5 Ways In Which The CBO Undermines Paul Ryan’s Budgetary Predictions

By Igor Volsky and Pat Garofalo

Yesterday, House Budget Committee Chairman Paul Ryan (R-WI) presented his budget as a bold vision for the future that would rescue the nation “from brink of national bankruptcy and place the country on a more sustainable course. “It is not just a budget – it is a cause,” Ryan said yesterday. “It represents our choice for America’s future, and our commitment to the American people.” Just hours after his remarks, however, the Congressional Budget Office (CBO) released its analysis of Ryan’s budget and concluded that the GOP’s “commitment” to Americans was not nearly as strong as the Chairman suggests.

Below are five ways in which the CBO report undermines Ryan’s lofty rhetoric:

1. SENIORS WOULD PAY MORE FOR HEALTH CARE: In 2022, seniors can purchase private insurance from a new Medicare exchange of private plans that have higher costs than traditional Medicare — both because of higher “administrative costs (including profits) and payment rates to providers” — with a “premium support” credit from the federal government that does not not keep up with health care spending. As the CBO concluded, “Under the proposal, most elderly people would pay more for their health care than they would pay under the current Medicare system.” “[T]he beneficiary’s share in 2030 would be 68 percent under the proposal” but only “25 percent” under current law. Starting in 2022, the age of eligibility for Medicare would also “increase by two months per year until it reached 67 in 2033.”

2. ELDERLY AND DISABLED WOULD LOSE MEDICAID COVERAGE: In 2013, the budget would eliminate the exiting matching-grant financing structure of Medicaid and would instead give each state a pre-determined block grant. According to the CBO, “Chairman Ryan’s proposal would shift some of the burden of Medicaid’s growing costs to the states.” “If the costs of medical services for Medicaid enrollees continued to rise faster than the growth in the block grant amounts…states would face significant challenges in achieving sufficient cost savings through efficiencies to mitigate the loss of federal funding.” States would be forced to reduce their spending, lower the size of their Medicaid programs “by cutting payment rates for doctors, hospitals, or nursing homes; reducing the scope of benefits covered; or limiting eligibility.”

3. THIRTY-TWO MILLION AMERICANS WOULD LOSE HEALTH COVERAGE: The budget repeals the requirement to purchase health insurance coverage, the establishment of health insurance exchanges and the provision of subsidies for lower-income Americans, the expansion of the Medicaid program, tax credits for small businesses that provide insurance coverage, along with other provisions. Based on previous CBO estimates, up to 32 million Americans would lose access to insurance. The budget office has not yet “analyzed the changes in health insurance coverage that would occur as a result of the repeal of the specified coverage provisions of the 2010 health care legislation,” however.

4. SHORT TERM DEBT INCREASES RELATIVE TO CURRENT LAW: The budget increases the federal debt as a percentage of GDP in the short-term, because the health care cuts it would implement phase in slowly, while the giant tax cuts for the rich and corporations it includes would take effect immediately. It isn’t until the steep health care cuts take effect that the budget starts to reduce the debt. Ryan’s plan would increase debt held by the public to 70 percent of GDP in 2022, while current law would increase it to 67 percent.

5. NO CONFIRMATION ON TAX REVENUES: The only reason that CBO scored Ryan’s plan as reducing the debt in the coming decades is because Ryan’s staff instructed CBO to assume that the plan would raise 19 percent of GDP in revenue. However, CBO noted that “there were no specifications of particular revenue provisions that would generate that path.” Ryan’s previous budget plan — the Roadmap for America’s Future — included wildly optimistic revenue assumptions that dramatically changed the effect the plan would have on the federal debt.