House Republicans Propose Remake of Medicare and Medicaid

En español | The House has passed a comprehensive and controversial 2012 spending plan proposed by Budget Committee Chairman Paul Ryan, R-Wis., that attacks the soaring federal deficit by remaking Medicare and Medicaid.

See also: AARP calls on lawmakers to oppose unbalanced budget plan.

Democrats, who have a majority in the Senate, hope to present their plan later in April. Meanwhile, in a speech April 13, President Obama unveiled his own vision for reducing the federal deficit, which also touched on changes to Medicare and Medicaid.

Advocates for seniors have protested the Ryan plan, saying the changes would leave older Americans with less health care coverage and access to nursing homes, and would expose them to potential future cuts to Social Security benefits.

President Obama reacts

President Obama portrayed the sharp differences between his and Ryan’s budget plans as “very sharply contrasting visions in terms of where we should move the country. That’s a legitimate debate to have,” he told reporters April 5 after meeting with congressional leaders. “Part of the reason that debate is going to be important is because that’s where 88 percent of the budget is.  What we’re spending weeks and weeks and weeks arguing about is actually only 12 percent of the budget, and is not going to significantly dent the deficit or the debt."

Later, White House press secretary Jay Carney added, “Any plan to reduce our deficit must reflect the American values of fairness and shared sacrifice.  Congressman Ryan’s plan fails this test. It cuts taxes for millionaires and special interests while placing a greater burden on seniors who depend on Medicare or live in nursing homes, families struggling with a child who has serious disabilities, workers who have lost their health care coverage, and students and their families who rely on Pell grants.  The president believes there is a more balanced way to put America on a path to prosperity.”

But Ryan, in a YouTube message, said health, retirement and interest on the debt will consume every cent of tax dollars by 2025. "If we don't reform spending on government health care and retirement programs, we have zero hope of getting our spending — and as a result our debt crisis — under control," Ryan said.

The Ryan plan puts the government on a path to spend about $40 trillion over the next decade, $6.2 trillion less than the spending plan proposed by Obama in February. It reduces tax rates for businesses and individuals to boost the economy. And it would repeal Obama's health care reform law, which has proved unpopular with conservatives who say it is too expensive and involves too much big government.

Repealing the health care reform law would eliminate help with drug costs for seniors that would close the "doughnut hole" gap in Medicare prescription drug coverage, Rother says. It also could allow insurers to return to a policy of not giving coverage to people with preexisting conditions.

Next: How would Ryan's plan change the Medicaid program? >>