Rep. Paul Ryan (R) has repeatedly called for entitlement reform. (Creative Commons)

While the exact details of House Budget Chairman Paul Ryan’s (R, Wisconsin) proposal have not yet been released, Ryan already articulated the basics of his plan, while his previous budget endeavors provide clues as to how he intends to approach the issue.

Under his proposal, the federal government would gradually replace traditional pay-for-service Medicare with a “premium-support system” that would place seniors under private insurance plans subsidized by federal funds.

The federal government would also fund Medicaid through grants to states, known as block grants. Republicans argue that it would give them more control over the program. Ryan estimates that these reforms, coupled with budget cuts and changes to the tax code, would amount to $4 trillion in cuts.

Ryan has pushed for these changes before; in 2010, he collaborated with former head of the Congressional Budget Office, Alice Rivlin to propose similar changes to Medicare and Medicaid.

But as with his previous attempts, Ryan’s plan has drawn criticism. Democrats argue that block grants for Medicaid would eliminate the program’s commitment to covering anyone who is eligible for care, while healthcare observers contend that eliminating fee-for-service Medicare would place a heavier financial burden on seniors.

In response to Ryan’s 2010 “Roadmap For America’s Future,” New York Times columnist Paul Krugman chastised subsidizing private insurance premiums in place of traditional Medicare coverage:

And we already know, from experience with the Medicare Advantage program, that a voucher system would have higher, not lower, costs than our current system. The only way the Ryan plan could save money would be by making those vouchers too small to pay for adequate coverage. Wealthy older Americans would be able to supplement their vouchers, and get the care they need; everyone else would be out in the cold.

Many have come to Ryan’s defense in his push towards health care reform, arguing that addressing the growing costs of entitlement programs is essential to resolving a major thorn in the federal budget.

In an open letter addressed to congressional leaders, more than 350 academics, economists, and other experts demanded that lawmakers “include fundamental entitlement reform in its Budget Resolution for Fiscal Year 2012,” stating that “there can be no greater national priority than reducing the prospective explosion of federal debt.” 

Reach reporter Aaron Liu here.

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