CBO: Ryan Budget Increases Deficit for Ten Years and Costs for Poor, Elderly

April 7th, 2011
in econ_news

Paul RyanEconintersect:  According to a report in Investment Advisor, the CBO (Congressional Budget Office) has found that the Ryan budget will actually increase the federal deficit through 2022 and dramatically increase health care costs for the poor and the elderly.  How can this be when there are supposed to be spending cuts?  Politico says there are $6.2 trillion in spending cuts over the next ten years in an article posted on the Paul Ryan website.  According to Investment Advisor, the deficit increases over the current law because there are more than $6.2 trillion in tax cuts.

Follow up:

There will be two major health care cost changes.  For medicare recipients who now pay premiums equivalent on average to 25% of health care costs, the Ryan plan will make that 68% for those turning 65 after 2021.  For Medicaid, substantial costs will be transferred from the Federal government to the states.

From the CBO Director's Blog, which has posted a CBO report to Congressman Ryan:

Under the proposal, most elderly people who would be entitled to premium support payments would pay more for their health care than they would pay under the current Medicare system. For a typical 65-year-old with average health spending enrolled in a plan with benefits similar to those currently provided by Medicare, CBO estimated the beneficiary’s spending on premiums and out-of-pocket expenditures as a share of a benchmark amount: what total health care spending would be if a private insurer covered the beneficiary. By 2030, the beneficiary’s share would be 68 percent of that benchmark under the proposal, 25 percent under the extended-baseline scenario, and 30 percent under the alternative fiscal scenario.

Federal payments for Medicaid under the proposal would be substantially smaller than currently projected amounts. States would have additional flexibility to design and manage their Medicaid programs, and they might achieve greater efficiencies in the delivery of care than under current law. Even with additional flexibility, however, the large projected reduction in payments would probably require states to decrease payments to Medicaid providers, reduce eligibility for Medicaid, provide less extensive coverage to beneficiaries, or pay more themselves than would be the case under current law.

Source:  Investment Advisor, CBO Blog and Paul Ryan website

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