The Republican Budget: Privatizing Medicare, Shifting Costs to Seniors and People with Disabilities

Mar 27, 2012

The Republican budget would end Medicare as we know it. The Republican plan would slash hundreds of billions more out of health care programs that middle class families depend upon – including $122 billion out of Medicare - to fund trillions of dollars in tax cuts, defense spending and deficit reduction.

Republican Plan Harms Medicare: For nearly five decades, Medicare has provided a lifeline for tens of millions of seniors and people with disabilities. The cornerstone of the program has been affordability, the peace of mind knowing that benefits are guaranteed across the country, and the ability for local physicians to treat patients without insurance bureaucrats interfering in treatment decisions. The Republican plan would undo these protections.

  • Ends Medicare’s Guarantee of Benefits: The Republican plan turns Medicare into a voucher program with no guarantee insurance plans would provide needed benefits, or the same benefits Medicare provides today that people depend upon. This voucher program is a disguised way to shift costs to seniors. According to CBO, under the Ryan budget, federal Medicare expenditures on behalf of an average 67-year-old beneficiary would be 35 percent to 42 percent lower than under current law in 2050 – that means patients would have to make up the difference, or go without.[1] This voucher is not guaranteed to keep pace with health care costs, regardless of whether a beneficiary enrolls in Original Medicare or a private plan.
  • Ends Medicare’s Promise of Affordability: For millions of seniors that wish to remain in Original Medicare, that program will likely become unaffordable under the Republican plan. Insurance company discrimination against the older and sicker beneficiaries will cause a death spiral for the Original Medicare program, driving up premiums, effectively denying access to even those with moderate incomes. Other beneficiaries will be priced out of Original Medicare simply because of where they live.
  • Increases Costs for Seniors and the Disabled: The Republican Medicare voucher would dramatically increase costs for Medicare beneficiaries – by approximately $2,200 per beneficiary starting in 2030 and increasing to $8,000 per beneficiary in 2050. It seems unlikely that most seniors living on fixed incomes could afford to bear these increased costs.[2]
  • Arbitrary Cap on Spending: The Republican plan limits annual growth in the voucher amount to GDP per capita + 0.5 percentage points. That would almost certainly mean the vouchers would grow much more slowly than health care costs — and beneficiaries will be able to purchase less coverage with each passing year.[3] The Congressional Budget Office (CBO) noted, “The restraints on Medicare spending could lead to reduced access to health care; diminished quality of care for Medicare beneficiaries…”[4]
  • Leaves More Near-Elderly Uninsured: At the same time that the Republican plan repeals the provisions of law that provide access to and subsidies for insurance coverage for American families, the plan raises the Medicare eligibility age to 67 – leaving the uninsured with two more years to fend for themselves. More than 5 million Americans who today could count on Medicare would remain uninsured longer under this plan.[5]

More Cuts to Medicare. In addition to the drastic changes to Medicare’s fundamental structure, the Republican budget would cut an additional $122 billion from the Medicare program over the next ten years. These cuts are in addition to the cuts to Medicare that result from the sequester required under the Budget Control Act of 2011. These cuts come from (1) further increasing income related premiums on Medicare beneficiaries; (2) medical malpractice changes that limit the amount of compensation injured patients receive; (3)  repealing the positive changes in the Affordable Care Act such as the new preventive benefits and wellness visit, elimination of cost-sharing for preventive care, and closing the donut hole. In addition, the Republican budget, however, maintains the provider cuts in the Affordable Care Act.

The Republican plan would also take away Medicare benefits provided under the Affordable Care Act; these new benefits are critical for the nearly 50 million Americans who rely on Medicare for their care.

What Seniors and People with Disabilities Lose Under the Republican Plan from the Affordable Care Act:

·        Reduced prices on prescription drugs.

·        Improvements to Medicare that reduce unnecessary hospital admissions, reduce medical errors, better coordinate care and improve health.

·        Expanded access to preventive benefits which save lives, keep people healthy, and reduce costs by early detection of illness.

·        Access to affordable insurance coverage in pre-Medicare years – which will help patients arrive at Medicare age healthier and less costly.

Taken together – less preventive care and detection of illness, no focus on reducing errors, greater costs for the same or worse care, and care decisions made for profit not compassion - these changes will result in denied, delayed or deficient care, increasing the strain on our nation’s health systems and families’ budgets.

In short, the Republican budget is an all-out assault on Medicare, shifting costs to beneficiaries, and eliminating Medicare’s guarantee that has protected the elderly and people with disabilities for nearly five decades.

[1] Congressional Budget Office, The Long-Term Budgetary Impact of Paths for Federal Revenues and Spending Specified by Chairman Ryan, March 20, 2012.

[2] Ibid.

[3] Greenstein, Robert, “CBO Shows Ryan Budget Would Set Nation on Path to End Most of Government Other Than Social Security, Health Care, and Defense by 2050,” Center on Budget and Policy Priorities, March 20, 2012.

[4] Congressional Budget Office, The Long-Term Budgetary Impact of Paths for Federal Revenues and Spending Specified by Chairman Ryan, March 20, 2012.

[5] Volsky, Igor, “Estimate: At Least 48 Million Could Become Uninsured Under Paul Ryan’s Budget, March 20, 2012,