Jonathan Cohn suggests that Republicans who are now fleeing House Budget Committee Chairman Paul Ryan’s (R-WI) Medicare plan may soon give a real push to his Medicaid reforms, which are no better. Ryan would transform the program’s matching rate financing structure — under which the federal government pays 50 to 75 percent of each state’s Medicaid costs and requires states to maintain certain eligibility and benefit standards — into a block grant system. States would receive a set “block” of money to do with it as they wished (within certain constraints) and could theoretically use that “flexibility” to design programs that go further in reducing health care costs. But Cohn isn’t buying it:

I don’t think the case for flexibility is particularly strong, in part because the states already have some of it. But make no mistake. The Republican proposal isn’t exclusively or even mostly about flexibility. It’s about money–and the desire by Republicans and their supporters to spend less of it on the health care safety net.

Medicaid, as you may recall, is a joint federal-state enterprise, with Washington picking up about two-thirds of the total cost. The House Republican budget would dramatically reduce the federal government’s contribution. According to the Congressional Budget Office, if the House Republican budget were to become reality, Medicaid spending in 2022 would be 35 percent lower and spending in 2030 would be 49 percent lower.

Yes, you read that right: If the House Republican budget were to become reality, federal spending on Medicaid would shrink to half of its projected value within two decades.

States would receive an annual federal appropriation that would be less than current projected growth of the program and would have to to make up the difference by increasing spending or (more realistically) capping enrollment, cutting eligibility, limiting mandatory benefits and lowering provider reimbursements.

That would endanger the coverage of the millions of elderly and disabled beneficiaries — two-thirds of Medicaid’s costs are spent on seniors and people with disabilities — who rely on the program today. In 2011, more than 69.5 million Americans will benefit from Medicaid, and according to a recent Kaiser Family Foundation poll, 59 percent of the American people said the program was either “very important” to them or their families or “somewhat important.” Which means that should the Ryan Medicaid proposal become law — and it’s doubtful that it will — that f-word will come to have a whole different meaning for Americans in the Medicaid debate.

Former Minnesota Gov. Tim Pawlenty (R-MN), who has been hesitant to endorse Rep. Paul Ryan’s (R-WI) budget, has released a bare-bones outline of his plan to reform entitlements. Via Ben Smith:

His Medicare plan, he said, “will feature payment reform” and will…give individuals rebates and financial incentives to get care in places that are higher in quality.”

Pawlenty also suggested he’d offer “premium support” — Paul Ryan-style vouchers — to people who aren’t yet enrolled in the program. He suggested, though, that he’d make the Ryan-style plan an option for individuals, not an immediate replacement for the entire program.

His payment reform ideas — which he outlined in greater detail during a recent event in Iowa — are already part of the health care law that he wants to repeal. The premium support proposal reads like a partial privatization scheme that could lead to some adverse selection problems and increase costs for existing beneficiaries. Insurers will recruit healthier applicants to enroll in private insurance, leaving the traditional fee-for-service (FFS) risk pool with a very sick (and costly) profile. Doctors could follow the patients, abandoning FFS’s lower reimbursement rates in favor of private insurance. That would result in provider shortages for the seniors who remain in the traditional program.

All of this looks very similar to the existing Medicare Advantage program in which private insurers are receiving an average of 9 percent — about $8.9 billion — more than traditional Medicare and don’t seem to be saving the program any money (with an estimated 13 percent of the payment going towards profits and administrative costs).

As he backed away from House Budget Committee Chairman Paul Ryan’s (R-WI) Medicare proposal during yesterday’s Health Affairs event, House Ways and Means Committee Chairman Dave Camp (R-MI) argued that the premium-support model advanced by Ryan “is not a new concept, and is one that was introduced by a Republican and a Democrat.” Camp is partly right, but Ryan’s plan differs from past efforts in several key respects that make his proposal far more politically toxic and reactionary.

“Premium support” — a proposal under which the federal government contributes a set amount towards the purchase of Medicare coverage — has been previously offered by Sens. John Breaux (D-LA) and Bill Frist (R-TN) in 1999 and 2001, and garnered some Democratic support. But unlike Ryan, Breaux and Frist replaced the current Medicare program with competing health plans, while maintaining the CMS-sponsored Medicare fee-for-service coverage as an option. They also offered seniors a premium support that did a better job of keeping up with health care costs (and insulating seniors from sudden prices increases).

Under Breaux/Frist, the Medicare contribution towards a beneficiary’s coverage was set as a percentage of actual plan bids for a comprehensive set of benefits; the beneficiary paid the difference between the plan bid and the government’s contribution (which is indexed to average costs). Ryan gives seniors a predetermined amount of money beginning in 2022 (with lower income and chronically ill seniors receiving more) and grows that support with inflation, leaving beneficiaries to absorb the much higher increases in health care costs. He shifts all financial risk from Medicare to seniors by having them shoulder the precipitous rise in health care spending without substantially increasing the government’s contribution.

As Henry Aaron — who developed the premium support concept with Robert Reischauer in 1995 — points out, Ryan’s plan also lacks three safeguards designed to protect seniors: 1) the number of plans that could be offered would be limited and specified by a regulatory agency, public or nonprofit; 2) the same agency would prepare materials explaining the alternative plans, provide counseling to buyers, and handle all sales; and 3) the government would redistribute premiums among insurance plans to offset any financial advantage that any insurer might secure by enrolling low-cost customers.

Aaron has since walked away from even this more progressive version of “premium support,” arguing that the “gains from being able to choose among competing insurance plans have been exaggerated” and that the Affordable Care Act may push Medicare to use its leverage to affect change in the way health care is delivered.