Representative Paul D. Ryan has proposed huge changes in entitlement programs like Medicare and Medicaid, which insure more than 100 million people and account for more than one-fifth of the federal budget.
The changes would help the federal government predict and control its costs, but could shift some costs to beneficiaries and to states.
The Republican-controlled House has twice approved Mr. Ryan's proposals as part of budget blueprints, but the Senate has rejected them.
Democrats see Mr. Ryan's plan for Medicare as a political gift. In automated telephone calls and radio advertisements, the Democratic Party has accused Republicans of favoring “millionaires over Medicare.â€
Medicaid and Medicare are now open-ended entitlements. Anyone who meets the eligibility criteria is entitled to benefits defined in detail by federal law. Spending increases automatically with health costs, the number of beneficiarie s and the amount of care they receive.
Mr. Ryan would change the nature of the entitlement under both programs. He would convert the federal share of Medicaid into a block grant. The federal government would give each state a lump sum of money to care for low-income people. States would also be given much more discretion over use of the money.
Mr. Ryan would repeal President Obama's health care law, which calls for the expansion of Medicaid to cover many more people.
To rein in Medicare costs, Mr. Ryan proposes fundamental changes in the structure of the program: The federal government would contribute a fixed amount of money on behalf of each beneficiary, and future beneficiaries could use the money to buy private insurance or to help pay for traditional Medicare.
In addition, the growth of Medicare would be capped. In general, spending would not be allowed to increase more than the growth of the economy, plus one-half o f one percentage point - a slower rate of increase than Medicare has historically experienced.
Analyzing a slightly different version of Mr. Ryan's proposal last year, the nonpartisan Congressional Budget Office said that “most elderly people would pay more for their health care.†The additional costs, averaging perhaps $6,400 for a typical beneficiary in 2022, would require older Americans to “reduce their use of health care services, spend less on other goods and services, or save more in advance of retirement,†the report said.
Mr. Ryan has tweaked his Medicare proposal in the last year, but Democrats are sure to cite the budget office report.
Under his proposal, Mr. Ryan said, “there would be no disruptions†in the traditional Medicare program for people who are currently enrolled or become eligible in the next 10 years.
Democrats say Mr. Ryan's plan would destroy Medicare. He says it would save the program, whose hospital insurance tr ust fund is expected to run out of money in 2024.
