The House Budget Resolution for Fiscal Year 2015, H. Con. Res. 96, introduced by Budget Committee Chairman Paul Ryan (R-WI), was passed by the House of Representatives  on April 10, 2014.  The budget proposes drastic cuts in federal spending for programs of importance to most low- and middle-income Americans while proposing tax breaks to benefit the very wealthy and large profitable corporations.  This paper summarizes some of the key proposals in the House Republican FY 2015 budget that would affect seniors and people with disabilities who rely on Medicare, Medicaid and Social Security.



The House Republican budget ends traditional Medicare and increases health care costs for beneficiaries.  Chairman Ryan’s plan privatizes Medicare and achieves savings for the federal government by shifting costs to Medicare beneficiaries.

Privatizing Medicare with Vouchers/Premium Support Payments

Beginning in 2024, when people become eligible for Medicare they would not enroll in the current traditional Medicare program which provides guaranteed benefits.  Rather they would receive a voucher, also referred to as a premium support payment, to be used to purchase private health insurance or traditional Medicare through a Medicare Exchange.  The amount of the voucher would be determined each year when private health insurance plans and traditional Medicare participate in a competitive bidding process.  Seniors choosing a plan costing more than the average amount determined through competitive bidding would be required to pay the difference between the voucher and the plan’s premium.  In some geographic areas, traditional Medicare could be more expensive.  This would make it harder for seniors, particularly lower-income beneficiaries, to choose their own doctors if their only affordable options are private plans that have limited provider networks.

The Ryan budget proposal calls for private plans to provide benefits that are at least actuarially equivalent to the benefit package provided by fee-for-service Medicare.  This gives private companies the ability to tailor their plans to attract the youngest and healthiest seniors, even if payments are “risk adjusted” to take health status into account, which would leave traditional Medicare with older and sicker beneficiaries.  Their higher health costs would lead to higher premiums that people would be unable or unwilling to pay, resulting in a death spiral for traditional Medicare.  This would adversely impact people age 55 and older, including people currently enrolled in traditional Medicare, despite Chairman Ryan’s assertion that nothing will change for them.

The Ryan proposal establishes accounts for low-income Medicare beneficiaries, such as those people dually eligible for Medicare and Medicaid, to use to pay premiums, co-pays and other out-of-pocket costs.  However, it is unclear what the amount of assistance would be or if it would adequately cover out-of-pocket expenses.

Raising Medicare’s Eligibility Age/Increasing Out-of-Pocket Costs

In addition to privatizing Medicare, the Ryan budget would increase the age of eligibility for Medicare from 65 to 67 by increasing it two months per year from 2024 to 2035.  Raising the Medicare eligibility age is a benefit cut.  Although this proposal would save money for the federal government, it would increase system-wide health spending by increasing costs for everyone else – 65 and 66 years olds who would have to buy private insurance, which can be age rated; younger people buying health insurance coverage in an older risk pool; Medicare beneficiaries left in an older and less-healthy risk pool; employers providing health insurance to workers and retirees and State Medicaid programs.

The Ryan budget plan would also redesign the Medicare benefit beginning in 2024 by combining the Part A and Part B deductibles and making changes to supplemental insurance (Medigap) policies, changes that would likely increase costs for people with Medigap policies.  Medicare could be improved for beneficiaries by simplifying its cost-sharing and adding a catastrophic cap.  However, the National Committee is opposed to proposals to restructure Medicare’s benefits that would reduce federal spending by requiring beneficiaries to pay more.

We also oppose a proposal in the Ryan budget plan to expand income-related premiums under Medicare Parts B and D until 25 percent of beneficiaries are subject to these premiums.  A Kaiser Family Foundation study found that this proposal would affect individuals with incomes equivalent to $45,600 for an individual and $91,300 for a couple today.

Repealing the Affordable Care Act

The Ryan budget also calls for repealing provisions in the Affordable Care Act (ACA), which would make insurance available and more affordable for 65 and 66 year olds if they lost Medicare coverage.  Without the guarantees in the ACA, such as requiring insurance companies to cover people with pre-existing medical conditions and to limit age rating, it would be very difficult and expensive for older people to purchase private insurance.

Repealing the ACA would also take away improvements already in place for Medicare beneficiaries – closing the Medicare Part D coverage gap, known as the “donut hole;” providing preventive screenings and services without out-of-pocket costs; and providing annual wellness exams.  The Centers for Medicare and Medicaid Services recently reported that since the passage of the ACA, over 7.9 million Medicare beneficiaries in the Medicare Part D donut hole have saved $9.9 billion on their prescription drugs, an average of $1,265 per person.  Also, 37.2 million people with Medicare took advantage of at least one preventive service with no cost sharing, including an estimated 26.5 million people with traditional Medicare, and more than 4 million who took advantage of the Annual Wellness Visit.


The House Republican budget would destroy the current Medicaid program and slash benefits for low-income individuals.  It calls for making major cuts to Medicaid funding and repealing the Medicaid expansion in the Affordable Care Act (ACA).  These changes would be detrimental to seniors and others who rely on Medicaid.

Block Granting Medicaid Payments to the States

Medicaid provides funding for health care to help the most vulnerable Americans, including low-income seniors, people with disabilities, children and some families.  The Ryan budget would end the current joint federal/state financing partnership and replace it with fixed dollar amount block grants, giving states less money than they would receive under current law.  In exchange, states would have additional flexibility to design and manage their Medicaid programs.  The proposed block grants would cut federal Medicaid spending by $732 billion over the next 10 years (2015-2024).  Giving states greater flexibility in managing and designing their programs in no way compensates for the significant reductions that beneficiaries, including nursing home residents and their families, could face by turning Medicaid into block grants.

Repealing Medicaid Expansion under the ACA

The Ryan budget also would repeal the Medicaid expansion in the ACA.  Beginning in 2014, states have the option to receive federal funding to expand Medicaid coverage to uninsured adults with incomes up to 133 percent of the federal poverty level ($15,521 for an individual in 2014).  Over half of the states plan to expand their Medicaid programs, and some others will likely participate in the future.  The Ryan budget would repeal Medicaid expansion, taking away $792 billion from the program over 10 years.  This would hurt states and low-income individuals by:

  • Eliminating billions of federal dollars to states to provide their residents with health care and financial protection.  Under the ACA, the federal government will pay 100 percent of the cost for newly eligible low-income adults in Medicaid for the first three years (2014-2016), phasing down to 90 percent by 2020.

  • Preventing low-income adults from receiving access to health care services.  Repealing Medicaid expansion would result in between 13-17 million people losing access to coverage. 

Altogether, the Ryan budget cuts the Medicaid program by more than $1.5 trillion over 10 years, compared to current law.

Social Security

The House Budget Committee’s summary of the Ryan budget reaffirms Chairman Ryan’s previous positions on seniors by endorsing the recommendation of the Bowles-Simpson Commission to increase the age of eligibility for retirement, while withholding endorsement of the Commission’s tax proposals.  The Ryan budget requires the President to put forward ideas for “fixing Social Security.”  The National Committee continues to believe that issues relating to the solvency of the Social Security Trust Funds and benefit adequacy should be considered separate and apart from any discussion of the nation’s debt or deficit.

Additionally, we are disappointed that the Ryan budget fails to make any meaningful recommendations as to how to address the projected shortfall in the Disability Insurance (DI) program.  In 2013, the Social Security Trustees projected that the DI Trust Fund would be depleted in 2016, the same year projected in the 2012 report.  After 2016, 80 percent of scheduled benefits would be payable.  Disability expenditures have increased primarily due to demographic trends – as baby boomers age into the disability-prone years (they turn ages 49 to 67 in 2013), more people become disabled and thus receive benefits.  The increase in full retirement age from 65 to 66 has also contributed to the increase in disability expenditures, as people remain on the disability rolls longer before shifting to retirement.

Congress has reallocated income across the Social Security Trust Funds 11 times – from the Old- Age and Survivors Insurance Trust Fund to the Disability Insurance Trust Fund and vice versa.  When Congress took action in 1994 to address a then-reported shortfall in the Disability Insurance Trust Fund, it knew that it would have to take action again in 2015 or 2016.  The National Committee supports reallocation of part of the 6.2 percent Social Security tax rate from the Old-Age and Survivors Insurance Trust Fund to the Disability Trust fund.  This reallocation would ensure that both funds can pay full benefits until 2033, after which about 77 percent of scheduled benefits would be covered.

While the Ryan budget rejected reallocation of Social Security taxes so that disability benefits can continue to be paid without interruption, it offered no proposals to ensure the soundness of the vitally important Social Security disability program.


The National Committee opposes the Ryan Budget Resolution, H. Con. Res. 96, and, in particular, the following:

  • Ending traditional Medicare by converting it from a defined benefit to a defined contribution program;

  • Raising the Medicare eligibility age;

  • Increasing costs for Medicare beneficiaries by further increasing income-related premiums and by restructuring the program and Medigap in ways intended to reduce federal spending;

  • Repealing the Affordable Care Act, which is helping Medicare beneficiaries with their prescription drug costs and providing preventive screening and wellness visits with no out-of-pocket costs;

  • Transforming the Medicaid program from a federal/state partnership to a block grant program, which would result in arbitrary cuts to vulnerable seniors and other individuals;

  • Repealing Medicaid expansion, which would hurt states financially and negatively affect low-income adults who need access to health care services;

  • Policy statements opposing reallocation of Social Security taxes to the Disability Insurance Trust Fund.  


Government Relations and Policy, April 2014