Rep. Paul Ryan, chairman of the House Budget committee, will propose fundamental reforms to Medicare and Medicaid in the GOP budget expected to be released Tuesday, implying in a Fox News Sunday interview that the deficit savings would exceed $4 trillion.
"We can't keep kicking this can down the road," Ryan said to Fox. "The president has punted. We're not going to follow suit."
He also said that the deficit reduction would exceed what President Obama’s fiscal commission proposed last year, which was $4 trillion.
Though we don’t have the actual GOP budget yet, prior CBO estimates provide us with some guidance on how much individual proposals could save.
On Medicaid, Ryan will propose to block grant the program to states, which would save money, allow it to grow at a predictable rate, and give governors more flexibility over how it is implemented. This is a popular option among many governors who are struggling with Medicaid costs, and it’s a proposal that has already attracted bipartisan support (at least intellectually speaking), as it was previously co-proposed with Alice Rivlin, the former Clinton budget director.
When it comes to Medicare, Ryan has previously proposed fundamentally reforming it to give retirees vouchers to purchase private insurance that would vary by income and health status. So, for instance, a poor and very sick beneficiary would receive a lot more than a very rich and healthy beneficiary. However, this reform would not kick in right away, as it only applies to those 55 and older. Thus, it would take time to produce savings and those wouldn’t show up in the CBO’s 10-year budget window.
Yet he and Rivlin also proposed changes to the formula for cost-sharing on supplemental Medicare insurance policies, which would affect near-term budgets.
Last November, the Congressional Budget Office did a preliminary analysis of the Ryan-Rivlin plan and found that the Medicaid and Medicare reforms, plus a change in medical malpractice law, would save $350 billion from 2011 through 2021.
Other possible ways to save money -- Ryan has supported the repeal of the national health care law. Were he simply to propose a repeal of the bill’s Medicaid expansion, which would add 18 million to the program’s rolls by 2021, it would save $674 billion from 2012 to 2021, according to CBO.
The Ryan proposal is also expected to cap discretionary spending as well as cap spending as a percentage of GDP.
When President Obama ignored the proposals of his own fiscal commission, it was an indication that he had chosen politics over leadership. That is, it was more important for him to goad Republicans into proposing entitlement reform so Democrats could attack them for it, then it was for him to try and actually address the nation’s challenges. Evidently, Ryan has decided to take the opposite approach.