"Litmus Test"
Among its provisions, House Budget Chairman Paul Ryan's budget plan, "The Path to Prosperity," released on April 5, 2011, proposed substantial changes to the Medicare and Medicaid programs.

"Save Medicare for current and future generations while making no changes for those in and near retirement. For younger workers, when they reach eligibility, Medicare will provide a Medicare payment and a list of guaranteed coverage options from which recipients can choose a plan that best suits their needs. These future Medicare beneficiaries will be able to choose a plan the same way members of Congress do. Medicare will provide additional assistance for lower-income beneficiaries and those with greater health risks."

"Secure the Medicaid benefit by converting the federal share of Medicaid spending into a block grant tailored to meet each state’s needs, indexed for inflation and population growth."

The Ryan proposal led to a lot of supercharged rhetoric.  Newly minted presidential candidate Newt Gingrich landed in considerable hot water with conservatives (to the point that some pronounced his campaign over) when he criticized the approach in a May 15, 2011 appearance on NBC's "Meet the Press."  Democrats sought to make support a litmus test for the Republican presidential candidates (video).  The Medicare proposal was also seen as the key to Democrat Kathy Hochul's win the May 24, 2011 special election in NY-26 (statements).

FACT SHEET from the House Budget Committee
May 24, 2011

The Path to Prosperity PRESERVES the Medicare Guarantee

  1. The Path to Prosperity makes no changes to Medicare for those 55 and older, guaranteeing they will receive coverage when they become eligible.  But I am younger than 55 – do your reforms mean I am no longer guaranteed Medicare?

    No. In fact, the opposite is true.  The Path to Prosperity protects and preserves the Medicare guarantee not only for current beneficiaries, but for future generations as well.  Beginning in 2022, beneficiaries are guaranteed a choice among Medicare-approved private health options and a premium-support payment to help pay for the cost of that plan.  The plans, which will also be listed on a new Medicare exchange, are required to provide coverage to any Medicare beneficiary that asks.  As the Congressional Budget Office notes: “Plans would have to issue insurance to all people eligible for Medicare who applied”.[i]  In other words, all Medicare beneficiaries are guaranteed that a health plan will be available for them.

    This is in stark contrast to what would happen to the Medicare guarantee for future generations if we fail to act now. The Congressional Budget Office estimates that Medicare will go bankrupt in the next nine years.  Experts on both sides of the aisle recognize that Medicare is on an unsustainable path.  If we do nothing – that is, if Washington chooses to continue the tradition of punting on the biggest issues of our time – Medicare’s guarantee will in fact disappear.  And not just for future Medicare beneficiaries, but for those who depend on Medicare today. 

  2. I understand that The Path to Prosperity guarantees a Medicare premium-support payment and access to a health plan.  But how do I know there will be a plan I can afford? What good is a premium-support payment if I can’t afford any of the options?

    In addition to requiring that Medicare-exchange health plans provide coverage to anyone who is eligible, The Path to Prosperity also prevents companies from charging prohibitively high premiums.  That is, insurers will not be able to charge high-risk or costly Medicare patients excessively high premiums in order to avoid having to provide them with coverage. The Congressional Budget Office describes this Path to Prosperity provision as requiring plans to, “charge the same premiums for all enrollees of the same age”.[ii] Combining this requirement with a premium-support payment that is tailored to meet an individual’s age, health status, and income level ensures that Medicare beneficiaries will be able to both find a plan that fits their needs and have the financial resources to afford it. 

  3. Beginning in 2022, when I become eligible for Medicare, The Path to Prosperity guarantees that I will receive a premium-support payment and that there will be a plan I can afford.  But what kind of coverage can I expect to receive?

    The Path to Prosperity requires every plan made available to Medicare beneficiaries to provide – at a minimum – the same standard value of benefits that Members of Congress and other federal employees receive.  The Office of Personal Management, the agency managing the Federal Health Benefits Program, would apply the same standards to Medicare plans that they apply to plans received by Members of Congress.[iii]  This reform means that seniors and Medicare beneficiaries will have access to private plans that provide real benefits and real coverage options. Seniors will be able to see what each plan offers and choose the one that works best for them.

i] http://www.cbo.gov/ftpdocs/121xx/doc12128/04-05-Ryan_Letter.pdf, pg 8

[iii] http://www.cbo.gov/ftpdocs/121xx/doc12128/04-05-Ryan_Letter.pdf pg 8