GOP budget plan would revamp Medicare and Medicaid to slash deficit

House Republicans' 2012 federal budget plan will propose significant changes to Medicare, shift control of Medicaid to the states and aim to chop more than $4 trillion from the deficit over the next decade, House Budget Committee Chairman Paul Ryan said Sunday.

Ryan's broad overview of the GOP plan, which is slated to be officially unveiled Tuesday, included a combination of entitlement reforms and spending cuts that amount to a dramatically different approach to deficit and debt reduction than that advocated by President Obama.

Obama's plan, proposed in February, aimed to shave $1.1 trillion from the deficit over 10 years through a combination of increased revenues and targeted budget cuts. He did not suggest structural changes to the nation's social safety net programs — Social Security, Medicare and Medicaid.

Republicans blasted that plan as ignoring the primary drivers of the escalating debt and deficits, as well as the solutions proposed by a commission Obama tasked with drafting a reduction plan.

In contrast, the GOP budget plan would attempt to make changes to entitlement programs as recommended by the commission.

The proposal would rework Medicare by offering seniors a menu of private plans and restructure Medicaid funding into block grants distributed to the states, while apparently leaving Social Security unchanged, Ryan said. The changes would not affect current recipients of Medicare, he said.

The Wisconsin Republican declined to offer exact estimates, but said the plan would go further than the commission's recommendations, which proposed nearly $4 trillion in deficit reduction through 2020.

"We believe in exceeding the goals put out by the president's debt commission," he said in an interview on "Fox News Sunday with Chris Wallace."

The commission's plan was rejected by both Democrats, who said it cut too much, and Republicans, who would not sign on to its call to increase government revenues.

Ryan said the House GOP plan would call for "pro-growth tax reform," although he was not specific. He indicated the plan included lower tax rates.

The proposal comes as House Republicans are already battling the Democratic-led Senate over federal spending levels. Having failed to pass a 2011 budget while Democrats were in control of both chambers, lawmakers now are locked in a fight over how to fund the government for the current fiscal year. Federal budget authority expires on Friday, leaving the threat of government shutdown looming over discussions.

That fight involves a tussle over peanuts — tens of billions of dollars — compared with the reductions outlined in the budget bill. Ryan acknowledged the Republican plan was landing in an already bitter and divided political environment.

"Whether it's dead on arrival, I don't know, but where the president has failed to lead we're going to fix this problem," he said.

Republicans hope the budget plan will shape the debate not only in Congress but also in the political contests of the 2012 campaign, in which Republicans will cast themselves as offering a more "serious" solution to the deficit and taking political risks.

"We are giving [Democrats] a political weapon against us, but look, they're going to have to lie and demagogue," Ryan said. "Shame on them if they do that."

Under the plan described by Ryan, starting in 2021 Medicare recipients would chose from a menu of plans that are subsidized by the government. The plan is known as a "premium support" system similar to one Ryan developed with former Clinton administration budget director Alice Rivlin.

He acknowledged the proposal would shift more of the burden of healthcare cost to seniors, saying that the wealthiest seniors would bear the largest portion.

"More for the poor, more for people who are sick, and we don't give as much to the people who are wealthy," Ryan said. "This saves Medicare."

On Medicaid, a program that offers healthcare to the poor, the House GOP proposal would shift more control — and flexibility, advocates argue — to the states by distributing funds in block grants. Critics say the end result would be a reduction in support for the neediest.

Ryan pushed back on that notion.

"Medicare and Medicaid spending will go up every single year under our budget. They don't go up as much as they're going right now because they're growing at unsustainable rates," he said.

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