What Ryan's Prescription on Healthcare Could Mean for New Yorkers

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House Budget Committee Chair Paul Ryan (R-WI) unveiling his 2012 budget proposal last week.

In choosing Wisconsin Congressman Paul Ryan as his running mate, Mitt Romney is putting the fate of much of the American healthcare system at the top of this year's political agenda. In the New York metro area, where healthcare is a dominant industry and an expensive proposition for consumers and taxpayers, whichever policy prevails will be uniquely felt.

Privatized Medicare

Democrats and Republicans agree that federal spending on healthcare is growing unsustainably. But the two sides have very different ideas for bolstering the vast entitlement system. In adding Rep. Ryan to the GOP ticket, Romney will spend a lot of the campaign talking about Medicare, the federal medical coverage for the elderly.

While Romney and Ryan's plans aren't identical, they're more similar than different in that both want to use private insurance companies to administer Medicare. Ryan and many Republican leaders have also made it clear they want individual patients to "have more skin in the game," shifting the system from a benefit dispensary to more of a contributor model, where seniors would receive subsidies to buy coverage.

A frequent criticism of Ryan's plan is that the subsidies or vouchers won't be adequate to cover medical expenses -- especially in a high-cost are like this metropolitan area, despite whatever geographic adjustments come from Washington. The Congressional Budget Office estimated seniors could shoulder up to 68 percent of their medical costs under Ryan's 2011 proposal. Ryan and his staff maintain the subsidies will adequately cover expenses, and insurers will have a strong incentive to deliver a product people can afford.

Although not much information exists on how much people in each state would shoulder in projected costs, there are longstanding complaints that Medicare's geographic formula doesn't adequately cover the real cost of providing medicine in the New York region.

The Ryan plans don't focus on specific spending cuts in healthcare, instead leaving decisions about how to trim hospitals, doctors or pharmaceutical companies to private insurance companies, a decade or so from now. This is in direct contrast to Obama and the Democrats, who aim to drive down costs by reducing unnecessary and redundant treatments and tests - ultimately, paying providers less. Providers don't like the idea of earning less, but they also stand to increase their number of new patience that the Affordable Care Act would bring into the system.

Changes for Medicaid

Medicaid, the healthcare program for low-income people, would change even more radically under the Ryan plan. Unlike Medicare, Medicaid is a joint federal-state program, and would continue to be one, but Ryan would convert it to a system of block grants. Medicaid expenditures would be tightly capped, and states would receive much less money than they currently get from the federal government.

Under the Affordable Care Act, the Medicaid enrollment stands to grow modestly in New York and potentially quite a bit in New Jersey, if Governor Christie decides to expand the program.

In line with the stated Romney/Ryan effort to the ‘repeal Obamacare’ agenda, Ryan's ideas would turn Medicaid into a system of block grants, turning over a fixed – and ultimately much smaller – amount of money to states, where the care would be administered. One study of the proposed Medicaid block grant system has New York and New Jersey both losing 12 percent of their federal funding - a substantial drop, but nowhere near as big as in many places.