Yesterday, the Congressional Budget Office released its preliminary analysis of the Ryan-Rivlin Health Proposal, a plan the two members of the President’s Fiscal Commission — Rep. Paul Ryan (R-WI) and former White House Budget Director and Federal Reserve Vice Chair Alice Rivlin — want to present before the committee. The CBO estimates that the proposal would “reduce federal budget deficits over the 2011-2020 period by about $280 billion,” but it would so by gutting the very institutions that spread economic risks across rich, and poor, healthy and sick, able-bodied and disabled, young and old and shifting all of the economic costs and risks onto individuals.
Ryan/Rivlin raises the eligibility age for Medicare to 67 from 2021 to 2032, transfers future beneficiaries into the exchanges in 2021 — where the infusion of older sicker people will increase premiums for everyone in the risk pool — and gives them a voucher that is intended to not keep up with health care costs. The CBO describes the consequences:
Voucher recipients would probably have to purchase less extensive coverage or pay higher premiums than they would under current law, for two reasons. First, most of the savings for Medicare under the proposal stem from reducing the amounts that the federal government would pay for enrollees on a per capita basis, relative to the projections under current law. Second, future beneficiaries would probably face higher premiums in the private market for a package of benefits similar to that currently provided by Medicare [...]
For both Medicare and Medicaid, the budgetary effects would become larger over time because federal payments would tend to grow more slowly under the proposal than projected costs per enrollee under current law. Although the level of expected federal spending and the uncertainty surrounding that spending would decline, enrollees’ spending for health care and the uncertainty surrounding that spending would increase.
The prognosis is even worse for Medicaid beneficiaries, many of whom would likely be forced out into the private market under the proposal’s block-grant approach. Rivlin/Ryan converts the existing matching system into block grants, where states would receive a fixed dollar amount annually that would fall below current growth — hence the savings. Under this arrangement, states would either have to increase their contribution to the program or cap enrollment, cut eligibility, stop offering mandatory benefits, lower provider reimbursements etc. As the CBO put it: “reducing federal payments for Medicaid relative to currently projected amounts would probably require states to provide less extensive coverage, or to pay a larger share of the program’s total costs, than would be the case under current law.
The proposal repeals the CLASS long-term care act to boot, leaving the sickest and poorest Americans who currently benefit from the Medicaid program without any obvious form of affordable coverage.
So consider this proposal dead on arrival, but one can’t help but marvel at its sheer callousness.