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GOP Budget Plan Slashes Health Care Spending

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Transcript

MICHELE NORRIS, host:

The 2012 budget outlined by Republican Paul Ryan gets a significant share of its savings by cutting spending on health care, specifically the Medicare program for the elderly and the Medicaid program for the poor.

While none of those savings proposals are new, NPR's Julie Rovner reports that the Republican move is still highly controversial.

JULIE ROVNER: Ryan says his plan for Medicare, which would involve a fundamental privatization of the heretofore government-run program, would simply make the program more efficient and hence less expensive.

Representative PAUL RYAN (Republican, Wisconsin; Chairman, House Budget Committee): We want to harness the power of patient choice, of competition, on behalf senior citizens, future seniors in Medicare.

ROVNER: The idea is called premium support. Seniors would choose from a menu of private health plans rather than the current government-run insurance program. They get a set amount of money from the government. And if they want to buy a more expensive plan, they'd have to chip in the extra themselves.

Ryan says it's a lot like the insurance he and other federal workers have. But there's a big difference between the federal employee health plan and what's being proposed from Medicare says Len Nichols, a health economist at George Mason University.

Federal workers get a set percentage of the cost of their premiums covered. That protects workers at least somewhat from health care inflation.

But under the Ryan plan, seniors would get a set dollar amount, which would purposely rise more slowly than health inflation in order to save the government money.

The result, says Nichols...

Dr. LEN NICHOLS (Director, Center for Health Policy Research and Ethics; Health Policy, George Mason University): It shifts all the risks of continued cost growth onto the individual.

ROVNER: Which may not be a bad thing for those who can afford it, he says. Nichols says he's more worried about whether seniors with lower incomes are in poorer health will be able to find adequate health coverage in the private insurance market.

Dr. NICHOLS: For the frail elderly, I'm not so sure we have actually that many plans who are ready and able to take them at a fixed price and be comfortable with it.

ROVNER: And when it comes to Medicaid, the joint federal-state program for the poor, the Ryan budget plan is more sweeping still. It would basically end the program as an entitlement and give states block grants instead that would be capped.

Republican governors have been clamoring for the chance to get out from under federal Medicaid rules for years. They say they can spend the money more effectively without having to jump through federal bureaucratic hoops.

But Edwin Park of the liberal Center on Budget and Policy Priorities says there are limits to being able to do more with less.

Mr. EDWIN PARK (Vice President for Health Policy, Center on Budget and Policy Priorities): The idea that states could use some of the greater flexibility it would gain under a block to compensate for cuts of this magnitude are just entirely unrealistic.

ROVNER: Indeed, Park says, by the year 2021, Medicaid spending would be reduced by as much as a third under the proposal. He says that would leave governors little leeway.

Mr. PARK: They would have no choice but to use that flexibility to really cut eligibility benefits, which would add to the ranks of the uninsured or deny people access to needed care and really cut provider reimbursement rates.

ROVNER: And cutting already low Medicaid payments to doctors, in particular, would mean even fewer practitioners would be available to see existing Medicaid patients.

In fact, neither the proposals nor the arguments against them are new. Both would clearly reduce the federal deficit. But whether they would actually reduce overall health spending or just shift it to patients, states and health care providers is one reason neither of these ideas has been enacted, at least not so far.

Julie Rovner, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

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