Medicare Reform: Plan to Privatize It Passes in House

April 18, 2011 Updated: October 1, 2015

Committee Chairman Rep. Paul Ryan (R-WI) speaks during a markup hearing before the House Budget Committee April 6, 2011 on Capitol Hill in Washington, DC. The committee held a markup hearing on the concurrent resolution on the Budget for Fiscal Year 2012. (Alex Wong/Getty Images)
Committee Chairman Rep. Paul Ryan (R-WI) speaks during a markup hearing before the House Budget Committee April 6, 2011 on Capitol Hill in Washington, DC. The committee held a markup hearing on the concurrent resolution on the Budget for Fiscal Year 2012. (Alex Wong/Getty Images)
WASHINGTON—A budget bill that tears down the foundation of both senior and poor Americans’ health care security passed in the House of Representatives on April 15 with near unanimous support from Republicans and complete opposition from Democrats.

The Path to Prosperity, crafted by House Budget Committee Chairman Paul Ryan (R-Wis.), would cap government spending on Medicare and Medicaid, and transfer costs in the form of higher health premiums and reduced care for millions of Americans.

Republicans argue that America can no longer afford the same health social safety net as enjoyed in the past. They argue an aging population and health care innovations, which prolong lives with the help of expensive drugs and technology make the programs unsustainable.

“It’s time that America develop a plan to save the next generation, and I believe that the budget we will consider this week in fact does that, said House Speaker John Boehner (R-Ohio) prior to the vote.

Ryan’s plan would cap current government spending on Medicare, which pays for services for seniors and the disabled, at a fixed rate. Medicare payments would go directly to insurance companies. Individuals would get vouchers to pay for part of private health insurance premiums.

Hospitals and doctors would then collect their remuneration from insurers. The program would give greater power to insurers to decide what and how much coverage an individual can receive.

The change would apply to Americans currently 55 and younger, and would result in rising premiums for individuals wanting the same level of care as what is currently offered.

With Medicaid, the Ryan proposal would again cap the costs, but turn federal payments into block grants to be transferred directly to states. The responsibility would then fall to individual states to deliver the services, supposedly with greater flexibility. Medicaid is meant for people in poverty, including children.

In a speech last week, President Obama strongly criticized the Republican approach, saying that it ends health care as we know it, and leaves Americans to fend for themselves.

“It says that 10 years from now, if you’re a 65-year-old who’s eligible for Medicare, you should have to pay nearly $6,400 more than you would today. It says instead of guaranteed health care, you will get a voucher. And if that voucher isn’t worth enough to buy insurance, tough luck—you’re on your own. Put simply, it ends Medicare as we know it,” Obama said.

Scott Lilly, a senior fellow with the Center for American Progress, said the Republican’s passage of the bill has opened up the budget debate and helped Americans to understand their choices.

While characterizing Ryan’s particular proposal as “extreme,” Lilly agreed that the “real choice is to substantially reduce the level of support or you raise the taxes to pay for those benefits.”

Ryan’s plan is heavy on the side of spending cuts and light in terms of revenue, or raising taxes. In fact, the budget calls for a permanent extension of the Bush tax cuts for all Americans.

“[W]e can’t tax the very people that we expect to reinvest in our economy and to create jobs. Washington has a spending problem, not a revenue problem,” Boehner said.