Republican vice-presidential pick Paul Ryan is widely considered a leading conservative policy intellectual on welfare and entitlement spending. His budget—loosely adopted by the Republican Party platform—calls for a massive reduction in programs that benefit Americans broadly, and the poor specifically, in order to pay for big tax cuts. But his vision goes further, fundamentally altering the way the United States provides for the poor and elderly. Ryan’s plan takes the social insurance promises of the New Deal and the Great Society and turns them into something far riskier and less dependable.
Ryan’s vision for reforming the social safety net can be explained in three verbs: he wants to block grant Medicaid, voucherize Medicare and privatize Social Security. Yes, Medicare, Medicaid and Social Security would likely still exist, but those changes would mean a profound difference for the average person who receives government benefits over his or her lifetime. Let’s look at what happens to Jessie, a low-income woman living in Pennsylvania who is eligible for all three programs at different periods of her life.
When Jessie is a child, her parents make a combined $30,000 a year. Because their income is under 133 percent of the federal poverty line, Jessie and her brother get health insurance through Medicaid. After Jessie gets older and becomes pregnant, she again enrolls in Medicaid. She and her partner only make $20,000, under the threshold of 133 percent of the federal poverty line for a couple, qualifying her under the federal requirement that pregnant women living at that income be covered. (Medicaid eligibility will expand significantly if the Affordable Care Act is fully implemented—a bill that Ryan, Mitt Romney and the Republican Party vow to repeal.)
Medicaid is a program designed to provide healthcare for people in poverty, an agreement between the federal government and states to jointly finance healthcare benefits. Since it involves cost sharing between federal and state governments, the federal government requires states to adhere to a defined level of benefits and eligibility baselines, which includes pregnant women and children. And lucky for Jessie, who also has diabetes, her chronic care will be covered while she’s on Medicaid.
But Ryan’s budget would block grant Medicaid. In a block grant, the federal government gives states lumps of money and then turns over administration of the program to them. To see the effects of block granting in real time, take a look at the welfare reform of the 1990s that lead to TANF, a block grant of money to the states to help families living in poverty. As the Center on Budget and Policy Priorities reports, “over time, states [have] redirected a substantial portion of their TANF…funds to other purposes,” including plugging budget holes and freeing up money for other purposes. This meant that when the recession hit, many states couldn’t get that money back and ended up slashing benefit amounts or shrinking the number of people on the program just when it was most in need. In 2010, only twenty-seven of every hundred families living in poverty received TANF benefits.
In Ryan’s Medicaid plan, the amount the federal government grants, relative to the economy, will decline sharply over time, with federal spending cut in half by 2040. According to the Urban Institute, between 14 million and 27 million would be dropped from Medicaid by 2021. That will force state legislators—who would be endowed with the power to set eligibility and benefits levels themselves—to make hard decisions about what to cover and what to exclude. State budgets are under constant financial pressure—almost all of them are required to balance their budgets—and many could target Medicaid as they struggle to slim down. That could lead them to cut off coverage for anything expensive—diabetes, heart conditions, cancer—or politically volatile like reproductive healthcare. “Even if someone is able to stay on the program,” says Greg Anrig, vice president of policy and programs at The Century Foundation, “they wouldn’t know from year to year whether they could count on a particular kind of coverage,” making it a “very unstable system.”