Ryan Plans to Introduce Roughly $1 Trillion in Medicare Cuts

Rep. Paul Ryan (R-Wisc.) plans to introduce more than $4 trillion in cuts to federal spending over the next decade, and GOP aids say roughly $1 trillion would come from restructuring Medicare as we know it, as reported by the Wall Street Journal today.

Under the Ryan proposal, those who retire after 2021 would no longer have access to the government-run fee-for-service health-insurance program that has been a bedrock for seniors since Lyndon Johnson was president. Some say the plan resembles the existing system for federal employees, under which the government contributes a set amount each year.

Ryan says his overall objective is to convert Medicare into a premium support program for which the government will spend a specific amount for beneficiaries’ care—a fundamental shift from the current system. The program would rest on limiting the amount that the government can spend on medical services for seniors and the disabled, moving away from the entitlement program format it has kept for decades.

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Instead of the current fee-for-service program, under a plan known as “premium support,” retirees would choose a private insurance plan from a federally operated exchange. The government would pay insurers up to a certain amount each year to help cover the cost of premiums, but that total would rise only at the rate of overall inflation, not at the higher rate of health-care inflation. Those who are enrolled in the new program would be able to put more money into the program for better benefits, and low-income individuals and those who have greater medical needs would likely have access to more treatment.

By tying payments to the overall inflation rate, the government would shave trillions of dollars from projected spending on health care, according to the plan proponents.

See the Wall Street Journal report on Ryan’s plan.

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