This morning, Rep. Chris Van Hollen (D-MD) appeared at the Center for American Progress Action Fund and delivered a rebuke of Rep. Paul Ryan’s (R-WI) budget. “At its core the Republican budget is the same old tired formula of extending tax breaks to the wealthy and the powerful at the expense of the rest of the country, except this time it’s on steroids,” he said before specifically going after Ryan’s claim that his Medicare reforms would give seniors the same health plan as members of Congress:
VAN HOLLEN: This is not like the Federal Employee Health Care Plan that members of Congress are on…The Federal Employee Health Benefits Plan, which members of Congress are on has something called the fair share formula. You share equally in the risk of higher health care costs. There is a fixed percentage — it is premium support. As the cost of the premium goes up, the share between the employer and the employee remains the same. It’s the exact opposite on the Medicare situation. The way they make money is to take advantage of the gap between what they’re going to provide the senior and the risking health care costs.
Indeed, Ryan is constraining the rate of growth in Medicare by offering seniors a defined contribution, regardless of the rate of growth in health care costs. The federal government’s contribution in the FEHBP program, by contrast, reflects actual increases in premium levels. According to the Office of Personnel Management, the FEHBP formula “is known as the ‘Fair Share’ formula because it will maintain a consistent level of Government contributions, as a percentage of total program costs, regardless of which health plan enrollees elect.” The difference is that Ryan’s proposal provides seniors with a set amount of money that, in order to reach the kind of savings he’s advertising, would have to depreciate each successive year — even as health care costs increase.
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.