Aug. 15 (Bloomberg) -- Paul Ryan’s plan to overhaul Medicare wouldn’t affect today’s seniors. His Medicaid proposal would.
While the Republican vice-presidential candidate is careful to avoid touching Medicare benefits for anyone at or near retirement, his budget would impose immediate cuts to Medicaid, the health-care program for the poor that funds nursing-home care and other benefits for 6 million U.S. seniors.
“It’s very easy to forget about these people,” said Howard Gleckman, a resident fellow at the Urban Institute, a Washington-based policy research group. “It’s a big, big cut.”
The proposed Medicaid changes are often overlooked amid the debate over Ryan’s Medicare plan, which has taken center stage in the presidential contest since the Wisconsin congressman was chosen as Mitt Romney’s running mate on Aug. 11. It’s politically important because those 65 and older are a crucial voting bloc.
“What Paul Ryan and I have talked about is saving Medicare, is providing people greater choice in Medicare, making sure it’s there for current seniors,” Romney said on CBS’s “60 Minutes” on Aug. 12. “No changes, by the way, for current seniors or those nearing retirement.”
A double standard exists when it comes to shielding Medicare and Medicaid beneficiaries from immediate cuts, said Representative Henry Waxman of California, the top Democrat on the House committee with jurisdiction over both programs.
‘Consequences’ of Cuts
“They care about the votes of seniors who are not poor and they don’t care about the votes and the consequences to seniors who are poor,” Waxman said in an interview.
Health-care policy specialists say it’s politically easier to cut Medicaid because most voters don’t understand it.
“Most people have no clue what Medicaid means, especially to seniors,” said John Rother, president of the National Coalition on Health Care, a Washington-based group that promotes expanding health-care coverage while controlling costs.
Asked for comment, Romney spokesman Brendan Buck pointed to a page on the House Budget Committee website that responds to complaints the plan would hurt Medicaid and other safety-net programs. Ryan is chairman of the House panel.
“Rather than micromanage Medicaid from Washington, states will have the freedom to ensure the disabled and those in nursing homes receive the quality care they deserve,” the page says. “Political attacks that question the House Republican budget’s commitment to society’s most vulnerable are rooted in a belief that a distant federal government can better allocate safety net spending than elected leaders closer to the people.”
At issue is the joint federal-state program that provided benefits last year to 70 million poor children, pregnant women, the disabled and the aged. That includes inpatient hospital services and long-term care for 11 million poor, disabled Americans.
The 6 million seniors who are Medicaid beneficiaries consume an outsized share of its budget -- about 23 percent of spending in 2009. That’s primarily because nursing-home care is so expensive. The program covers more than two-thirds of all nursing-home residents in the U.S., according to the Kaiser Commission on Medicaid and the Uninsured.
Many middle-income Americans who may be unfamiliar with Medicaid end up relying on the program in their old age because they exhaust their assets. Medicare doesn’t cover long-term care so they turn to Medicaid, which does.
“Most of us could end up in Medicaid whether we imagine ourselves that way or not,” Rother said.
The program also covers Medicare premiums and other fees for the poorest Americans.
Ryan’s plan would make it difficult to maintain these services because it calls for $800 billion in cuts over the next decade, which would be a one-third reduction in projected spending. By 2050, his proposed budget would cut Medicaid funding in half, according to the nonpartisan Congressional Budget Office, while demand for services is projected to climb as the baby-boom generation reaches old age.
It would be up to the states that administer Medicaid to decide how to allocate the program’s spending among seniors, poor children and the other beneficiaries. Many Republican governors support Ryan’s plan because it would eliminate many of the strings the federal government attaches to its Medicaid dollars, which they said would allow them to run the program more efficiently.
“Medicaid remains an antiquated, federal maze of regulations and mandates focused on process instead of quality health care,” Republican Governors Association Chairman Rick Perry said in a letter last year. “We know their needs far better than the federal government.”
Rother said the elderly would surely face cuts because the reductions would be so steep.
“If you’re talking about a third or half of the funding being cut, there’s really no alternative,” he said. “Cuts of that magnitude are impossible to absorb any other way.”
“Even with significant efficiency gains” Ryan’s plan could require “considerable” cutbacks if states don’t make up the difference in funding, according to the Congressional Budget Office. That could mean fewer services, greater cost sharing or lower payments to health-care providers -- “all of which would reduce access to care,” the CBO said.
The Medicaid cuts are partly the result of Ryan’s decision to spare current Medicare retirees from reduced benefits. His plan to offer seniors subsidies to buy private health insurance wouldn’t take effect until 2023 and would affect those born in 1958 or later. Because the changes are phased in, Ryan’s budget postpones the savings that would accrue by revamping Medicare -- of the $5 trillion in spending cuts in the first decade, only $200 billion come from Medicare.
Meanwhile, the Medicaid cuts would leave many seniors with few alternatives, Gleckman said. Medicaid recipients are so poor they wouldn’t come “remotely close” to being able to buy long-term care insurance, he said.
“If you can’t buy insurance and we’re not going to give you a safety net, what exactly is it that these folks are supposed to do?” he said.
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