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News December 2015

Washington Watch

House Speaker Paul Ryan, Social Security and Medicare — Big Changes, Little Tweaks or...?

By Alan M. Schlein

Unable to reach a “grand bargain” on the budget with President Obama, Boehner pushed through smaller limited changes to Medicare as part of a larger deal on government spending. Ryan is likely to try the same strategy. But he has clearly laid out a larger vision for changing Medicare and Social Security.

New House Speaker Paul D. Ryan, R-Wis., says he plans to pursue a “bold alternative agenda” that would include major revisions in entitlements.

Ryan, who as Speaker of the House becomes the person directly behind the vice president in line to the presidency, is now in a much better position to deliver on his ambitious plans – overhauling the tax code, slashing federal spending and rewriting the social contracts for Medicare and Social Security.

For years, Ryan has pushed proposals that would privatize parts of Social Security, cut Medicaid and convert Medicare to a voucher-based program, in which private insurance would be purchased with federal subsidies.

But as the leader of the House of Representatives, Ryan finds himself with an interesting dilemma. Will his new power and position provide a platform for his vision or will those big ideas weigh him down in a political climate of conflict and partisan rancor?

If recent experience under former Speaker John Boehner, R-Ohio, is any indicator, Ryan may have to keep his expansive aspirations quiet and instead focus on more modest goals. As speaker he needs to appease his mainstream Republicans, not displease his hard line conservative faction, while also keeping enough votes to keep the Democrats in check. As budget chairman, Ryan was able to cut some modestly successful deals, but never was able to impose his bigger vision and turn it into law.

Ryan, 45, is the youngest person to serve as house speaker in nearly 150 years. He was elected, in 1998, at age 28. But he is a somewhat accidental traveler in the corridors of power. He is much more passionate about working through the policy issues than he is about dealing with politics. He is one of about 50 lawmakers who sleep in their Congressional office, which he sees as fiscally responsible and more practical than getting a Washington D.C. apartment. “I live in Janesville, Wis.,” Ryan told CNN recently, referring to his 5,800-square-foot Georgian home. “I commute back and forth every week. I just work here. I don’t live here.”


Wrangling the House Forward

The road ahead will not be easy for Ryan even as he starts out with a reservoir of good will from lawmakers eager to move on from fiscal crisis to fiscal crisis.  Before Boehner left the job in late October, he gave Ryan a huge gift: the House passed a tentative budget-and-debt deal that would lift the debt ceiling until March 2017. The bill now moves to the Senate and would lead to a government default if it does not pass. A lack of action before Dec. 11 would also lead to a partial government shutdown.

The House voted 266-167, potentially avoiding a fiscal crisis that could have ensued if the nation defaulted on its loans. But while Ryan denounced the agreement –  “this stinks” is how he labeled it – he surprised some conservatives by supporting it. Avoiding an imminent government shutdown should enable Ryan to get his sea-legs under him as speaker.

The House-approved budget deal increases federal spending on defense and domestic programs over $80 billion for the next two years and suspends the nation's debt limit through March 2017. To pay for the higher levels, Boehner and congressional leaders used a mix of reforms to entitlement programs, including the Social Security disability insurance program and Medicare, among other maneuvers.


Redefining the Job

Ryan wants to be the visionary and be the big-picture policy guy for the Republicans. But he’s going to have to change a long-held view within the Republican Party of being the opposition party to the Obama White House. For years, Congressional Republicans have seen their job as preventing or stopping President Obama from accomplishing things. But if Ryan wants to be successful speaker – and to leave open the possibility of wanting to president someday – he will have to show that House Republicans can work with Senate Republicans to get things done – even over the objections of the White House. Proving they can govern effectively is a much harder job than saying no to everything.


Ryan and Medicare

If you think managing the competing forces within his Republican majority will make moving his Medicare voucher concept forward difficult, Ryan will also have to deal with steadfast opposition from Democrats in the House, Senate and at the White House. In an election year, Democrats are savoring the opportunity to revive the criticisms they’ve used against Ryan in the past.

It’s unclear how hard Ryan will push to change entitlements – specifically Medicare, Medicaid and Social Security –  the mandatory spending that comprises most of the federal budget. Big changes to those programs have fallen way to partisan divisions for many years. What Ryan is likely to do is seek modest changes to Medicare and Social Security as bargaining chips, rather than pursuing a sweeping overhaul, a move tried by Boehner, his predecessor. Unable to reach a “grand bargain” on the budget with President Obama, Boehner pushed through smaller limited changes to Medicare as part of a larger deal on government spending. Ryan is likely to try the same strategy. But he has clearly laid out a larger vision for changing Medicare and Social Security.

In 2005, Ryan caused a firestorm proposing legislation that would have partially privatized Social Security, allowing Americans to invest some of their payroll taxes in mutual funds and other securities instead of paying into the Social Security Trust Fund. The idea was to both save money and also give American’s greater control over their retirement savings. But the idea would have exposed those paying into Social Security to greater risks. That proposal failed and Ryan has not raised the idea again. Instead he has advocated other controversial changes to entitlement programs.

When he took over the House Budget Committee and then the tax-writing Ways and Means Committee, Ryan has repeatedly proposed partially replacing Medicare with a system of vouchers, which retirees could use to buy health insurance from the provider of their choice. This, like his previous idea on Social Security, would give beneficiaries greater freedom in choosing their doctors and hospitals and allow private firms to look for new ways of providing medical care to seniors at lower costs.

His budget proposals were considered so brutal and draconian that Democrats made the “Ryan budget” an epithet in almost every campaign they could. One advertising spot, in 2012 when Ryan was on the ticket as Mitt Romney’s running showed Ryan shoving a grandmother off a cliff. As if Democratic opposition wasn’t fierce enough, even some Republicans turned on Ryan’s Medicare idea somewhat, prompting then-presidential candidate Newt Gingrich to say the plan was too “radical” a change for most people. “I don't think right-wing social engineering is any more desirable than left-wing social engineering," he said when asked about Ryan’s 2012 budget proposal.

But those years also made Ryan a hero to the right, the rare policy wonk who was willing to challenge GOP complacency on the budget, and even take credit for Social Security and Medicare reform ideas that Democrats felt sure would doom him. They didn’t and when Republicans won control of the House in 2010 Ryan became an icon.

Ryan has already had success pushing voucher programs or “premium support” plans as part of House-approved budgets, always strictly on party-line votes. But he has not been able to get Senate approval or White House consent.

His idea is for the federal government to make a fixed monthly payment to future beneficiaries that they would use to buy either a private plan or the government-run traditional Medicare plan. Any costs beyond the monthly payment would come out of beneficiaries’ pockets. That would be a dramatic change from the current system in which the government covers the full cost of Medicare’s defined benefit package.

Supporters say the premium support model would better control Medicare spending by forcing competition between private plans and Medicare. But critics warn it could shift costs substantially to beneficiaries, hurting lower income and sicker people.

Another variable in Ryan’s path to success are the Republican presidential candidates, who cover the waterfront with different views on solutions to Medicare. Some of the GOP presidential candidates are jockeying to be seen as in solidarity with Ryan. Former Florida Gov. Jeb Bush and New Jersey Gov. Chris Christie have come out with plans similar to Ryan’s. But a few of the candidates are keeping their distance from Ryan. Donald Trump has railed against proposals to end or significantly change Medicare, as has former Arkansas Gov. Mike Huckabee and former Sen. Rick Santorum, R-Pa.

Democratic front-runner Hillary Clinton appears eager to take on Ryan’s voucher idea and with good reason. It’s unclear exactly how much turning Medicare into a voucher system would exactly cost seniors, but the Congressional Budget Office, assessed Ryan’s April 2011 plan. CBO estimated that seniors could end up paying $12,500 a year more for medical care by the year 2022 than under the current Medicare system. That could make Medicare and Ryan’s ideas a major issue politically with the 2016 elections on the horizon.


[Also contributing to this report were the Washington Post, Los Angeles Times, AP, Reuters,
CNN, the New York Times and Modern Healthcare]

Alan Schlein runs, an internet training and consulting firm. He is the author of the bestselling “Find It Online” books.

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