (R-WI), the House budget blueprint would provide vouchers to Medicare beneficiaries to purchase either a private health insurance plan or the traditional Medicare plan. This would result in shifting costs to seniors, making many pay sharply higher premiums to stay in traditional Medicare and keep their current choice of doctors.

This premium-support plan would also limit growth in Medicare spending to growth in the economy plus 0.5 percentage points. But since it’s unclear how this cap would be enforced, it’s likely that the cap would limit the amount of the vouchers provided to beneficiaries. Since the proposed growth rate is much slower than the projected growth in health care costs, the nonpartisan Congressional Budget Office estimates that new beneficiaries could pay over $1,200 more by 2030 and over $5,900 more by 2050.

Furthermore, the plan allows private insurers to “cherry pick” healthier seniors, driving up premiums for those who remain in traditional Medicare. Private plans would be able to undercut traditional Medicare in other ways, such as by offering free gym memberships or other perks. As a result more and more seniors would gradually shift to private plans over time. This gradual privatization of Medicare does not make sense because traditional Medicare costs less than comparable private coverage. But with fewer beneficiaries Medicare would have less leverage to contain the growth in health care costs.

The House Republican budget would also shift costs to seniors by raising Medicare’s age of eligibility to 67. Some seniors who would no longer be eligible for Medicare would pick up employer coverage—but they would pay more in premiums and cost sharing. And since the budget would scale back or eliminate other coverage options, hundreds of thousands of seniors would become uninsured.

The budget would also shred the safety net for the middle class and the most vulnerable people in our society—jeopardizing the health and economic security of tens of millions more Americans. All told, more than 47 million Americans would lose health insurance coverage in 10 years. The House budget would repeal affordable health insurance coverage for 33 million Americans under the Affordable Care Act. And the budget would eliminate the new law’s consumer protections, which have already benefited tens of millions of Americans.

The Ryan budget would also transform Medicaid, replacing guaranteed federal funding with block grants to states. This would shift costs to states, which are already under enormous strain. According to the CBO, states would be forced to reduce eligibility, benefits, or payments to health care providers. More than 14 million Americans would lose coverage in 10 years.

All told, the House budget would cut Medicaid by more than $1.4 trillion over 10 years. But these cuts would not go toward deficit reduction. Rather, they would largely pay for expensive tax cuts. In essence the House budget seeks a massive transfer from the middle class and the most vulnerable in our society to high-income individuals.

Major consequences of the House budget include:

Many seniors would be forced to pay sharply higher premiums to stay in traditional Medicare and keep their current choice of doctors.
New Medicare beneficiaries could pay over $1,200 more by 2030 and over $5,900 more by 2050.
More and more seniors would gradually shift to private health insurance plans over time, increasing the privatization of Medicare.
Hundreds of thousands of seniors would become uninsured.
Premiums would increase for most Medicare beneficiaries.
More than 47 million Americans would lose health insurance coverage in 10 years.
Tens of millions of Americans would lose consumer protections that are essential for health and economic security.
States would be forced to slash Medicaid eligibility, benefits, and payments to health care providers.

Read the analysis: