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Paul Ryan’s slash and burn: $800 billion in Medicaid cuts

By RICARDO ALONSO-ZALDIVAR
August 15, 2012

GOP veep candidate Paul Ryan: The slasher
(AP Photo/David Becker)

Rep. Paul Ryan‘s plan for Medicare gets all the attention, but the GOP vice presidential candidate has proposed more fundamental changes to medical care for the poor and disabled.

Under the Wisconsin congressman’s Medicaid plan, states would take over the program. Simultaneously, Ryan’s proposed budget would reduce projected federal spending by about $800 billion over 10 years, shrinking Medicaid as a share of the overall national economy. The plan has passed the Republican-led House two years in a row.

Ryan would also repeal President Barack Obama’s health care law, expected to add at least 11 million more people to Medicaid.

On both proposals, Ryan is in sync with his new boss, Republican presidential candidate Mitt Romney. But such cuts would result in millions of vulnerable people losing health insurance, according to advocates for the poor and some nonpartisan economic analysts.

“Medicaid is already a very lean program,” said Edwin Park of the Center on Budget and Policy Priorities, which advocates for low-income people. “It is not a program where you can magically glean huge efficiencies by just devolving it to the states. The only way to compensate for funding reductions of this magnitude would be to institute deep, damaging cuts to beneficiaries and the health care providers who serve them.”

Bring it on, says Wisconsin Health Secretary Dennis Smith, who oversees Medicaid in Ryan’s home state. Smith, who works for Republican Gov. Scott Walker, says states can cut costs without gutting services by running Medicaid more efficiently.

“Everybody agrees that there is excess cost in the health care system, so by golly, give us the flexibility to address it, and we will,” said Smith. “We can serve the people on Medicaid with the adjustments the Ryan budget. We can make that work.”

For example, Wisconsin is now charging some low-income adults a modest monthly premium for Medicaid, tapping a new funding source to pay for valuable benefits, Smith said. And the state is looking for ways to help frail elderly people keep living at home, avoiding the costly alternative of a nursing home.

Medicaid serves nearly 60 million people, about 20 percent of Americans, a diverse population brought together by need.

Low-income children and their mothers, people disabled by life-changing injuries or birth defects, as well as elderly nursing home residents would all feel the consequences of the debate.

On average, the federal government pays about 60 percent of Medicaid costs, and states cover the rest. Medicaid has become a big share of state budgets, and since Washington sets many of the rules, the program is a source of constant tension between federal and state governments. The Supreme Court recently gave some latitude to states chafing at Obama’s health care law, saying they are free to opt out of its Medicaid expansion.

Obama has largely shielded Medicaid from cuts in budget negotiations with Congress. But his administration has proposed new ways to allocate funding that could be used to dial back the federal share.

Ryan’s plan goes beyond tweaking. It would essentially rip up the Medicaid manual and start all over again. States would get a lump sum from Washington, a “block grant” indexed to reflect population growth and inflation. The idea has governors split along party lines.

Ryan’s Medicare plan, shifting future retirees to private insurance, would phase in over a decade or more. But the Medicaid changes would come much more rapidly. The proposal has not been fleshed out in detail, leaving many unanswered questions. For example:

—What happens if a state’s economy tanks?

Under current law, the federal Medicaid share is pegged to program enrollment, not population growth, said John Holahan, director of the Health Policy Center at the nonpartisan Urban Institute. That means federal funding increases when the Medicaid rolls swell. But under Ryan’s plan, “there are no provisions to automatically deal with recessions,” said Holahan. “The demand for Medicaid goes up at the same time state revenue is going down.”

—Would low-income and disabled people still have a legal right to coverage?

Converting Medicaid into a block grant would end the current right to coverage under federal law, and it remains unclear what rights could be preserved. Most analysts say states would insist on the flexibility to reduce their Medicaid rolls. The Urban Institute estimates that between 14 million and 27 million people would lose coverage because of Ryan’s spending restrictions.

—What sorts of safeguards would remain in place for seniors in need of nursing home care?

Although frail elderly people must spend down most of their savings before they can qualify for Medicaid, a federal law shields spouses from becoming impoverished. It’s unclear what would take its place.

Supporters of state control say governors and legislatures are closer to the people and would not run roughshod over their own constituents.

Back in Ryan’s state, the jury is still out.

Medicaid covers nearly 1 in 5 Wisconsin residents, and hospitals have a major stake in the outcome. But Joanne Alig, senior vice president for policy with the Wisconsin Hospital Association, says they would need to know more about the plan to reach conclusions.

“While I think we are supportive of looking at alternatives to the Medicaid status quo, the devil’s in the details,” she said.

Copyright 2012 The Associated Press

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5 Responses to Paul Ryan’s slash and burn: $800 billion in Medicaid cuts

  1. Sandy Price

    August 15, 2012 at 2:53 pm

    If Medicaid can be kept solvent by reforming the system, then why the hell didn’t the congress do it while they had it on their plate? That Congress waited until it would work for their candidate. This is no way to work as a political party when so many poor people are waiting for correction in the system.

    Neither party is earning their wages and should be told not to return to work. There is no bargaining chip to negotiate with anyone in the House and Senate. The Republicans are waiting for their party to prohibit many items such as birth control and abortions not to mention minority rights before they come up with a method to compete with the Democrats.

    I’m tired of being manipulated by the GOP into making America look like a third world nation by tearing us down and bankrupting the nation and then starting all over under a new Christian Constitution. . Can they do it? Without a strong opposition, you bet your bippie they can do it. I casually try to bring up these problems in public and am told that no one will discuss politics. In my world they just admitted they haven’t a clue what either party has in mind behind our election.

    When do we see the budgets from both parties so we know how to vote in advance? This morning on Morning Joe, he defined the Romney budget as: 57 points of correction, 86 pages of discussion and 0 calories.

    Where is the movement to save Medicare? Even the Seniors on S.S. pay for Medicare when they take it out of our checks. How much do others pay from their paychecks? How can Hospice continue to serve terminally ill seniors if Medicare is eliminated? Someone mentioned on another site that they would cancel PBS. All I can say is shee-it! Who the hell voted these bums in office?

  2. Jim B.

    August 15, 2012 at 6:50 pm

    Right on, Sandy!…Ryan’s proposals are a “Nightmare on Elm Street” for the most vulnerable in our society…In this case, Freddy Krueger, is played by a bean-counter, a small-minded man for a small-minded America.

    I know there are problems with Obama, but the Rom/Ryan ticket might enact a state of agonizing neglect for the people in this country who have little or no voice.

    If the Ryan would have his way….what kind of country would we become when we turn our backs on our neighbors who need help?

  3. Dave

    August 15, 2012 at 7:34 pm

    Saving Medicare is going to be a moot point unless something drastic is done. Very quickly, it’s approaching the point where it cannot be saved. Quite simply, government revenue cannot keep pace with the growth in Medicare spending – and even if taxes are increased (and yes, they should be marginally increased across the board), it would be impossible to raise them to the level that would be required to match the current growth rate in Medicare expenditures without further wrecking the economy. Maybe Ryan’s plan isn’t the answer, but it at least takes a sober look at the financial reality of Medicare and Social Security.

    Even if you cloak your argument in the language of “turning our backs on our neighbors” it doesn’t erase the fact that if you’re bankrupt, you’re not going to be much help to yourself OR your neighbor.

    • Jim B.

      August 16, 2012 at 5:42 pm

      You raise some good points, Dave!

      I agree that something must be done to keep costs under control, and you’re right when you state “maybe Ryan’s plan isn’t the answer”…it isn’t. It’s too extreme and harsh.

      The way it should work in Congress is…you don’t get everything you want…you….(wait for it)….you….compromise…something the young Turks many times refuse to do.

      All this focus on penny-pinching has its place at times in America, but it should be resolved as equitably as possible and in regards to everything else it is a less important issue….We’re a big and powerful country…We need to continue to think and work in an expansive way.

  4. sherry morrison

    August 16, 2012 at 11:47 pm

    I am not suggesting for a moment I have all the answers. Been working in medical billing for 20 years. I could write an entire article but I will save you the boredom.
    Obama cut 700 million from Medicare. No one is talking about that. He is closing the donut hole for meds which is nice, but Medicare is being billed FULL retail for prescriptions. Obama promised to fix the badly flawed Part D program. All he fixed was the donut hole so Big Pharma could fleece us even more.
    Medicare and Medicaid don’t pay the cost of doing business for most providers. There are exceptions. Like durable medical equipment. Dang if they don’t clean up.
    My mother was succuessfully treated for breast cancer two years ago. Post mastectomy, she was given a camisole. It was a top with a built in pocket for the drains. It was over $100. Then she was told she needed a post mastectomy bra. For $300 she got two bras with a pocket for the prostethesis. She found them to be cumbersome and uncomfortable. (ladies if you have do a mastectomy, just get a double, it makes life so much easier. Mom wishes a thousand times she had done that)
    I was in a local drug store and saw the “genie bra” as advertised on TV. Two for $20. I thought, hey give it whirl. It’s what mom wears. It even has a pocket for the “modesty pads”. Her prosthesis fits just fine.
    So Medicare could save a bundle if they made a deal with Genie bra. Of course then the bra would be $300.
    That’s just one example. I could go one and one. If you were on the inside, you would know just how rediculous this figures being batted about truly are