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.

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