House Budget Panel Considers Age 56 for Medicare Transition

House Republicans may propose protecting fewer Americans from changes in Medicare as part of their effort to balance the U.S. budget in 10 years, lawmakers said.

Budget Committee Chairman Paul Ryan promised in 2012 that people then age 55 and older would continue to be covered by the traditional Medicare program under his proposal to partially privatize the health care plan for retirees. The panel is considering raising the age to 56 in this year’s budget, New Jersey Republican Scott Garrett, a member of the committee, said today.

People younger than that would be offered subsidies to buy private insurance under Ryan’s proposal, passed by the House in 2011 and 2012. The Medicare age change is in a “list of options” being studied as the budget panel drafts a 2014 budget Ryan plans to introduce next week, Garrett said.

“The question is how do you save Medicare,” Budget Committee Vice Chairman Tom Price, a Georgia Republican, said in an interview today. “How do you get there? How do you make the money work, the finances work with an aging population?”

House Republicans’ budget plan also may seek to roll back the expansion of Medicaid to cover more low-income people in President Barack Obama’s health-care law, said a Republican aide who asked for anonymity and wasn’t authorized to speak publicly.

People become eligible for Medicare at age 65. Medicare trustees reported in April 2012 that 48.7 million people received benefits in 2011 at a cost of $549 billion.

Senate Democrats

The House’s 2011 and 2012 proposals to partially privatize Medicare didn’t advance in the Senate, where majority Democrats support higher taxes for top earners instead of cuts to entitlement programs such as Medicare.

House Republicans have “committed themselves to advancing an even more extreme version of the Ryan budget, and that says a lot,” Senate Majority Leader Harry Reid said. “There’s no way to accomplish the goals they’ve laid out without gutting education, health care research, and of course, Medicare benefits.”

“This is not what the American people want,” said Reid, a Nevada Democrat.

The House Budget Committee is considering ways to balance the federal budget in 10 years, a goal Republicans set as they decided this year to postpone the debate over raising the government’s borrowing authority at least until May.

Laying ‘Groundwork’

House Speaker John Boehner, an Ohio Republican, said Ryan and other Budget Committee members are laying the “groundwork” for budget legislation. The committee is still working on the details, the speaker told reporters in Washington.

Ryan, a Wisconsin Republican and his party’s 2012 vice- presidential nominee, told reporters today he will spell out his budget proposal next week. He declined to comment on any details.

“With respect to Medicare, House Republicans will again put forward a real solution to protect and strengthen Medicare for current seniors and future generations,” said Will Allison, a Ryan spokesman, in an e-mail. “His reforms ensure no changes for those in or near retirement, a sharp contrast to the real harm inflicted on seniors by the president’s health-care law.”

Creating Competition

Republicans contend that providing subsidies to senior citizens to buy private insurance would create competition and drive down costs. Democrats maintain the concept won’t work, saying the subsidies won’t keep pace with health-care prices, leaving seniors to pay bigger bills or forgo care.

“The Republicans have said for the last two years if you’re over 55 years old don’t worry, it won’t impact you, and now it’s a big ‘whoops,’” Representative Chris Van Hollen of Maryland, the top Budget Committee Democrat, said in an interview.

Garrett said it is a “natural progression’” to raise the transition age to 56 now that a year has elapsed since the House passed its proposal. “The people who were 55 last year are now 56,” he said.

Still, New York Republican Peter King said he was “concerned” about a proposal that would “change the commitments we made” on Medicare. He said he wanted “to see the extent of what it means.”

Garrett and two other Republicans on the budget committee, Ken Calvert of California and James Lankford of Oklahoma, said the blueprint isn’t finished.

New Revenue

The Republican aide who spoke on condition of anonymity said the specific age for the Medicare transition to subsidizing privately purchased case is being worked out. Budget drafters envision starting the program in 2022 or 2023, the aide said.

Budget drafters are also considering expanding means- testing for some Medicare programs, including Part B for doctor visits and Part D for prescription drugs, the aide said. Individuals with incomes of more than $85,000 and couples with incomes of more than $170,000 already pay higher premiums.

The $660 billion in new revenue from raising taxes for the wealthiest Americans, passed by Congress Jan. 1, would be used to balance the budget, the aide said. The plan would reduce the debt by $4.5 trillion over a decade, the aide said.

Health Law

Republican budget drafters are considering repealing the expansion of Medicaid coverage to more low-income people under Obama’s health-care overhaul law set to take effect next year, the aide said. It also would repeal subsidies for health- insurance exchanges where eligible Americans can buy coverage at a lower rate.

Price said the budget would include defense spending at the level it was before $85 billion in federal spending cuts for this fiscal year began March 1. About half of those cuts will come in defense spending.

Price said the panel is still deliberating the defense portion. The goal is to keep defense at higher levels, so the U.S. can “have the kind of resources available to protect the country,” he said.

Louisiana Republican John Fleming in January said party members discussed raising the transition age in the Medicare proposal at their policy retreat in Williamsburg, Virginia.

Also today, government auditors said health insurers that offer private Medicare plans were overpaid by as much as $5.1 billion over the past three years. The Medicare Advantage plans were paid about $135 billion in 2012, according to the Government Accountability Office, the investigative arm of Congress.

Insurers are fighting a proposed 2.2 percent cut in a rate used to determine their payments in Medicare Advantage. About a quarter of Medicare beneficiaries sign up for Advantage plans, in which their care is covered by insurers led by UnitedHealth Group Inc. (UNH) instead of the government.

To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net; Roxana Tiron in Washington at rtiron@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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