Will Paul Ryan Raid Medicaid?

The 2012 campaign continues to center on candidates and their allies calling the other guys “extremists,” and few bear the title as often as Vice Presidential nominee Paul Ryan.  For his plan to reform Medicaid, for example, Ryan is a commander in the “Republican War on the Poor.” Others say his Medicaid plan will deprive millions of poor Americans of health care and may even split up families.

Far from hurting the poor, Ryan’s Medicaid plan will preserve their access to health care by making the government health care program affordable and sustainable. The plan has three main features: It would change Medicaid into a block grant, put the program on a yearly budget instead of writing it a blank check, and give states flexibility in how they implement the program.

Let’s address some of the myths and campaign rhetoric on Ryan’s reforms.

The Ryan plan will gut Medicaid spending.

Truth: The Ryan plan does not cut spending, but pegs federal Medicaid spending growth to changes in population and inflation, instead of an open-ended entitlement where the sky is the limit.  States would have greater flexibility in how they spend federal funds, but would see sustainable growth in tax dollars.  While Ryan’s plan would spend less than President Obama’s, the latter path is unrealistic.  Under President Obama’s budget, Medicaid spending would grow by 9 percent a year, which cannot be sustained when the economy is expected to grow only 2 to 4 percent.

While special interest groups bemoan efforts to control spending, those administering the program at the state level, such as Wisconsin Health Secretary Dennis Smith, know they can do more with less. 

Everybody agrees that there is excess cost in the health care system, so by golly, give us the flexibility to address it, and we will, said Smith.  

Indeed, 29 states including Pennsylvania have asked for greater flexibility in administering Medicaid. Without state flexibility to innovate, change incentives and right-size the program, future generations of taxpayers we won’t be able to afford a social safety net.

This is the first in a series of blog posts on the myths of the Ryan Medicaid plan. For more myth busting see our Policy Memo.