Paul Ryan
J. Scott Applewhite  /  AP
House Budget Committee Chairman Paul Ryan, R-Wis., touts his 2012 federal budget during a news conference on Capitol Hill in Washington on April 5.
updated 4/11/2011 10:19:15 AM ET 2011-04-11T14:19:15

Now it's their turn to try to fix the health care mess. Republicans, just like President Barack Obama, may discover that's easier said than done.

The GOP budget expected to go to the full House this week would remake health care programs for the elderly and the poor that have been in place for nearly half a century. Budget Committee Chairman Paul Ryan, R-Wis., says his approach would "save" Medicare by keeping the financially troubled program affordable for federal taxpayers.

But it turns out that people now 54 and younger would pay the price.

By one authoritative estimate, they'd be on the hook for most of their own health care costs after they become eligible for Medicare as retirees. The nonpartisan Congressional Budget Office says the typical beneficiary would be expected to pay more than two-thirds of his or her medical costs by the year 2030.

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First Thoughts: Bigger budget battles ahead

Costs wouldn't come down; they'd just get shifted.

"It's a political nonstarter," said health care consultant Robert Laszewski, a former insurance executive and strong critic of Obama's overhaul. "It kills Medicare as we know it, and that is simply too popular a program among seniors and their children."

Cue the Democratic political ads for the 2012 campaign.

Republicans may escape the full wrath of seniors, however, since the House budget isn't likely to get very far. It won't pass the Democratic-run Senate. House members can vote for the budget's tough medicine without having to dish it out before they run for re-election. But Democrats running against them in 2012 won't let voters forget the budget, just as Republicans hammered Democrats last year over Medicare cuts in Obama's health care law.

Two views on health insurance for seniors
Whatever happens to his budget, Ryan's general idea that seniors should bear more direct responsibility for decisions that affect health care costs isn't going away.

"If everybody who bought health care was paying more when they get a more expensive plan, that would create a lot more pressure to bring costs down," said Mark McClellan, who ran Medicare for President George W. Bush. "There's reason to think that reforms that engage beneficiaries in getting less costly care will make a difference."

Story: Ryan defends plan for fundamental Medicare redesign

The principle behind Ryan's plan is that seniors making their own decisions about health insurance can do a better job of keeping costs in check than Washington bureaucrats playing whack-a-mole with rising prices.

That's different from the approach in Obama's health care law, which relies on government to police the market and would deny insurers that jack up premiums the right to sign up customers who are receiving taxpayer subsidies.

The GOP budget "will preserve Medicare through competition among health plans for the business of millions seniors," said Ryan.

But would it work as envisioned?

CBO, Democratic criticism
Under Ryan's plan, Medicare would remain largely the same for current beneficiaries and people within 10 years of retirement. The biggest change for this group would be the revival of the "doughnut hole" gap in Medicare prescription coverage that Obama's health care law eliminated. (The GOP budget calls for repeal of the new law.)

Then, starting in 2022, new retirees would get a fixed amount of money to buy private insurance from a choice of plans regulated by the government. The sick would get more money, the wealthy less. The payment would be adjusted for inflation.

Ryan calls his approach "premium support." Critics call it the voucher plan.

The Congressional Budget Office analysis suggested the new system would start running into problems right away.

Buying the Medicare benefit package from a private insurer would turn out to be significantly more expensive. Medicare typically pays hospitals and doctors less than private insurance. Without some kind of effort to control private health care costs, the government contribution toward premiums wouldn't go very far.

"I don't believe you can pursue this approach for Medicare and not at the same time address the problem of cost growth in the private health care sector," said economist Robert Reischauer, a former budget office director. "To do so would result in a two-tier health care system." Reischauer says he's sympathetic to the voucher system in principle, just not this version.

David Plouffe
William B. Plowman  /  AP
David Plouffe, White House Senior Adviser, is interviewed on NBC's "Meet the Press" in Washington Sunday.

Ryan had developed an earlier form of his proposal jointly with a prominent Democratic economist, Alice Rivlin, a former vice chair of the Federal Reserve. Although Ryan publicly cited her in unveiling his plan, Rivlin said she doesn't support this version.

The government health care payment in the GOP budget would quickly fall behind medical inflation, Rivlin said. "Ryan has lowered the growth rate so that it's really punitive," she added. Rivlin also says seniors should be given a choice between staying in traditional Medicare and a voucher system.

She also differs with Ryan on raising taxes. "You can't do it all on the spending side, because the cuts required are Draconian," Rivlin said.

Despite the political risks Republicans take with their Medicare remake, they won't get much in savings over the 10-year estimating window that Congress applies to the budget. It's because the shift to a new system doesn't come until 2022.

That's not the case with Medicaid. The health care program for the poor would be turned over to the states and spending cut by more than $700 billion over time.

Although the GOP's 2012 budget reduces total government spending by more than $5 trillion over a decade, that still wouldn't bring the federal budget into balance.

One of Obama's top advisers, David Plouffe, says the president this week will offer his own plan for reducing long-term spending. The details will come from Obama, Plouffe says, although the adviser acknowledges that cuts to Medicare and Medicaid will be necessary.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Clyburn: Ready for 'adult' talk on lowering debt

  1. Closed captioning of: Clyburn: Ready for 'adult' talk on lowering debt

    >> welcome back to " morning joe ." mike barnicle , charles blow still with us, joining us democratic representative from south carolina and assistant democratic leader congressman, jim clyburn , good to have you on the show this morning.

    >> thank you for having me.

    >> it will be the next battle we're talking about. the debt ceiling would be one of them. the question is what does either side --

    >> the congress and president coming out with his budget this week. this government shutdown battle was --

    >> it was a drama. i was biting my nails friday.

    >> jeb said it was a -- a -- basically, we're debating over a rounding error.

    >> they were debating ultimately over planned parenthood and other things that didn't ultimately --

    >> why don't we go to news and then talk too the congressman and see what he thinks.

    >> president obama is expected to lay out a plan to address the country's long term deficit in a speech scheduled wednesday. it comes after friday's short term budget agreement over the weekend. the president spoke at the national mall to emphasize parks and monuments were indeed open.

    >> hooray!

    >> had congress failed to reach a deal, many tourist sites may have had to close temporarily. on meet the press, white house david plouffe announced the president's plan.

    >> the president has been clear we need to come together in this country, both parties in congress, to reduce the deficit. it will be a tough fight, how will we reduce the deficit on a more sustainable trajectory but in a way that doesn't hurt the economy and grow jobs.

    >> it is to include a reduction in growth of medicare and medicaid but less aggressive than proposed last week by paul ryan and changes to social security . will also call for tax hikes for those making over $250,000 a year and plan to revise tax code sections that benefit the wealthy on the heels of the republicans budget offered last week by paul ryan that claims to slash over $6 trillion in the next decade and privatize medicare and cut spending. david plouffe threw cold water on congressman ryan 's plan.

    >> is this palestenian, congressman ryan 's plan dead on arrival ?

    >> certainly, the president will not support a lot of what's in that plan. any chance it gets passed?

    >> >> it may pass the house, will not become law. i don't think the american people will sign up for something that puts most of the burden on the middle class , people trying to go to college, on senior citizens , while not just asking nothing of the wealthy, giving them at least a $200,000 -- that's a choice you're doing.

    >> four things we're trying to do for this budget. get the economy going, get people back to work. save social security , medicare and retirement programs and future generation, we want to give our children a debt- free nation . that's what this plan does and i think what this country wants.

    >> the debt talk comes as yet another deadline loomts. the national debt is 14.$14.28 trillion and next month, 14.$14.29 trillion. if a debt extension isn't voted on, the u.s. could default on its debt and that is the next battle.

    >> let's go to jim clyburn . congressman clyburn, how concerned are you the debt ceiling will not be raised and we may actually have a real financial crisis on our hands?

    >> i'm very concerned about that, joe. thank you for having me this morning. the full faith and credit of the united states cannot be put at peril. i think speaker boehner said it very well when he said, we have to be adults about this. i think the adult thing to do is for us to stop all this debate over these social issues, let's talk about the fiscal responsibility that ought to be laid out for the american people , and how we can get our fiscal house in order. i think we can have a very adult conversation about that. we can look at the ryan proposals, we'll get a chance wednesday to see exactly what the president is outlining for us. i think he's going to give us a good comprehensive approach to have an adult conversation about what we can do going forward to bring our debt down, if not eliminate it, get rid of these deficits and create jobs. we have to have jobs created in this country. 1.8 million jobs over the last 13 months is a good start, but we have to do something to double, if not triple that. i think we can if we can be adults.

    >> congressman let me ask you about the number one driver, i think all of us will agree, not only this table but everybody that comes through, the number one driver of debt in america is medicare , not medicaid, that's big but medicare is the number one driver. paul ryan wasn't afraid to take on medicare and slow down the rate of growth. we think the president's going to do the same. do you agree that you can't take care of america 's long term debt problem without first taking care of the explosive rate of growth in medicare ?

    >> i absolutely agree with that. that's why i worked so hard on the health care reform bill, when we put a 14 year fix in there on medicare . we did that. we can do better than that. the fact of the matter issen, that's what they campaigned against us for last november. our republican friends were out there telling all the seniors because we did this correction to medicare , we were in fact cutting their support. now, they are saying, well, we are against the cuts, we're against the fix, we would like to just eliminate the whole thing. we should not eliminate medicare guarantee for seniors. we should be better than that. we should not be eliminates a head start for preschool kids. we should not be putting the burden on students trying to go to college. we ought to be getting rid of all of these subsidieseies to oil companies when they really don't need it, we ought to be getting rid of these loopholes that allow companies to take jobs overseas and when we can bring all that in and do one big comprehensive approach. i would love to see the debt ceiling in discussion with the president's proposals, let's do it all-in-one felt swoop.

    >> mike barnicle , it is in the end medicare that causes the biggest problems. governors will tell you medicaid is crippling as well. but you also have pentagon spending that nobody seems to really want to go after. tax increases, the president doesn't want to talk about tax increases for millionairs and billionaires, and certainly republicans don't. a lot of really unpopular things nobody seems to want to talk about.

    >> two things, the most powerful single lobby in the congress in this country is aarp, old people. they vote in huge numbers compared to the rest of us and thus no one, no one will touch medicare spending. my question to you, congressman, is wednesday, the president is speaking to the nation on our fiscal nightmare. is there any way imaginable you can deal with the deficit, you can deal with the debt limit but deficits particularly without a tax increase at some point in time?

    >> you call it a tax increase, i call it closing loan holes. if you close loopholes that exist, you will have t into sour coffers . if you get rid of unseemly oil subsidies between 14 and $15 billion, i think you will have income coming and a lot of people call that a tax increase. i don't call that a tax increase at all. i call that getting rid of a lot of corporate welfare in existence at the current time.

    >> congressman, wouldn't you as a democrat, like to see the president of the united states plant the flag on the tax increase, whatever you want to call it, however you want to phrase it for people making $250,000 and more in this country, say we have to go back, close that loophole and they have to pay more than their fair share of taxes than they've been paying. wouldn't you like to see that happen?

    >> i've been proposing that for a long time and the president has been proposing that for a long time. i want your listeners to remember, this is an increase in income over $250,000 a year. that's a little different than say you're taxing people who make $250,000 a year. that's never been what we proposed, saying you make $250,000, fine, make $251,000, you will pay a tax on that $1,000. the first $250,000 will not be affected by this. if we begin to say this right, the way we are proposing it, i think the american people will be much more receptive to it. i talked to a lot of people who got the wrong understanding what that $250,000 exemption is all about.

    >> i completely agree with you. for sure.

    >> people from south carolina , they're just smarter than most people in america . you look at jim clyburn .

    >> get out of here!

    >> here's a good example. jim clyburn comes on, you have a lizard's thicket and have something in the ham.

    >> lizard's thicket is a good brain food .

    >> brain food . i'm telling you, it's brain food .

    >> i have a soft spot for that place.

    >> i love south carolina .

    >> some of the dishes might be a little heavy.

    >> a little?

    >> a little heavy?

    >> jim, it's always great to see you. we will see you in south carolina sometime soon.

    >> take care, congressman.

    >> please, come on down.

    >> thank you so much.

    >> you will love it.

    >> that point he made about the $250,000 and the tax situation, how it would actually impact people is huge.

    >> yeah.

    >> i'm not sure why the president passed on it.

    >> you voted on the debt ceiling for a lot of people watching , i had people ask me this, why is that important? what exactly happens if we don't raise the debt ceiling? why is that seen as the next big fight?

    >> first, the republicans, freshmen i talked to, i never heard of fresh american a month ago saying, i will shut down the government, they were all talking about this debt ceiling and said to their leaders, we have to come up with a big comprehensive package before we increase the debt ceiling. it's usually a symbolic vote because usually everybody marches in lock-step to raise the debt ceiling. i voted against the debt ceiling specifically because i knew it would be a good point to make. i didn't do press releases. why do you keep coming to me asking to vote to raise the debt ceiling when you aren't acting responsibly about balancing the budget. we did. i'll give bill clinton credit, he eventually, after kicking and screaming for a couple years started signing bills, we did get serious about it. i don't think i had to vote to raise the debt ceiling from '97 to ' 2001 because we actually got responsible. mike barnicle , why is it the responsible thing to do to keep raising the debt ceiling when washington doesn't do the responsible thing by curbing spending?

    >> right.

    >> how hard is it for you or how hard was it for you, when you were a member of congress and people come up to you and say, boy, the mauer of the o -- power of the oil lobby and financial services lobby compared to power of senior services in this country, we will not touch medicare . we put a huge burden on the young by taking care of the old without saying, hey, there's a reasonable way to do this.

    >> i hate to tell a story but i am going to tell a story.

    >> then i want to hear from charles because he just sighed in a very rich way.

    >> yes, he did.

    >> means testing.

    >> you look at what jim clyburn talked about, medicare , you're saying you can't touch it. jim clyburn 's right. there were some republicans that shamelessly demagogued medicare against democrats. bill clinton did the same thing to us, remember mediscare in '95?

    >> sure.

    >> all i talked about in my '96 election was medicare and while my other friends that tried to run from it got slaughtered, i talked to senior citizens and glenn bollinger, the pollster for the races said i had the highest approval rating among senior citizens of any republican that he hold that year. in part, it base, charles , i went there and explained. the trustees say this program goes bankrupt in seven years. you can say i'm mean and throw you out in the streets, i'm trying to save your damn program.

    >> right.

    >> you vote for the other guy and say, you have cancer and want to open you up and assist. seniors understand if you tell them the truth, right?

    >> there's a difference between tinkering with a program to make it stronger and dismantling. they understand making cuts to make it stronger and involves stress and strain. the idea of completely dismantling that program, and private sizing it which rye yarn is suggesting, that's not going to happen.

    >> gordon brown will be here, the host of cnbc's "mad money," jim cramer and kelly o'donnell joins us from capitol hill with the latest on congress's plan to tackle the


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