In a budget proposal for 2012 to be released this week, Chairman of the House Budget Committee Paul Ryan has announced plans to include over $4 trilling in federal spending cuts over the next ten years and seek to transform Medicare and Medicaid entitlement programs.  The plan will draw entitlement program reform into an already contentious budget debate.


Based upon the current rate of raising costs, projections estimate that the cost of Medicare is expected to increase from $396.5 billion in 2010 to $502.8 billion in 2016.  Indicating that Medicare cannot be sustained on its current path, the budget proposal would convert Medicare from an entitlement program to a "premium support" program.  The new program would apply to those currently under 55 years old.  Upon reaching 65, they would be able to choose from a range of private insurance plans and the government would pay about the first $15,000 in premiums.

The same proposal would convert Medicaid into a series of block grants for states.  With similar spending growth to Medicare, Medicaid costs are expected to double by 2021.  The grant program would seek to provide the states more flexibility to managing programs to assist poor and disabled residents with healthcare costs.

Although the plan will not likely garner strong support from Democrats, it does bring entitlement programs to the forefront of the budget debate.  The shared ground in the debate acknowledges that Medicare, Medicaid and Social Security, which make up 60% of the budget, must be reformed on some level to insure sustainability.