Paul Ryan's $1 Trillion Plan to Slash and Burn Medicaid

| Thu Mar. 31, 2011 9:35 AM EDT

Congressional Republicans have been making noises about gutting Medicaid for months, as it's become clear that—politically speaking—the health-care program for the poor is the easiest entitlement to cut. Now the shape of their plan is finally coming into view. Politico reports that Rep. Paul Ryan (R-Wisc.), chair of the House Budget Committee, is planning to slash $1 trillion from Medicaid in the House GOP's 2012 budget proposal. The details of the plan haven't leaked yet, but it's almost certain to include some sort of artificial spending "cap," which will reduce spending not by finding efficiencies but by slashing benefits, cutting payments to providers, and reducing access to the program.

Currently, the federal government reimburses states for a set percentage of their Medicaid costs. A spending cap-type plan would change that. There are already two such options on the table, both of which would fundamentally change the nature of the program. The first, which Ryan himself outlined last year, would turn Medicaid into a voucher program to "give Medicaid recipients $11,000 with which to purchase health insurance." Obviously, a program that gives people a set amount of money to pay for health insurance is a very different program from one that reimburses states for a percentage of the costs of insuring those people.

Ryan's voucher proposal hasn't won very many supporters. But Republicans in both houses of Congress are already united behind a push to convert Medicaid into a "block-grant" system that would give states the power to gut the program. Instead of giving individuals a set amount of money to buy insurance, like Ryan's voucher program, this plan would give states a set amount of money to provide insurance for poor people. Like the voucher program, this would represent a dramatic shift from the current percentage-based arrangement.

The House GOP's 2012 budget won't likely pass in its full form. But by putting draconian spending cuts on the table, House Republicans know they'll be able to move the policy goalposts further and further to the right—as they're already succeeding in doing.

When pressed, Hill Republicans will admit that Medicare, not Medicaid, is a bigger debt driver. But politically speaking, it's far easier to extract savings from the poor than from seniors. And when their opponents have supported Medicare spending reductions—as Democrats have successfully done through federal health reform—the supposedly fiscally conscious GOP turns around to accuse the Democratic Party of "an immediate 15 percent cut in [Medicare] benefits," as the National Republican Campaign Committee wrote in a press release on Wednesday. When it comes to entitlement cuts, the GOP rolls out its deficit hawkishness very selectively.