With congressional Republicans backing away from a contentious plan to overhaul Medicare, cutbacks in the Medicaid program appear to be the new pathway in attempts to control the nation’s surging deficit.


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Medicaid on firing line in fight over reducing debt

May 23rd, 2011

WASHINGTON – With congressional Republicans backing away from a contentious plan to overhaul Medicare, cutbacks in the Medicaid program appear to be the new pathway in attempts to control the nation’s surging deficit.

House of Representatives Ways and Means Committee Chairman David Camp (R., Mich.) says the panel will not advance a Republican proposal to privatize Medicare for future retirees because it stands no chance of getting passed by the Democrat-led Senate. Camp’s comments came as Vice President Joseph Biden began bipartisan White House talks on cutting the $1.4 trillion U.S. deficit.

The Medicare plan’s author, House Budget Committee Chairman Paul Ryan (R., Wis.), said Republicans hoped to achieve some spending cuts in negotiations but predicted that any sweeping changes to the popular health care program would not be in play until after 2012.

President Obama has characterized Ryan’s Medicare proposal as radical, saying it tries to solve the deficit problem “on the backs of the poor.”

Republicans have encountered voter anger over the proposal, which would phase out traditional government-run Medicare and replace it for future retirees with subsidies to purchase health policies from private insurers.

Although a sweeping overhaul of Medicare has been set aside, Camp says it remains on the table as rapidly rising spending for U.S. health programs threatens to overwhelm the budget. The debt limit is seen as a Republican lever for pressuring Obama and Democratic lawmakers into accepting deep cuts in federal spending. And Tea Party conservatives are demanding tough spending controls even with no quick agreement on Medicare, Medicaid and other social programs.

Although the largest number of Medicaid recipients are low-income children and adults, changes to Medicaid proposed by Ryan could have a more direct impact on older Americans than the Medicare part of his plan.

The plan would turn Medicaid, which provides health coverage for the poor through a combination of federal and state money, into a block grant program for states. The federal government would give lump sums to states, which would be given more flexibility and independence over use of the money.

Beginning in 2013, these grants would increase annually at the rate of inflation — with adjustments for population growth — a rate significantly below that of inflation for health care costs.

As a result, states would be likely to slash coverage, and such reductions could have a disproportionate effect on Medicaid spending for nursing home care for the elderly or disabled.

Conversely, under the Medicare proposal approved by the House, no one currently age 55 or older would see a change in benefits, which the House proposed to turn into a voucher-type program.

According to the Congressional Budget Office, in the 2010 fiscal year 77% of those enrolled in Medicaid were children and families, while the rest were elderly or disabled. But nearly two-thirds (64%) of Medicaid spending was for older Americans and people with disabilities; 36% went to children and families.

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