How Congressman Ryan’s Radical Health Care Proposals Would Impact DC

Now the answer to a question I’ve been asking myself ever since I looked at Congressman Paul Ryan’s proposals for federal health care programs. What would they mean for the District of Columbia and its residents?

Families USA has just issued a report with state-by-state impact figures for each of the major health care parts of Ryan’s Fiscal Year 2012 budget resolution — his so-called Pathway to Prosperity.

Here’s what we learn.

Medicaid Block Grant. As you may recall, the Ryan plan would convert Medicaid to a block grant. Grants would be adjusted according to a formula that reflected neither rising health care costs nor the aging of the population. The latter is important because state Medicaid programs spend more for low-income seniors than for most other covered groups.

Under the block grant, the District’s existing program would lose $4.4 million next year. Losses would grow exponentially every year thereafter. For the entire first 10-year period, 2012-2021, they would total more than $3.4 billion.

Funding for Medicaid Expansion. Under the health care reform act, states must expand their Medicaid programs to include all people with incomes at or below 133% of the federal poverty line. The federal government will pay all the costs of the expansion for the first three years and most of the costs thereafter.

The Ryan plan would repeal both the expansion requirement and the related funding. Losses to the District by 2021 would reportedly total well over $1.2 billion.

“Reportedly” because Families USA assumed that the District would undertake the expansion in 2014, as the law requires. I understand it’s decided to move at least some eligible residents into Medicaid earlier. This might affect the estimate.

Tax Credits for Insurance Premiums. The health care reform act includes tax credits to help moderate-income families purchase health insurance in the exchanges that will be created. Credits will be available to families up to 400% of the federal poverty line.

The Ryan plan would repeal this provision also. District residents eligible for the tax credits would lose $37.4 million in 2014, the year they’d become available under the current law.

Here again, losses would dramatically escalate. During the 2012-21 period, they’d total close to $1.3 billion.

The health care reform act also provides tax credits for small businesses and some other incentives to encourage employers to provide health insurance. These too would be repealed under the Ryan plan.

Loss of all the tax credits, plus the loss of federal funding for expansion of Medicaid would mean that at least 46,600 District residents would have no health insurance 10 years from now.

Medicare Privatization. Under the Ryan plan, people now under 55 would be subject to an altogether different health insurance scheme when they reached Medicare eligibility age or became severely disabled before that.

Instead of enrolling in the fairly comprehensive, low-cost insurance plan we know as Medicare, they’d get the equivalent of a voucher to purchase health insurance in the private market. As I noted earlier, the value of the voucher would increase at a much lower rate than health care costs.

Families USA doesn’t provide state-by-state figures for the budget crunch that seniors and people too disabled to work would face. The Congressional Budget Office, however, did some preliminary national estimates.

According to these, typical 65 year olds enrolled in a private insurance plan similar to the current Medicare would pay 68% of their health insurance premiums and out-of-pocket costs in 2030. This is 43% more than what they’d pay under Medicare as it exists today.

And the total costs would be much greater because Medicare delivers more health care bang for the buck than private insurance plans.

Bottom Line. If the Ryan proposals for Medicaid, Medicare and health insurance tax credits were all adopted, the District and its residents would lose more than $6 billion in the first 10 years alone.

And for what? So that $4.2 trillion could be used to finance extended and expanded tax breaks that would make the wealthiest even wealthier.

Congressman Ryan’s Radical Attack On Our Health Care System

Republicans in Congress made a big deal of the fact that the health care reform legislation was more than 1,000 pages long. A large portion of those pages spelled out initiatives aimed at controlling health care costs.

Congressman Paul Ryan, Chairman of the House Budget Committee, has a simpler way of cutting federal health care spending. Just stop paying for the health care people need.

His just-released Fiscal Year 2012 budget resolution, The Pathway to Prosperity, would make two radical changes in our health care system.

It would convert Medicare from a health insurance program for seniors and severely disabled people to subsidies that would partially cover the costs of health insurance they purchase on the private market.

Ryan claims that his plan will unleash competition by letting patients choose the plan that delivers high-quality services for the lowest cost.

But, of course, that’s how a vast number of people get their health insurance now — not only the members of Congress Ryan mentions, but others who get their health insurance through their employers or purchase it on their own. Yet health care costs are spiraling.

So how will the Ryan plan save money? Pathway to Prosperity makes the conventional references to waste and abuse, but is otherwise judiciously vague.

But Ryan’s earlier Roadmap for America’s Future certainly wasn’t. Nor was the similar plan he developed in partnership with Alice Rivlin, former head of the Congressional Budget Office and the Office of Management and Budget.

Ryan would reduce federal Medicare spending by adjusting the value of the subsidies according to an inflation index that doesn’t reflect rising health care costs. This produces an even bigger crunch than Ryan-Rivlin.

So, as the Center on Budget and Policy Priorities explains, seniors and other beneficiaries would have to shoulder more and more of their health insurance costs or switch to plans that provide significantly less protection.

Ryan would also convert Medicaid from a genuine federal-state partnership into a block grant — a different type of cost shift, but with similar results.

The federal government now covers a certain percentage of states’ Medicaid costs — somewhere between half and three-quarters, depending on a state’s average per person income.

Under Ryan’s plan, states would get a fixed amount of money — the same in good times and bad, somewhat more over time, but considerably less than would be needed to accommodate rising health care costs and the aging of the population.

States would get enormous “flexibility” (favorite Republican word). They’d no longer have to enroll everyone whose income was low enough to fall below a standard threshold — or indeed, any threshold at all. Nor would they have to provide a specified minimum package of essential services.

Ryan claims that the block grant would eliminate incentives that have led states to expand coverage to people who aren’t “truly in need” — as if people who now qualify for Medicaid aren’t.

States would also, he says, gain freedom from unspecified restrictions that keep them from making their programs “smart” and “efficient.”

We’ve already seen what happens when states face budget pressures due to a combination of lower revenues and rising safety net costs. They look for savings in Medicaid, which accounts for a large percentage of those costs.

And they exercise what’s actually considerable flexibility to eliminate benefits federal rules don’t require — home care that keeps frail elderly people out of nursing homes, hearing aids and eyeglasses, preventive dental care, even life-saving organ transplants.

They make further cuts in reimbursement rates, effectively denying Medicaid participants health care because doctors won’t treat them.

They seek permission to drop people from the program — something they wouldn’t have to do under Ryan’s plan because it would repeal most of the health care reform act, which bars states from rolling back Medicaid coverage.

And recall, this is all happening under the current funding formula.

Ryan says that his plan for Medicaid would save $1 trillion over 10 years. Only one way that could happen. Less federal funding than under the current system — probably progressively less relative to need as time goes on.

States could in theory pick up the difference. But it’s more likely that most would ramp up the kinds of cost-cutting measures we’re seeing now — and go in for others we’re not seeing, thanks only to federal rules.

The Ryan plan may be a pathway to prosperity for the wealthiest, who would enjoy a further 10% cut in their income tax rate. But it’s a pathway to unnecessary pain, suffering and economic insecurity for the rest of us.

UPDATE: The Ryan plan is more generous to the very wealthy than I realized. The Wall Street Journal reports that it would not only cut the top income tax bracket, but eliminate the recently-enacted surtax on high earners’ investment income.

How Mom Lives

My husband and I just got back from a visit with his mother in Cleveland. We were celebrating her 91st birthday.

Mom is one of those wonderful stereotype-busters. A single mother who successfully raised two boys, keeping them securely housed, well-fed, at the top of their classes and, I gather, happy on the wages she earned as a housekeeper.

She’s still sharp as a tack and fiercely independent. I think she might decline — just sort of settle into waiting for the end — if she had to move to a nursing home.

Instead, she lives alone in the same apartment she’s lived in for about 27 years. She doesn’t get around as much any more. Tires easily and not so steady on her feet. But she takes regular walks and visits with her neighbors.

A testimony to her fighting spirit, since she was paralyzed on one side after a stroke eight years ago. Also to the intensive physical therapy she got, including home visits after she left the rehab facility. Then came an excruciating case of sciatica. All but cured after she decided to risk a spinal operation rather than become bed-bound.

Mom reads a lot. She’s curious about many things — animals, far off places, famous and not-so-famous people, American history. And she does love those Grisham mysteries. The public library delivers the books she asks for and picks them up when she’s finished them.

Still cooks for herself. Free fruits and vegetables come to the building biweekly through an arrangement with a farmers’ market. One of the younger residents picks up bags of non-perishables from a local food pantry. A home aide does in-between shopping, plus some housekeeping.

I’m telling you about Mom because her housing, health and general well-being are all made possible by public benefits.

Her apartment building is public housing for seniors and younger disabled people. Most of her medical care and the home aide are covered by Medicaid. So was the visiting physical therapist. The book service is also publicly funded, as is a portion of the costs of the food pantry items.

So I worry. Ohio has been hard it by the recession. It will soon have to close a budget gap that’s been estimated at $8 billion. And we know what often happens to programs for low-income people when elected officials face a revenue shortage.

The food bank that supplies the pantry depends in part on commodities the U.S. Department of Agriculture purchases under The Emergency Food Assistance Program (TEFAP). As I earlier wrote, funding for these purchases has dropped at the same time need is increasing.

This may help explain why the bags Mom and her fellow residents get have fewer items and less variety now. Just two small cans of veggies in the bag I unpacked. No fruit, fish or dairy. The building’s food pantry intermediary says, “The rest of us [who aren’t well-off] are expected to get by.”

I know this is foolish and sentimental. But I can’t help thinking that if the decision-makers knew Mom they’d find a way to protect the programs that make her life possible.

What Does The New “Jobs Bill” Mean For DC?

I’ve been asked how the new job-saving measure will affect the District. Here’s what I’ve come up with thus far.

First a brief overview. The amendment will deliver an estimated $16.1 billion of fiscal relief to the states in the form of a phased-down extension of the higher federal match on state Medicaid costs (FMAP). An additional $10 billion will be apportioned among states to preserve jobs in elementary and secondary education. In both cases, states include the District of Columbia.

About 45% of the total costs — $11.9 billion — will be paid for by terminating the 13.6% boost in food stamps that was part of the economic recovery act. End date will be April 2014. As I previously wrote, the boost was expected to end in 2018 and with no benefits loss.

Now for the District.

FMAP Extension. The District’s Fiscal Year 2011 budget assumes a straightforward extension of FMAP, worth an estimated $77.6 million. According to recent estimates by the Center on Budget and Policy Priorities, the District will actually get $54 million. So there could be a budget gap to close, though much smaller than it would have been without the extension.

Public Education. According to estimates developed for the House Labor and Education Committee, the District stands to gain somewhat over $18 million. The funds are said to support an estimated 200 jobs.

As the DC Fiscal Policy Institute reports, the District will lose considerably more in stimulus funding that was part of the economic recovery act. The Fiscal Year 2011 budget will use local funds to make up part of the loss, but some staff reductions could have been in the offing. The new stimulus infusion might avert them. The amendment strictly limits, if not altogether precludes all other uses of the funds.

Food Stamp Benefits. It’s hard to come up with hard numbers for the impact of the premature end of the food stamp boost. What we know is that, in May 2010, about 119,260 District residents were receiving food stamps — nearly 20% of our total population.

Participation in the food stamp program has been steadily increasing. The annual May-to-May increase for the District was 15.5%. So barring some economic miracle, at least 200,000 or so residents will see their benefits drop.

The dollar impact will depend on family size, income and whether the cost of the food plan used to calculate benefits increases before the boost ends. The Food Action and Research Center says that a family of four will lose $59 per month. I’m guessing this reflects a calculation based on some average.

At this point, the maximum monthly per person benefit for a family of four is $167. Many District residents get far less. In Fiscal Year 2009, with the boost in effect, the average monthly per person benefit for District residents was $128.66. Without the boost, it probably would have been $24 less. I believe the figure would be the same for this fiscal year.

It doesn’t mean that District residents will lose, on average, this amount. But it’s clear that the poorest among us will be paying, with a benefits loss they can’t afford, to save jobs they don’t have.