GOP "Path To Prosperity" Would Drive More Seniors Into Poverty

April 06, 2011 2:20 pm ET — Walid Zafar

The budget proposed by House Budget Committee Chairman Paul Ryan (R-WI) will decimate the social safety net. An analysis from the Center for Budget and Policy Priorities shows that nearly two-thirds of the budget cuts will be to programs benefiting lower-income Americans. Despite Ryan's assurances to the contrary — he told Fox News this morning that his budget actually will "actually save the safety net" — the "Path to Prosperity" will mean a path to poverty for millions of Americans struggling to stay afloat, including future retirees.

According to the Congressional Budget Office, Medicare beneficiaries "would bear a much larger share of their health care costs than they would under the current program." As Dean Baker explains, the vouchers that Ryan has proposed for those hitting retirement in 2022 will not come close to covering the cost of health insurance. Seniors will have to fork over most of their income for health care:

According to the CBO analysis the benefit would cover 32 percent of the cost of a health insurance package equivalent to the current Medicare benefit (Figure 1). This means that the beneficiary would pay 68 percent of the cost of this package. Using the CBO assumption of 2.5 percent annual inflation, the voucher would have grown to $9,750 by 2030. This means that a Medicare type plan for someone age 65 would be $30,460 under Representative Ryan's plan, leaving seniors with a bill of $20,700. (This does not count various out of pocket medical expenditures not covered by Medicare.)

Time's Kate Pickert writes that "if Ryan's plan is adopted as is — and it won't be — absent an individual mandate but with guaranteed issue and community rating, private insurance prices in the individual and small-group market would go through the roof. This would lead to more uninsured Americans."

Worse, since Ryan's budget is predicated on repealing the Affordable Care Act in its entirety, including the popular provision that prohibits denying coverage to those with pre-existing health conditions, future retirees will not only be unable to afford coverage on the individual market; they won't even be able to find policies that will cover them in the first place because of the pre-existing conditions they will likely have.

As Paul Krugman notes, "This isn't a serious proposal; it's a strange combination of cruelty and insanely wishful thinking."