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Rep. Paul Ryan Budget Plan Would Increase Health Care Costs: Bloomberg Study

Paul Ryan

First Posted: 06/29/11 06:39 PM ET Updated: 08/29/11 06:12 AM ET

WASHINGTON -- A new study shows Rep. Paul Ryan's budget plan will do little to reduce health care costs, Bloomberg News reports.

The study, authored by Bloomberg Government, claims that key health care provisions in Ryan's budget are ineffectual in terms of cutting costs, according to the report.

In his budget proposal, Ryan (R-Wis.) presents a revamped Medicare plan in which individuals would receive "premium support payments" that subsidize private health care plans. However, the wealthiest 2 percent of beneficiaries would receive only a third as much in these payments as others, and the following 6 percent of beneficiaries would receive only half as much.

"If you're wealthy and you've got substantial assets beyond your Social Security, we're going to expect you to actually pay the cost of your premium. But it's not going to affect anybody in the middle class or below," said House Speaker John Boehner in an exclusive interview Monday night on Fox News Channel's "Hannity."

Ryan's plan aims to decrease the government's share of health care costs and increase those of the beneficiary. The theory is that increasing an individual's financial stake in health care will drive down unnecessary procedures and costs.

But according to Bloomberg, the study shows Ryan's plan will drive up costs to both beneficiaries and the government alike by curbing the assistance that goes to the wealthiest seniors. Increased expenses and limited returns for the top 8 percent of beneficiaries gives them an incentive to opt out of Medicare altogether, reports Bloomberg, in turn forcing those in lower income brackets to make up the difference.

While the Bloomberg study focuses on the effects of this one provision, other reports have dogged the Ryan plan as a whole.

An April report by the Congressional Budget Office (CBO) found that while Ryan's plan would dramatically reduce federal spending on health care, total health care costs would skyrocket. By 2022, alleges the CBO, overall health care costs under the plan would be a staggering 34 percent greater than they would be as Medicare currently stands, and would rise to 40 percent by 2030.

As former Director of the OMB Peter Orszag puts it in a piece for Bloomberg, "health-care costs would not be reduced on the backs of seniors; they would be raised on the backs of seniors."

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