Giving wealthy seniors less for Medicare, a component of a budget plan by Representative Paul Ryan that made the Wisconsin Republican a polarizing figure in the U.S., would barely dent health spending, a Bloomberg Government study shows.
The plan would replace the current Medicare system of guaranteed benefits with payments to make up for the cost of obtaining private health insurance. It offers less assistance to seniors with the highest incomes, a policy known as “means testing” that Ryan has said will reduce the budget deficit.
Ryan would make the wealthiest 8 percent of 65-year-olds pay a larger share of their health-care bills in 2022, the first year the plan would take effect. Smaller U.S. subsidies would be 4.4 percent, or $1.2 billion, cheaper than if all beneficiaries got the same assistance, according to the study.
The plan “actually generates very modest dollars” in savings while giving higher-income seniors an incentive to pull out of the entitlement program, said Judith Feder, a professor at the Georgetown Public Policy Institute at Georgetown University in Washington. Costs for remaining beneficiaries may be higher if that happens, she said.
Stephen Spruiell, a spokesman for Ryan, didn’t respond to an e-mail requesting comment. Ryan is chairman of the House Budget Committee.
A copy of the complete study may be found at Bloomberg Government.