House GOP budget plan aims to slice entitlements, deficit

Democrats and some in organized medicine slammed the proposal, saying it would force states, the poor and the elderly to pay too much.

By Doug Trapp — Posted April 18, 2011

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Even before lawmakers narrowly averted an April 8 government shutdown by finalizing fiscal 2011 funding levels, House Budget Committee Chair Paul Ryan (R, Wis.) launched what is expected to be an even more contentious debate over federal spending for next year and beyond.

Ryan's $3.53 trillion fiscal 2012 budget proposal is the House GOP response to the Obama administration's budget plan. Some Republican congressional leaders praised Ryan for delivering a deficit reduction proposal that tackles federal health entitlement spending. But Democrats and some physician and hospital organizations criticized the plan, saying it would shift too much health spending to states, the poor and the elderly.

The House Budget Committee approved Ryan's resolution along a 22-16 party line vote on April 6, a day after it was released. The Republican-controlled House was expected to follow suit before members began a two-week recess on April 18.

But the plan was not expected to go anywhere in the Senate, which also must approve any budget resolution before spending guidelines apply.

Congress is not required to approve a budget blueprint, only to pass spending bills before the Oct. 1 start of the next fiscal year.

The Ryan budget resolution includes policy changes and spending projections that extend as far as 2050. It would privatize Medicare and phase out the government-run fee-for-service program. Instead, it would offer annual vouchers that start at an average of $8,000 when the program begins to help offset the cost of buying private health insurance for citizens who turn 65 in 2022 or later.

"We want to harness the power of patient choice, of competition on behalf of senior citizens," Ryan said April 5.

The budget resolution would turn federal Medicaid funding into block grants that would be capped at levels much lower than current federal Medicaid spending. States would be given more power to adjust Medicaid eligibility and coverage.

The Ryan proposal would repeal several provisions of the health system reform law, including its requirement for individuals to have health insurance and its plan for an independent Medicare payment board. It would cap noneconomic damage awards in medical lawsuits similar to levels in California and Texas. It pledges to prevent the 29.5% Medicare physician pay cut scheduled to take effect on Jan. 1, 2012, as well as cuts in future years under the sustainable growth rate formula, but it does not specify how the GOP would cover the estimated $300 billion price tag.

Ryan said his proposal would reduce spending by $6.2 trillion. He claimed it would cut deficits by $4.4 trillion over the next decade compared with President Obama's fiscal 2012 budget request.

But the Ryan budget may overstate likely revenues and lacks specificity, said a Congressional Budget Office analysis released April 5. The proposal assumes that federal revenues would "reach higher levels relative to the size of the economy than ever recorded in the nation's history" but does not specify how, the CBO said.

Organized medicine weighs in

Ryan's proposal would not reduce overall health care costs, it would just shift more costs from the federal government to the poor, elderly and others, said American Academy of Family Physicians President Roland Goertz, MD.

CBO estimated that by 2022, the average portion of total Medicare spending shouldered by seniors would increase from 30% to 61%. Private health insurance would cost more than traditional Medicare because of higher administrative costs and physician payments, the CBO said.

Dr. Goertz said political leaders have two choices to reduce health care spending: cut payment and benefits or reengineer programs to perform more efficiently. Ryan's plan focuses on the former, Dr. Goertz said. The AAFP prefers patient-centered medical homes and other changes to help achieve the latter.

Ryan's proposed budget also fails to invest in children's health and to allow America to be more competitive in the global economy, said Marion Burton, MD, president of the American Academy of Pediatrics.

The Medicaid cuts in Ryan's proposal would strain the nation's health safety net, said Chip Kahn, president and CEO of the Federation of American Hospitals. "It would result in the loss of health coverage for millions of low-income Americans, reduce critical benefits for others, and make it more difficult for hospitals, clinicians and other health care providers to deliver the care so many need," he said.

GOP leaders praised the Ryan proposal for including entitlement reforms. "The American people understand we can't continue spending money we don't have," said House Speaker John Boehner (R, Ohio).

Democratic reaction to the proposal was universally negative. For example, 17 Democratic governors sent a letter to congressional leaders on April 4 stating opposition to the Medicaid block grant proposal. "There is nothing courageous about targeting the most vulnerable in our society. Yet that is the biggest area of Republican cuts," said Rep. Chris Van Hollen (D, Md.), the highest ranking Democrat on the House Budget Committee.

Democrats scoffed at the plan's mention of Medicare physician pay. "The House Republican budget takes care of doctors the same way it takes care of senior citizens, people with disabilities and low-income women and children -- it doesn't. Their doublespeak in this budget would make George Orwell proud," said Rep. Pete Stark (D, Calif.).

The president was preparing to deliver his own long-term deficit reduction plan at this article's deadline.

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Shifting costs, cutting benefits

House Budget Committee Chair Paul Ryan (R, Wis.) proposed a fiscal 2012 budget resolution that would end guaranteed benefits in Medicare and Medicaid. The resolution also includes other policy changes through year 2050 that Ryan says are designed to reduce the national debt. The proposal would:


  • Prevent a scheduled 29.5% Medicare physician pay cut from occurring in 2012 and prevent further pay cuts through 2021. The plan does not specify how to pay for the changes.
  • Close enrollment in traditional Medicare starting with people who turn 65 in 2022. Instead, these seniors would receive vouchers indexed to inflation and based on age, income and health status, to purchase private insurance from health plans.
  • Increase Medicare's eligibility age by two months per year starting in 2022 until it reaches 67 in 2033.


  • Turn federal Medicaid funding into block grants starting in 2013. The grants would grow based on inflation and state populations.
  • End Medicaid payments for acute care and dual-eligible beneficiaries starting in 2022.
  • Stop Medicaid funding from automatically increasing during a recession.

Health reform law

  • End the law's requirement for individuals to have health coverage.
  • Rescind a Medicaid expansion expected to cover 16 million people.
  • Repeal health insurance exchanges and coverage subsidies.
  • Repeal tax credits for small employers that offer health insurance.
  • Retain hundreds of billions in Medicare cuts in the reform law.
  • End the process of closing the Medicare prescription drug benefit's coverage gap.
  • Repeal the Medicare Independent Payment Advisory Board.

Source: Congressional Budget Office analysis of House Republican budget proposal, April (link)

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External links

The Path to Prosperity, the House Republican fiscal 2012 budget proposal (link)

The Congressional Budget Office analysis of the House GOP proposal (link)

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