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Michigan Elder Law Today

Tuesday, May 10, 2011

House Budget Cutters Want Big Changes to Medicare and Medicaid

House Budget Committee Chairman Paul Ryan (R-WI) has proposed a budget that would radically reshape both the Medicare and Medicaid programs and shift more costs to seniors and people with disabilities.

The proposed budget, aimed at shrinking the nation's deficit as well as the size of government, slashes $1.43 trillion from Medicare and Medicaid over the next 10 years, in part by bringing the curtain down on the popular Medicare program as we know it and by ending Medicaid's guarantee of nursing home benefits for seniors.

Here are the broad outlines of the proposed changes to Medicare and Medicaid and their impact on seniors.

Medicare: Starting in 2022, people who turn 65 or who qualify for Medicare because of a disability would not enroll in the current Medicare program but instead would receive a "premium support payment" (what many call a "voucher") to help them purchase private health insurance. Also beginning in 2022, the age of eligibility for Medicare would increase by two months a year until it reaches 67 in 2033. Because the plan also repeals the new health reform law's coverage provisions, many 65- and 66-year-olds would be uninsured.

Under the Ryan plan, future seniors would pay far more for health coverage than do today's beneficiaries, according to an analysis by the nonpartisan Congressional Budget Office (CBO). For example, by 2030 a typical 65-year-old would pay 68 percent of the total cost of her coverage, compared to the 25 percent she would pay under current law, the CBO calculates. In 2022, the typical 65-year-old Medicare beneficiary would be spending $12,500 a year out of pocket in today's dollars.

This new Medicare scheme would apply to anyone who is age 54 or younger at the end of 2011.

Medicaid: The House Republican proposal would turn Medicaid funding to states into a "block grant," something proposed by George W. Bush in 2003 and by Newt Gingrich in 1995. Rather than the current system, under which the federal government matches every dollar that states spend on Medicaid, under the House Republican plan starting in 2013 states would receive a fixed amount every year, which would only increase with population growth and the overall cost of living. The result, according to the CBO's analysis, is that by 2022 federal funding for Medicaid would fall 35 percent below what the federal government now is projected to provide states, and the shortfall would be 49 percent by 2030.

States would have to make up for this dramatic loss in funding by restricting eligibility for Medicaid (including nursing home coverage), reducing covered services, and cutting payment rates to health care providers. The result would be more uninsured or underinsured citizens, as well as doctors, hospitals, and nursing homes refusing to take Medicaid patients. It would be easier for states to make these changes than under current law because the Ryan plan would give states additional flexibility in designing their Medicaid programs.

Whether these proposals will become law remains to be seen.


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