House Speaker Paul D. Ryan said Thursday that Medicare has “serious problems” that would need to be addressed when Congress moves to repeal and replace President Obama’s health-care reform law — a signal that he is willing to immediately enter the treacherous politics of entitlement reform and perhaps break with President-elect Donald Trump.
“When Obamacare became Obamacare, Obamacare rewrote Medicare, rewrote Medicaid, so if you’re going to repeal and replace Obamacare, you have to address those issues as well,” he said in a Fox News Channel interview. “What people don’t realize is that Medicare is going broke, that Medicare is going to have price controls. Because of Obamacare, Medicaid is in fiscal straits. So you have to deal with those issues if you’re going to repeal and replace Obamacare. Medicare has got some serious problems because of Obamacare. Those things are part of our plan to replace Obamacare.”
Ryan spokeswoman AshLee Strong declined to comment further on Ryan’s plans for Medicare and Medicaid, but he has long advocated major changes to both programs that could reduce their costs — and their benefits for poor and elderly Americans.
Ryan (R-Wis.) specifically cited the Independent Payment Advisory Board, a body created under the Affordable Care Act that has the power to recommend cuts in the level of government’s payments to providers who participate in Medicare. It is set to start wielding its powers next year, and while Obamacare’s backers say the board is an important tool for reining in health-care costs, conservatives see it as an infringement on the free market that could lead to the rationing of care.
The “Better Way” policy package that Ryan drafted earlier this year with the aid of his fellow House Republicans proposed a broad package of proposed Medicare reforms, ranging from the repeal of the IPAB to expanding the privately managed Medicare Advantage program to a full-blown overhaul of the Medicare system into a “premium support” model.
That would involve transforming Medicare from a largely single-payer federal program to a private model where seniors would be federal subsidies to buy private insurance — similar to the subsidies available to younger Americans who can now buy insurance on the ACA-mandated state marketplaces.
“This reform ensures affordability by fixing the currently broken subsidy system and letting market competition work as a real check on widespread waste and skyrocketing health-care costs,” the GOP plan says. Ryan has included a premium support model as part of the budget proposals he put forth as chairman of the House Budget Committee, calling them necessary to stabilize the nation’s long-term fiscal outlook.
But any radical changes to Medicare have historically been deeply unpopular. Trump, by and large, stayed far away from proposing Medicare cuts during the campaign. His health policy platform, for instance, does not make any mention of Medicare amid its promises to repeal Obamacare. It does, however, support “block-granting” Medicaid — that is, changing the federal health program for the poor from an open-ended, formula-based system with strict rules on benefits to a lump-sum model in which states would have great leeway to reduce or supplement benefits.
Last year, Trump briefly said he would consider a plan supported by GOP rival Ben Carson that would have seniors rely on health savings accounts to finance their care before reversing course and saying he was wary of Medicare changes.
“Abolishing Medicare, I don’t think you’ll get away with that one,” he said. “It’s actually a program that’s worked. It’s a program that some people love, actually.”
In a 2013 speech to the Conservative Political Action Conference, Trump said, “As Republicans, if you think you are going to change very substantially for the worse Medicare, Medicaid and Social Security in any substantial way, and at the same time you think you are going to win elections, it just really is not going to happen.”
But his new transition website includes a revised health policy agenda that could encompass the sorts of changes that Ryan has proposed. “Modernize Medicare, so that it will be ready for the challenges with the coming retirement of the Baby Boom generation — and beyond,” the document reads. “Maximize flexibility for States in administering Medicaid, to enable States to experiment with innovative methods to deliver healthcare to our low-income citizens.”
As for whether Medicare is “going broke,” the program’s trustees say that the “Part A” trust fund — the costliest component of Medicare, covering hospital visits — is set to become insolvent in 2028. In 2009, before the passage of the Affordable Care Act, however, the trustees projected that fund would be insolvent in 2017.
The latest projections from the nonpartisan Congressional Budget Office show that Medicare spending is set to rise from the current level of about 3 percent of gross domestic product to more than 5 percent of GDP in 2040. But that is considerably less growth than the CBO projected before the passage of the Affordable Care Act, which showed Medicare spending in the realm of 7 percent around 2040. In the next 10 years alone, the difference between those projections could amount to $2 trillion, according to an analysis by the liberal Center for American Progress.
“Both in the aggregate and on a per capita basis, Medicare spending growth has slowed in recent years,” the nonpartisan Kaiser Family Foundation said in a July report. “While spending is expected to continue to grow more slowly in the future compared to historical trends, there are signs that spending growth could increase at a faster rate than in recent years, in part due to rising prescription drug spending, growing enrollment in Medicare, increases in provider payments, and higher growth in input prices for medical care.”
Fox anchor Bret Baier asked Ryan about “entitlement reform” generally Thursday, and while he readily proposed reforms to Medicare and Medicaid, he appeared much less eager to propose changes to Social Security. “Fiscal pressures are mounting faster on health care than they are on Social Security,” he said.