Washington — Republicans’ promise to swiftly repeal and replace the Affordable Care Act could change Medicare – a prospect that has alarmed Democrats and advocates of the program covering nearly 1.9 million people in Michigan.
U.S. Rep. Tom Price, whom President-elect Donald Trump picked Tuesday for Health and Human Services secretary, supports GOP plans to transition Medicare from a defined set of benefits to a “premium support” model that would give seniors or disabled people a subsidy toward purchasing health insurance.
And with Republicans poised to control both the White House and Congress, House Speaker Paul Ryan recently said they should tackle the “serious problems” of the federally subsidized health care program for seniors when lawmakers vote to repeal President Barack Obama’s health care law next year.
“You fix the health care problem, you are dramatically fixing the fiscal health of this country,” Ryan told reporters this month at the U.S. Capitol.
But U.S. Sen. Gary Peters, D-Bloomfield Township, said dismantling the Affordable Care Act with no plan to replace it would undermine the solvency of Medicare and potentially strand millions without health insurance.
“Congress should come together to work on needed reforms and ensure all Americans have access to quality and affordable health care coverage,” Peters said.
Medicare faces long-term fiscal challenges, with the trust fund that covers hospital visits, hospice care and nursing facilities expected to hit a shortfall by 2028. The fund was projected to be exhausted in 2017, but the Affordable Care Act of 2010 extended the fund’s solvency 12 years when it created a 0.9 percent payroll tax for wealthy Americans and other program savings.
Repealing Obamacare would endanger the slowdown in Medicare spending introduced by the federal health law, unless Republicans somehow retain the law’s savings, said Tricia Neuman, director of the program on Medicare policy and senior vice president at the Kaiser Family Foundation.
“In the past, proposals to repeal the ACA actually kept the Medicare-savings provisions, but it’s not clear what the next Congress will do when they go to repeal and replace the law,” Neuman said.
Congressional Republicans have long vowed to rein in Medicare spending, which consumes 14 percent of the federal budget. Committee staff are already drafting legislation to reform the program that covers 55.5 million Americans.
House Republicans in June finalized a health care reform proposal as part of their Better Way agenda that would involve gradually transforming Medicare from a single-payer federal program into a system of “premium supports,” where seniors could receive a set amount of money to buy or offset the cost of health insurance – either private insurance or traditional Medicare.
Critics such as Rep. Sandy Levin, D-Royal Oak, noted the Congressional Budget Office and other independent analysts have found that premium support plans, also called “vouchers,” may not keep pace with medical costs or patient needs.
“Similar attempts to privatize Medicare have failed in the past because that’s not what the American people want,” said Levin, the ranking Democrat on the Ways and Means Committee. “Democrats will fight any effort to weaken or undermine the Medicare program.”
Reforms long a GOP goal
A Republican committee aide said last week that Ways and Means staff are working on targeted Medicare reform legislation but not a comprehensive overhaul.
Rep. Fred Upton, R-St. Joseph, says seniors deserve peace of mind that Medicare will be there for them and future generations.
“We must work together to ensure the long-term solvency of this critical program,” said Upton, chairman of the House Energy and Commerce Committee, in a statement. “As we move forward on any discussions, I will continue to focus on common-sense, bipartisan ways we can protect and strengthen Medicare.”
Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare, expects Republicans to advance the premium support and other Medicare reforms when they move to repeal the Affordable Care Act using the reconciliation process.
Budget reconciliation is a fast-track procedure for forcing committees to alter mandatory or entitlement spending and revenues in a way that prevents a minority of senators from blocking it in that chamber.
“If Ryan persuades the president-elect to include that, then the president-elect would break his promise about not substantially changing Medicare because it would be a huge change,” Adcock said. “It basically would stack the deck against Medicare and end traditional Medicare.”
Price, a Georgia Republican who chairs the House Budget Committee, has said reforming Medicare is a goal for next year. A committee aide last week confirmed that Price considers budget reconciliation to be a mechanism that Congress should use to advance major reforms, including Medicare.
Details and timing would depend on the incoming Congress and the Trump administration. The website of Trump’s transition team speaks of “modernizing” Medicare “so that it will be ready for the challenges with the coming retirement of the Baby Boom generation – and beyond.”
“It sounds very non-specific at the moment,” Neuman said. “There really aren’t any specific proposals under discussion, and it’s not clear what the term Medicare modernization really means.”
Political costs of reform
Marianne Udow-Phillips, director of the University of Michigan’s Center for Healthcare Research and Transformation, compares the premium support proposal to the historic shift from traditional pensions to 401(k) and other defined contribution plans.
“Seniors are strongly opposed to that because one of the problems is we know the funding that is provided on an annual basis to seniors does not keep up with medical-cost inflation,” she said.
Some healthier people might spend less than they currently contribute to Medicare through their taxes, but that’s unclear, Udow-Phillips said.
“It’s a philosophical viewpoint that’s based on the market — that if we get people more sensitive to the cost of healthcare, then health care spending will come down,” she said. “We have no data to show they would actually do that.”
Major changes could have a political cost.
“If Republicans tinker with the ACA and/or Medicare, they may have to pay a political price,” said Kyle Kondik at the University of Virginia Center for Politics. “Any changes to the ACA and/or Medicare that reduce coverage will generate tons of criticism and attack ads from Democrats — criticisms that very well could be effective in the 2018 midterm (elections) and beyond.”
Republicans stress that their plan would offer seniors more choice and ensure no disruptions in the Medicare program for those in or near retirement, while helping reign in costs and reduce waste.
Rep. Bill Huizenga, R-Zeeland, says incremental changes are needed for those further away from retirement to preserve Medicare.
“Millions of Americans, just like my own mom, count on Medicare to provide access to health care when they retire,” Huizenga said. “I’m 47. People in my generation and my children’s generation should be able to choose from competing plans in addition to Medicare, which is precisely what House Republicans have proposed.”
Staff Writer Karen Bouffard contributed.