Paul Ryan's Medicare/Medicaid shell game

Harold Pollack points out that Paul Ryan's plan to restructure Medicare can't be considered in isolation from his plans to block-grant and gut spending on Medicaid, which seniors also rely on. I would add that Ryan's Medicare plan places new burdens on Medicaid.

Pollack explains how Medicare and Medicaid tag-team to cover seniors' healthcare needs today:

Medicaid has always been Medicare’s essential backstop. About one third of Medicare spending finances services for “dual-eligibles”—nine million people who, like Vincent, are eligible for both programs, and who often have complex needs.

Dual-eligibles are the sickest, poorest, and most vulnerable segment of the Medicare population. Medicaid spends billions on nursing home and long-term care for the dual-eligible population [about 60% of nursing home residents have their fees covered by Medicaid]. It pays for many other things, too. It helps dual-eligibles by covering Medicare Part B premiums, copayments, and deductibles that they couldn’t otherwise afford. It also covers essential services such as dental care that Medicare doesn’t cover, but that elderly and disabled people need.

In addition to these existing high-cost mandates -- Medicaid spends an average of almost $16k on 4.6 million aged beneficiaries, and $30k on 1.6 million nursing home beneficiaries* -- the Medicare reform plan proposed in Ryan's 2013 budget imposes  new expense. In the Ryan premium support plan, seniors choose from a menu of Medicare plans, with the government allegedly footing the bill for the full cost of the second-least expensive approved plan offered in the exchange.  The Ryan plan also imposes an annual cap on growth in federal spending to support the program (GDP + 0.5%). If the plans in the exchange hike their prices at a rate exceeding the cap, means-tested seniors may be required to pay more.  Ryan is notably silent about who will pick up the tab for middle-income seniors. But if plan costs rise faster than the cap, the tab for low income seniors will be picked up by -- you guessed it -- Medicaid:

This budget also seeks to strengthen protections for lower-­‐income Americans. If costs rose faster than this established limit [the annual growth cap], those low-­‐income individuals who qualify for both Medicare and Medicaid (also known as “dual-­ eligibles”) would continue to have Medicaid pay for their out-­‐of-­‐pocket expenses. Other lower-­‐income seniors (those who do not qualify for Medicaid but are still under a certain income threshold) would receive fully-­‐funded accounts to help offset any out-­‐of-­‐pocket costs (Ryan 2013 budget, p. 53).

On the one hand, this passage would seem simply to continue the existing system for dual-eligible seniors. Yet the passage implicitly acknowledges that the spending cap may lead to increased cost offload on non-low-income seniors -- and taps Medicaid to protect dual-eligibles from that outcome.  That might work if Ryan's 2013 budget did not call for (to borrow Pollack's wording and link) a punishing 34 percent reduction in federal support for Medicaid over the next decade.

Any mercy, any provision for the most vulnerable in Ryan's budget, is an illusion.

* CMS 2011 Medicare/Medicaid Summary, p. 29

Update: The language in Ryan's 2013 budget is studiously vague as to what kinds of rising Medicare costs Medicaid would cover for low income seniors. Some clarity can be gained by looking back to the Medicare reform proposal that Ryan co-published with Senator Ron Wyden, D-Oregon, in December 2011.  Ryan 2013 is an abbreviate and weakened version of the Wyden-Ryan plan: much of the language in Ryan 2013 is identical to that of the prototype, but Ryan 2013 omits both consumer protections and clarifying detail contained in Wyden-Ryan.  The earlier plan reflects Wyden's determination to protect access for the poorest and most vulnerable. Wyden-Ryan makes it explicit that the premium support system may raise premiums for non-low-income seniors and that low income seniors will be protected from such increases:

Finally, we do not believe that income should determine how many choices a senior has. For that
reason, we hold dual eligibles harmless from any premium increases, guarantee them the same
options in the new program as any other Medicare beneficiary, adjust their premium-support
payments to reflect their health needs, and ensure that this vulnerable population receives additional support in the form of fully-funded accounts for their out-of-pocket costs  (p.3).

Wyden-Ryan also includes measures to improve healthcare for low income seniors that are omitted in Ryan 2013:

Special consideration would be given to the 9 million Americans who qualify for both Medicare and Medicaid. These “dual eligibles” are disproportionally sicker than other seniors. They are often suffering from multiple chronic conditions that require persistent medical attention, as well as physical and cognitive impairments. Despite their greater needs, dual eligibles are forced to contend with a fragmented benefit system and care delivery that is both inefficient and outrageously expensive. Efforts both public and private are underway to better integrate and coordinate the care and services deemed necessary for these individuals. This proposal should complement those efforts by encouraging plans that specialize in care management for complex patients to compete in the Medicare Exchange based on their ability to provide affordable, quality coverage to a specialized population (p. 9).

Better coordinating Medicare and Medicaid services would preclude, I would think, gutting Medicaid or turning it over entirely to the states.

For a comparison of how the two plans handle cost control, click here.

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