Ryan Budget Would Make Big Changes in Medicare

House Budget Committee Chairman Paul Ryan’s new budget provides much less detail than last year’s about his proposals in Medicare and other areas — too little for the Congressional Budget Office (CBO) to estimate their impact, as Brookings economist William Gale points out.  (CBO estimated that Chairman Ryan’s Medicare proposals last year would have driven up total health care spending and doubled the out-of-pocket costs of a typical 65-year-old.) 

Nonetheless, we can piece together a fair amount about Chairman Ryan’s updated plans for Medicare.  As my new paper explains, these include:

• Replacing guaranteed coverage with a voucher. Most notably, the Ryan budget would replace Medicare’s guarantee of health coverage with a flat “premium support” payment, or voucher, that beneficiaries would use to buy either private health insurance or a form of traditional Medicare.  This would shift substantial costs to Medicare beneficiaries — especially for low-income beneficiaries also eligible for Medicaid; the Ryan plan would eliminate the supplemental benefits and help with premium and cost-sharing they receive through Medicaid without providing an adequate replacement.

  Adopting premium support would also, contrary to Chairman Ryan’s claim, likely lead to the demise of traditional Medicare by making its pool of beneficiaries smaller, older, and sicker — and increasingly costly to cover.

• Raising the eligibility age. Starting in 2023, the Ryan budget would raise the eligibility age for Medicare — now 65 — by two months per year until it reaches age 67 in 2034.  It also would repeal health reform.  As a result, many 65- and 66-year olds would have neither Medicare nor access to health reform’s coming health insurance exchanges in which they could buy affordable coverage.
• Rescinding health reform’s Medicare improvements. The Ryan budget would repeal health reform provisions that strengthen Medicare benefits, such as closing the gap in Medicare prescription drug coverage (known as the “doughnut hole”) and covering preventive services with no cost sharing.  These repeals would adversely affect both current and future beneficiaries.