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Ryan Opposes Bill that Cuts Medicare Benefits, Expands Government-run Health Care

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August 01, 2007 | Kate Matus ((202) 226-7326) | comments

WASHINGTON – First District Congressman Paul Ryan today voted against legislation that exploits the reauthorization of a popular children’s health insurance program to expand government-run, bureaucracy-driven health care and greatly increase already unsustainable entitlement spending. The bill would hurt seniors, working families, and taxpayers through a combination of Medicare cuts and tax increases to pay for this fiscally irresponsible proposal. The House of Representatives passed this bill (H.R. 3162) by a vote of 225-204.

The legislation goes far beyond simply extending the State Children’s Health Insurance Program (SCHIP), which was intended to serve low-income, uninsured children whose family incomes were a little too high to qualify for Medicaid assistance. Ensuring that SCHIP continues to serve these children as well as pregnant women whose family income is about $40,000 would cost about $4.9 billion over five years. In contrast, the SCHIP expansion the House approved today would spend $27.5 billion over five years and $132.6 billion over ten years in new mandatory spending, increasing the deficit over ten years by more than $72 billion.

Furthermore, this bill vastly expands the SCHIP program beyond its original intent so that it covers not only low-income, but middle and higher-income children and pushes individuals who already have coverage under private health insurance into government health care. In fact, the Congressional Budget Office estimates that H.R. 3162 would shift about 2.4 million children who are currently in private health care plans to government-run health care.

“Congress should be making thoughtful reforms to help insure the uninsured, lower the high cost of health coverage, and give patients the options they need to access quality care. Instead, this bill uses a children’s health insurance program as an excuse to push people from private health insurance to government health coverage, while taking away coverage choices from seniors,” Ryan said. “It essentially creates a costly new entitlement program at a time when our existing major entitlements are going broke. While I support extending the State Children’s Health Insurance Program so it can keep fulfilling its original purpose, this fiscally irresponsible bill, with its tax hikes and Medicare cuts, goes far beyond this goal and does more harm than good.”

The legislation makes it possible for – and even encourages – states to provide SCHIP benefits to families with incomes of up to $83,000 per year or even more. The more individuals that states enroll, regardless of income or legal eligibility, the more money states receive.

States could also cover larger numbers of adults under this proposal. Besides allowing states to establish their own eligibility standards, H.R. 3162 would not require enrollees to prove their income. In other words, a millionaire could claim he qualifies for SCHIP coverage under the state’s requirements and that would be sufficient proof.

The legislation pays for this massive expansion of an entitlement program partly by cutting payments to consumer-oriented Medicare Advantage (MA) plans. MA plans allow seniors to choose a private insurance plan that works for them and typically provide more supplemental benefits than standard Medicare. This cut is expected to force one in five Medicare beneficiaries out of their existing coverage under Medicare Advantage. A recent study coauthored by a former Clinton Administration official predicts that Wisconsin would lose more than 100,000 MA enrollees if such a reduction in MA rates is enacted.

Among its major problems, H.R. 3162:

  • Cuts Medicare Advantage by $157 billion, resulting in less quality and choice of programs for seniors.

  • Cuts Medicare Part A for seniors by $8.8 billion, including rehabilitation facilities and long term care hospitals.

  • Includes Medicare cuts of $3.6 billion to the end-stage renal disease program for seniors.

  • Cuts Medicare Part B for seniors by $9.6 billion, including payments for oxygen and brachytherapy.

  • Includes a stealth tax increase on private insurance plans that will raise the cost of health insurance and drain money from the Medicare Trust Fund (already projected to reach bankruptcy in 2019).

  • Puts no income limit on SCHIP eligibility, enabling states to expand coverage for increasingly wealthy beneficiaries – going well beyond SCHIP’s original intent.

  • Requires no means testing – essentially allowing anyone to be eligible for government health care.

  • Encourages states to spend more by shortening the amount of time a state has to spend its annual SCHIP allotment, creating new bonus payments to states that enroll more children, and requiring the federal government to pay the state more money if it exceeds its allotment as a result of covering more individuals.

  • Raises the cigarette tax, which falls disproportionately on lower-income Americans, by 45 cents per pack. This revenue source is constantly declining, calling into question the ability of this tax to really offset as much of the cost of the bill as expected.

  • Uses a budget gimmick to reduce the cost of the measure on paper – increasing Medicare payments to physicians over the short-run, but at the same time scheduling a 12 percent cut to physicians in both 2010 and 2011 and then freezing payments to doctors after 2012.  

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