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From Health Law Daily, March 17, 2015

House GOP budget: ACA repeal, privatized Medicare, and Medicaid block grants

By Bryant Storm, J.D.

House Republicans have released their Fiscal Year (FY) 2016 budget which plans to repeal the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), privatize Medicare, and transform Medicaid into a block grant program for states. The GOP budget seeks to tackle growing debt burdens by reaching a balanced budget in ten years without raising taxes, in part, through significant changes to federal health care programs. Representative Tom Price (R-Ga), Chairman of the House Committee on the Budget, called the budget “a plan to get Washington’s fiscal house in order, promote a healthy economy, protect our nation and save and strengthen vital programs like Medicare.” President Obama criticized the Republican strategy, saying: "it's not a budget that reflects the future. It's not a budget that reflects growth.”

ACA. The budget proposed by House Republicans seeks to fully repeal the ACA. Republicans emphasize that with the repeal of the ACA, the budget would end the Independent Payment Advisory Board (IPAB), Medicaid expansion, and other ACA programs in order to “increase access to affordable choices, which will in turn increase economic growth and employment while lowering health care inflation.” The New York Times reported that although conservative groups have urged the importance of repealing all of the ACA, the repeal effort comes in the wake of an Obama administration announcement that health care reform “provided coverage to 16.4 million previously uninsured people.”

Medicare. The plan set forth by House Republicans sees Medicare as an unsustainable federal program, which, at current rates, will be bankrupt by 2030. The budget proposal blames “Medicare’s fundamentally flawed structure” and the “open-ended fee-for-service model” for the program’s failures. The privatization involves what House Republicans are calling a premium support program in Medicare where Medicare beneficiaries would be able “to choose from a range of guaranteed coverage options, including traditional Medicare, to find a plan that best fits their needs.” Medicare would then pay premium support payments directly to a health plan chosen by a beneficiary. Under the program, lower income beneficiaries and those with illness would receive greater assistance, while higher income beneficiaries would be responsible for a greater share of the cost. Under the GOP plan, the premium support program would take effect in 2024. The system would be operated through a Medicare Exchange. The budget also includes medical liability reforms to curb what the House Republicans call “frivolous lawsuits.”

Medicaid. The budget plans to curb Medicaid spending, which according to the Congressional Budget Office (CBO) will account for $335 billion in federal spending in fiscal year 2015. The budget seeks to end what it calls states’ “perverse incentive to expand” Medicaid under the current program. As a first step, the House budget would repeal Medicaid expansion under the ACA. In its place, the Republican budget would rely on block grants or “State Flexibility Funds that give states greater freedom to build the most effective programs for their communities.”

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