Ryan Seeks Balanced Budget Through Health Savings

The Republican’s budget plan repeals and reins in health care entitlements.

Republican congressman Paul Ryan of Wisconsin delivers a press conference at the Capitol in Washington DC, April 5, 2011
Republican congressman Paul Ryan of Wisconsin delivers a press conference at the Capitol in Washington DC, April 5, 2011 (Republican Conference)

Wisconsin congressman Paul Ryan unveiled the Republicans’ budget proposal for the fiscal year 2013 on Tuesday which reduces expected spending increases over the next ten years by $4.6 trillion and produces a $7 billion surplus in 2023.

The plan is likely to be adopted in the House of Representatives where Republicans are in the majority but Democrats, who sharply criticized Ryan’s two previous budget plans, are unlikely to approve it in the Senate, especially because more than a third of Ryan’s savings, some $1.8 trillion, comes from repealing President Barack Obama’s 2010 health-care reform law.

Another $930 billion comes from counting savings from ending the wars in Afghanistan and Iraq, a budget gimmick that conservatives have criticized in the president’s deficit reduction plans because it’s not as though those wars were supposed to go indefinitely.

The plan leaves in place savings from automatic spending cuts that went into effect this month as well as income tax increases that Republicans fought earlier this year.

Ryan, who chairs the House budget committee and was the Republicans’ vice presidential candidate in last year’s election, again included comprehensive Medicare reform in his plan, the federal health-care entitlement for the nation’s 46 million elderly. As in last year’s budget, the Republican proposes to privatize the program in part. By giving seniors the choice of buying subsidized private insurance, $129 billion in Medicare spending can be saved in ten years’ time, he believes.

Medicare spending is projected to rise $300 billion over the next decade before the fund falls into deficit in 2024. Once the main trust fund is depleted, revenues from Medicare taxes will initially be enough to cover 90 percent of expenses but that share is expected to decline to 75 percent by midcentury, then rise to 88 percent by 2085.

And those figures assume that Congress will eventually cut physicians’ reimbursements which it has never done.

Another $756 billion in savings would be achieved over ten years by reining in Medicaid spending, a similar program that finances health care for the poor.

Medicaid spending has increased from nearly $74 billion in 1990 to $459 billion last year. It is projected to spend $434 billion more in the next ten years as the president’s health reform law has put twenty million more Americans on Medicaid, making it more difficult for the states, which have to pay for those extra people after 2016, to continue to finance education, infrastructure and public safety services besides. Already, Medicaid is often their single largest budget item and crowding out other spending commitments.

Ryan’s plan block grants federal Medicaid spending per state, allowing local governments to reduce costs however they see fit.

Senate Democrats are expected to unveil their own budget plan on Wednesday. A spending plan that can be approved in both chambers of Congress would have to find a balance between the two. The parties have been unable to reach such a compromise since Barack Obama was elected president, however. The national debt has grown nearly $6 trillion in the meantime.

Last year, the federal government borrowed $1.3 trillion to finance $3.8 trillion in spending. This year, the deficit is expected to fall to $900 billion.

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