The budget proposal approved this week by the U.S. House of Representatives Budget Committee is predicted to balance the federal budget in nine years, largely through across-the-board reductions in spending. One exception to these cuts is an increase of $90 billion dollars in defense spending.
The proposed changes to the health care system are profound–repealing the Affordable Care Act, block-granting the Medicaid program, and partially privatizing the Medicare program through premium support. Under premium support proposals, the federal government would give Medicare beneficiaries a subsidy to purchase private health insurance.
Critics of premium support caution that privatizing Medicare would significantly increase costs for beneficiaries and weaken the Medicare program. The subsidy made available to people with Medicare purchase insurance may not keep up with the cost of coverage.
The viability of traditional Medicare may also be at stake as younger, healthier people would be more likely to opt for private health plans, leaving older, sicker beneficiaries in traditional Medicare. Higher health costs among the remaining population could lead to unaffordable premium hikes.
In addition to privatizing Medicare the budget would also consolidate Medicare Parts A and B and leave in place the sequester cuts instituted in 2011, which reduced payments to Medicare providers.