Despite Uproar, State Lawmakers Pursue Medicare Overhaul

Across the nation, U.S. House Republicans are getting an earful from their constituents about a GOP budget proposal to overhaul Medicare, the federal health care program that insures the elderly.

The Republican plan, written by Wisconsin Rep. Paul D. Ryan as part of his sweeping budget overhaul, would turn Medicare into a program that subsidizes private health care coverage for seniors instead of directly paying medical costs as it does now. Some Republicans, unnerved by the public reception, have even begun to retreat from it. 

But that message hasn’t made its way to Texas, where state lawmakers are moving full speed ahead on their own efforts to take control of — and then restructure — both Medicare and Medicaid, the joint state-federal health care program that primarily serves poor children and the disabled.  

Rep. Lois Kolkhorst’s “health care compact” bill, HB 5 — which would effectively ask the federal government to give Texas and other states block grants to run Medicaid and Medicare as they see fit — passed easily out of the House, and was heard in a Senate committee on Tuesday. That’s despite Democrats’ warnings that any effort to redesign Medicare will terrify, or potentially harm, seniors and a failed attempt by Rep. Craig Eiland, D-Galveston, to remove Medicare from the Texas compact bill.

“The reason I offered the amendment is exactly because of what’s going on nationally — it’s an ‘I told you so,’” Eiland said. “Before we start messing with our seniors, let’s try to prove we can run Medicaid.”

Republicans in the state House say they have no intention of curbing services or compromising care for the nearly 3 million Texas seniors on Medicare. But they say the health care compacts under consideration by other states are all written to include Medicare, and that they must align. And they argue there’s no way to get at the country’s escalating medical inflation and spiraling health care costs without addressing overutilization, fraudulent spending and other inefficiencies in Medicare. Medicaid mostly covers children; Medicare’s seniors are far more costly to insure.

“Our elderly population wants to know they’re going to be taken care of in their waning years of life. I get that, and we have always done that as a society,” Kolkhorst said. “But this is a ‘save your country’ issue. While I worry about the Medicare question, I also worry about the unfunded liabilities we’re leaving behind.”

House Republicans also argue the conversation on the table in Washington is different from the one in Texas. The federal Medicare proposal authored by Ryan, the House Budget Committee chairman, and passed by the U.S. House on April 15, would, like Texas’ health care compact, give states the purse strings to operate Medicaid. But what’s gotten so much attention is how his proposal overhauls Medicare: giving the elderly fixed annual payments to purchase insurance from private providers.

In recent weeks, Washington policymakers have been subjected to a harsh lesson about the political risks of tampering with Medicare, a highly popular program among seniors. In town hall meetings around the country, constituents essentially — and literally — screamed at Republican U.S. House members who supported overhauling Medicare as part of the non-binding budget resolution, which passed the lower chamber on April 15. (Only one Republican in the Texas delegation voted against the budget resolution: U.S. Rep. Ron Paul.)

That proposal, which has virtually no shot in the U.S. Senate, would leave Medicare as is for those who are already retired, or are within 10 years of retirement. Everyone else would get Medicare as a “premium support” program, meaning they would get a set amount of money from the government to purchase private insurance. It also would raise the age of eligibility from 65 to 67. Seniors would pay more with this concept, according to the Congressional Budget Office: Estimates indicate by 2030, a typical 65-year-old would cover 68 percent of his or her total cost, compared with 25 percent under the existing system.

Initially, House Republican leaders were cautiously quiet about the plan. When it was made public, many of them were forced on the defensive, as constituents flooded town hall meetings and other public events to express their opposition — often angrily. While polls show that most seniors want to reduce the deficit, they adamantly oppose major Medicare changes like raising the eligibility age and using vouchers. Most also have no idea what the term “premium support” means, even though it is the foundation of Ryan’s plan.

Kolkhorst says the Texas compact proposal leaves the door open for the state to decide how to operate Medicare — but that it would probably look far different from Ryan’s proposal. If the compact is eventually approved — a steep, highly unlikely hurdle considering it must be approved by Congress and the president — the state would start with Medicaid, which covers more people in Texas than Medicare, Kolkhorst said, before moving toward anything affecting seniors. (The compact also leaves Texas the option to keep its seniors on federal Medicare, if designing a state program becomes unworkable.)   

“Right now we have no incentive to save money on Medicare” because it’s funded by the federal government, Kolkhorst said. “What I get excited about is taking this population, mitigating risks, reining in some of the costs and finding big savings.”

But Anne Dunkelberg, associate director of the Center for Public Policy Priorities, a liberal think tank, said it’s better to conduct a study first, before jumping into any proposals to alter how health coverage is provided, or what benefits are available. She said the current measure would allow the state to simply pick and choose which federal programs to take and laws to follow — something the Obama administration is seriously unlikely to allow. And she said that unlike with Medicaid, state leaders have no experience running Medicare, providing little assurance to elderly Texans. 

“I don’t think there’s an attempt to scare seniors,” she said, “but … it’s not enough to tell people to just trust us to go forward.”