Tuesday, April 5, 2011

GOP budget plan guts fundamentals of Medicaid, Medicare

VIA John Nicholson, BNA

GOP FY 2012 BUDGET PLAN SETS STAGE FOR MEDICARE, MEDICAID CHANGES

Posted April 5, 2011, 10:34 A.M. ET

The House Republican budget resolution for fiscal 2012 would decrease federal deficits by $1.649 trillion over the 2012-2021 period by cutting spending by almost $6 trillion, according to a summary of the proposal released April 5.

 The plan would set the stage for major changes in the two biggest federal health care programs, Medicaid and Medicare, and put in place "enforceable spending caps" to restrain outlays. It would also make permanent the 2001 and 2003 tax cuts and repeal the 2010 health care overhaul.

In the area of changing Medicare, the House budget document said current program beneficiaries would not be affected. When younger workers become eligible for Medicare, they would be able "to choose from a list of guaranteed coverage options, enjoying the same kind of choices in their plans that members of Congress enjoy today. Medicare would then provide a payment to subsidize the cost of the plan. In addition, Medicare will provide increased assistance for lower-income beneficiaries and those with greater health risks."

And for Medicaid, the summary said the Republican budget proposal would end "an onerous, one-size-fits-all approach by converting the federal share of Medicaid spending into a block grant that gives states the flexibility to tailor their Medicaid programs to the specific needs of their residents."

According to the summary, the resolution would cut spending by $5.812 trillion compared to projections under current law by the Congressional Budget Office. In comparison, the CBO said March 18 President Obama's budget would raise outlays by about $412 billion over the same period, mostly to pay for interest costs on debt.

But the deficit-reduction impact of the spending cuts would be offset by revenue cuts almost as large. The summary showed revenues would fall by $4.162 trillion over the 2012-2021 period, much more than$2.331 trillion revenue loss seen in the Obama budget. Much of that revenue loss is in both cases is tied to the costs of extending the 2001 and 2003 tax cuts.

Even with additional tax cuts, the GOP budget would decrease the deficit, in contrast with the Obama plan. The CBO said the Obama plan would add $2.733 trillion to the deficit over the 10-year period.

 Text of the budget summary will be available at http://op.bna.com/der.nsf/r?Open=csaz-8fmj2j.

 

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