This column is the third of a series that examines claims Republicans make to defend their budget that actually better describe the Affordable Care Act. The focus of this column is the claim that the House budget better serves low- and middle-class families. In fact, the House budget makes these families worse off, while the Affordable Care Act protects Medicare and Medicaid.
The House budget shifts costs to low-income seniors while giving huge tax cuts to the wealthy
In a speech at the Economic Club of Chicago, Rep. Paul Ryan (R-WI), the author of the House Republican budget, said the Medicare proposal provides “less help for the wealthy, and more help for the poor and the sick.” Karl Rove echoed this claim writing, “Bill Gates should bear a greater share of his health-care costs than the less healthy or less wealthy.”
Does this mean lower- and middle-class seniors are better off under the Republican budget than under the traditional program? No.
The House budget ends Medicare for those born after 1956 and replaces it with government support, or a voucher, to help purchase a private plan that increases at the rate of inflation. The nonpartisan Congressional Budget Office found that a typical 65-year-old in 2022 would pay double what they would pay under the traditional Medicare program, or $6,400 more. The value of the voucher would shrink over time as health care costs increase faster than inflation, meaning beneficiaries will pay more out of pocket.
In addition to ending Medicare, the House budget slashes Medicaid, the program that serves low-income children, seniors, and people with disabilities, and converts it into a block-grant program. According to the Center on Budget and Policy Priorities, the House budget would “eliminate the coverage for health services … that Medicaid currently provides to low-income seniors and people with disabilities on Medicare. It also would eliminate the assistance that Medicaid provides with Medicare’s premiums and cost-sharing charges.”
Instead, the budget provides a $7,800 health savings account for each Medicare beneficiary with income up to the poverty line. But this amount is not enough to keep up with the cost of care to these low-income beneficiaries.
Further, the effect of a block grant that caps federal spending jeopardizes access to long-term services and supports at home as well as in nursing homes, which are so important for so many seniors and people with disabilities.
The result is a huge cost shift onto the most vulnerable. Taking into account the added support based on income in the budget proposal, the Center on Budget and Policy Priorities found that a typical 65-year-old living at the poverty line would still pay $4,700 more than under Medicare as it exists today.
What about the wealthy? It is true that the House budget’s cost shift to seniors hits everyone across the income spectrum and shifts even more of the cost to wealthier people. But for wealthy people the budget makes up for the shift with a huge tax cut. It lowers the top marginal income tax rate by 10 percentage points, to 25 percent, bringing it to the lowest rate since under President Herbert Hoover.
The Affordable Care Act makes wealthier seniors pay slightly more
House Republicans need look no further than the Affordable Care Act if they want the Bill Gateses of the world to bear more of their health care costs and if they want to provide more assistance to lower- and middle-income seniors.
The law protects Medicare and Medicaid, which provide services to middle-class seniors at a lower cost than under the House budget. In addition, the law tightens and extends “requirements that higher income beneficiaries pay higher premiums” that were already on the books. Wealthier seniors have been paying higher Medicare Part B premiums for physician and other professional services since 2007. The Affordable Care Act also establishes a new income threshold for the Medicare Part D prescription drug program. That means wealthier seniors on Medicare will pay a higher premium for their medications.
Claims that the House budget provides more help to lower-income seniors while asking wealthier seniors to pay more are disingenuous. First, the budget makes low-income seniors worse off by shifting the burden of higher Medicare costs onto them and cutting the Medicaid cushion. Second, the budget includes a huge tax cut for the rich that brings the top marginal tax rate to the lowest since before the Great Depression.
On the other hand, the Affordable Care Act protects Medicare and Medicaid for low- and middle-class seniors while asking wealthier seniors to pay more in premiums for health care and prescription drugs.
Tony Carrk is Policy Director for the ThinkProgress War Room.