Thursday, March 14, 2013

Healthcare Costs Under Fire in Budget Battles

The budget battle is underway in Washington, and healthcare programs seem to be in the cross hairs. Republicans in the House and Democrats in the Senate have come out with budget proposals that differ dramatically. House Budget Committee Chair and former Vice-Presidential Candidate Rep. Paul Ryan (R-WI) announced his budget at a press conference on Tuesday. His plan would balance the federal budget by 2023, largely by reducing spending. Certain provisions proposed in the plan, however, have Washington insiders calling it a non-starter.

The Ryan plan, similar to the budget that he released last year, would deal a huge blow to healthcare programs in general, and specifically calls for the repeal of the Affordable Care Act. According to Politico, defunding the ACA alone accounts for almost half of the $2.72 trillion in healthcare spending cuts outlined in the plan. The Ryan plan also calls for Medicaid to be changed into block grants, and for Medicare to introduce a voucher system while raising the eligibility age for those who are currently under 55. The budget all together recommends $3.93 trillion in spending cuts on top of the sequestration cuts, which would stay in place.

Democrats responded to the Ryan budget proposal by releasing their budget on Wednesday. The proposal, announce in Committee by Senate Budget Committee Chair Patty Murray (D-WA), includes a sharp contrast of only $275 billion in healthcare spending cuts. Of that, $265 billion would come from Medicare and $10 million would come from Medicaid. The specific ways that the cuts would be implemented was unclear. The bill proposes a total of $1.85 billion in deficit reduction over 10 years through a combination of spending cuts and increased revenue. That is in addition to the $2.4 trillion in deficit reduction called for in current law. Read more about the Murray proposal in this Politico article.

Both of these proposals would have to pass both houses of Congress, which is highly unlikely in their current forms.  These budgets are through to be the starting points for each side of the aisle, from which they can work to a compromise. If a budget is passed, would be effective for the next fiscal year. The Senate is currently debating a continuing resolution, already passed by the House, that would fund the government from of March 27th through the end of the fiscal year.

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