Ryan To Unveil Budget Proposal

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The Republican who heads the House Budget Committee unveils his proposal for a 2012 budget Tuesday. And Rep. Paul Ryan is not merely tinkering around the edges. While the battle over this year's budget has focused on a narrow slice of federal spending, Ryan's plan tries to reshape the whole pie — including health care. Ryan told Fox News over the weekend his plan would replace the government-run Medicare system for workers under 55. When those workers retire, they would receive a government subsidy to shop from a menu of private insurance plans. Michele Norris speaks with NPR's Scott Horsley for more.


From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

Congressman Paul Ryan has his big moment tomorrow. He's the Republicans' go-to guy on the budget, and he will unveil his plan for 2012. And Congressman Ryan is not just tinkering around the edges.

While the battle over this year's budget has focused on a narrow slice of federal spending, Ryan's plan tries to reshape the whole pie, and that includes health care.

He told Fox News over the weekend his plan would replace Medicare for workers under 55. When they retire, they would receive a government subsidy to shop from a menu of private insurance plans.

Representative PAUL RYAN (Republican, Wisconsin; Chairman, House Budget Committee): Medicare puts a list of plans out there that compete against each other for your business, and seniors pick the plan of their choosing, and then Medicare subsidizes that plan. Doing that saves Medicare.

NORRIS: Joining us now to talk about the Republican budget is NPR's Scott Horsley. And, Scott, whatever else you might say about Congressman Ryan, you can't say that he's timid.

SCOTT HORSLEY: No. This is a bold plan. It attempts to cut trillions of dollars from the federal budget, and, as you say, unlike the debate we've been witnessing for the past few months, which is focused on this narrow piece, the discretionary nondefense spending, this plan does go after the big-ticket items, and that includes Medicare and Medicaid.

NORRIS: So how exactly would this plan save money on health care?

HORSLEY: Well, one thing we should stress is that Congressman Ryan would not change Medicare for people who are retired now or who are a few years from retirement. But for those who would retire, say, 10 years from now or after that, Medicare, as we know it, would disappear, and instead, seniors would choose from a variety of private insurance plans with the government picking up some of the cost.

Now, the government's payouts would increase year by year, according to a formula but, as budget maven Alice Rivlin, who served with Ryan on the president's deficit commission, points out, the growth in government spending would not keep pace with what we've been seeing in health care inflation.

Dr. ALICE RIVLIN (Member, National Commission on Fiscal Responsibility and Reform): It is slower than health costs have been growing recently, but that's the point. We have to find a way to slow the growth of health costs generally, not just in Medicare, but unless we do, we're in real trouble. The current system is not sustainable.

HORSLEY: So we can say with some certainty that Ryan's plan would save the government money on health care relative to the current system. What's less clear is whether the overall cost of health care would be cut, or if cost would just be shifted onto the backs of retirees.

NORRIS: And can we also say with some certainly that under this plan, seniors might end up paying more out of pocket for their health care?

HORSLEY: It's possible. Now, Ryan and other supporters of this plan argue that having these private insurers compete for business will drive down costs, so the government subsidy would stretch farther.

But critics say, you know, Medicare, which is effectively a single-payer plan, is already pretty efficient, and that adding private insurers to the mix would just add in administrative costs. It would add a profit motive. And that competition itself may not be the salvation.

What would help is if private insurers or the government could figure out and pay for the kind of care that actually makes us healthier and stop paying for the kinds of care that doesn't.

NORRIS: Preventive care and that kind of thing. Now, what are the changes to health care we'll see in the Republican budget?

HORSLEY: Well, we could see a gradual increase in the age at which seniors become eligible for Medicare, from 65 up to, say, 67 over a period of many years.

The GOP also wants to change Medicaid, the health care program for the poor, turn that into a block grant that the federal government gives to the states. Again, the federal exposure would be capped, and states would have more flexibility.

But as with Medicare, this might produce real savings, or it might just result in a cost shift onto the states, onto the backs of poor people or onto the backs of everyone else who has to pay for insurance coverage.

NORRIS: Scott, I've got only few more seconds. Would likely to be met with applause or a robust debate about this?

HORSLEY: It's certainly going to be a robust debate. The White House was guarded in its response today. They say they welcome an adult conversation.

NORRIS: That's NPR's Scott Horsley.

Scott, thank you very much.

HORSLEY: My pleasure.

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