Yesterday, Politico ran a front page article accusing the House Republican budget of hiding a change in the annual growth rate for Medicare spending in order to pay for—you guessed it—tax cuts. The article stated in the second line that this was a “little-noticed but vital change,” which is perplexing, given that several major media outlets (including the Kaiser Family Foundation, The Committee for a Responsible Federal Budget, and the Washington Post), have noted for months that both Chairman Ryan and President Obama use the same growth cap for Medicare. The change was also noted several times during markup.
In fact, while the Affordable Care Act capped Medicare growth at GDP plus 1 percent, President Obama proposed to lower this cap to GDP plus .5 percent in his FY13 budget, which both he and the media called “strengthening IPAB to reduce long-term care drivers of Medicare cost growth.” One would expect a similar change by President Obama would warrant the same level of scrutiny, especially given that the President’s budget still manages to increase the gross national debt to $26 trillion in 2022. Additionally, the House Budget Committee specifically decreased the cap in the House FY13 budget because the President’s FY13 budget was based on that level.
Further, the article notes that for new Medicare enrollees, “Ryan’s instructions to CBO were to assume net spending of $7,500 per 65-year-old in 2023 dollars — a significantly lower starting point than the rest of Medicare.” According to the House Budget Committee, the lower starting point was used because CBO is unable to analyze the effects of competitive bidding, which they have admitted is a “gap in their toolkit.”
Both the President and the House Republican budget assume the same growth rate; they just achieve it in different ways. Under President Obama’s plan, if CMS determines that future Medicare spending will exceed the target growth rate (GDP + .5 percent), the Independent Payment Advisory Board (IPAB), an unaccountable board of 15 unelected bureaucrats, will make indiscriminate cuts to the Medicare program for seniors current enrolled in it. The IPAB will have unprecedented power with little oversight and will result in reduced access to care for seniors currently enrolled in the program. The 2012 Medicare Trustees report warned that cuts to provider payments will force providers to drop out of the program, reducing beneficiary access. Most importantly, despite President Obama’s IPAB, Medicare is still scheduled to go bankrupt in 2024.
Under the FY13 House Budget, there are no changes to the current program. Those who are currently enrolled in Medicare or who become eligible in the next 10 years (55 and older today) can count on the same Medicare program without any changes – unlike the President’s plan. Future seniors will have the option of choosing a guaranteed-issue, private plan or traditional fee-for-service Medicare, and pay for it using premium support. Plans will compete for seniors’ business, and this competitive bidding process is expected to hold Medicare program growth even lower than the GDP + .5 percent cap.
Lastly, both the FY12 House Budget and the FY13 House Budget call for revenue neutral tax reform with a 25 percent top rate for individuals and the reduction of tax preferences. Both budgets also call for reducing corporate tax rates to 25 percent and reducing tax preferences. Given the lack of change regarding revenue, it is unclear why the article is assuming that the change in the Medicare growth rate means Chairman Ryan is “cutting corners with seniors to pay for tax cuts.”
Staff Contact: For questions or further information contactLisa Collins at 5-2045.