Paul Ryan said that he intends to target Medicaid and Medicare for savings. | AP photo GOP plans $1 trillion Medicaid cut

House Republicans are planning to cut roughly $1 trillion over 10 years from Medicaid, the government health insurance program for the poor and disabled, as part of their fiscal 2012 budget, which they will unveil early next month, according to several GOP sources.

Though Budget Committee Chairman Paul Ryan has yet to lock in his final numbers, he made clear to POLITICO in February that he intends to target Medicaid and Medicare for savings. While Medicaid is easiest to win consensus on, Medicare is the biggest debt driver. It’s not yet clear how much Ryan hopes to cut from Medicare, and he and GOP leaders have been reluctant to discuss their plans for the other entitlement behemoth: Social Security. But they’ve made clear that they don’t consider Social Security to be as pressing an issue as Medicare and Medicaid.


The entitlement cuts represent a major battleground for the parties from now through the 2012 election: Democrats are already accusing Republicans of slashing benefits for the neediest Americans, but Republicans say Medicaid needs to be reformed to give states more flexibility in how they use federal dollars — and to rein in costs for both the federal government and state legislatures, which are swimming in red ink because of health care expenditures.

To bolster their cause, GOP leaders point to years of requests from governors to reform Medicaid so their states aren’t on the hook for so much money in the federal-state partnership.

Because the new health care law includes a major expansion of the program, there’s a double bonus for GOP leaders slashing it: It’s a bigger pot than it used to be, and it’s a major component of what Republicans derisively call “Obamacare.”

They have vowed to target entitlement spending in their budgets, after chiding President Barack Obama for failing to lead because his fiscal 2012 blueprint didn’t touch Medicaid, Medicare or Social Security. Under Obama’s budget, Medicaid grants to states would more than double — to about $600 billion per year — by 2021.

Ryan’s spokesman, Conor Sweeney, said it’s still “premature to speculate on specifics,” but he didn’t knock down the trillion-dollar figure.

“Chairman Ryan has committed to put forward a budget that deals with the drivers of the debt. He has committed to put forward a budget that helps spur job creation and economic growth. He has committed to put forward a budget that helps save the nation’s critical health and retirement security programs,” Sweeney said Thursday. “By contrast, given their refusal to lead, the president and his party’s leaders are committing the nation to the bankruptcy of these programs, the bankruptcy of the federal government and a debt-fueled economic crisis.”

Ryan’s preferred treatment for Medicaid, outlined in a policy booklet called “A Roadmap for America’s Future,” is to convert current federal payments to states into direct assistance in the form of $11,000 per year per recipient, which could be used to purchase private insurance. It’s not clear whether Ryan envisions pursuing his prescription for Medicaid or a different formula for restructuring the program.

Chuck Loveless, legislative director of the American Federation of State, County and Municipal Employees, said any cuts that approach $1 trillion over 10 years would have “devastating consequences for the disabled, the working poor and children,” as well as seniors who rely on long-term care. “It shines a bright light, we think, on what the House Republican leaders are attempting to do in these various budget discussions as we go forward. They’re seeking to savage the safety net for the most vulnerable in our society [at] a time when corporations are enjoying record profits.”

Republicans are on the offense, too. Even before the $1 trillion figure was reported, GOP officials were laying the groundwork for a Medicaid fight.

The National Republican Congressional Committee issued a release Thursday noting that “several former Democrat governors serving in President Obama’s Cabinet and in the Senate … believe that Medicaid spending is out of control, that unfunded federal mandates and regulations are an unnecessary burden on states, that states need more flexibility and that a solution to these problems is to convert Medicaid to a block grant program.” Among those quoted in the release are Commerce Secretary Gary Locke, Agriculture Secretary Tom Vilsack and Health and Human Services Secretary Kathleen Sebelius, as well as Democratic Sens. Joe Manchin of West Virginia, Mark Warner of Virginia and Ben Nelson of Nebraska.

Even less is known about how Ryan will treat the other entitlement programs.

Medicare is considered a mixed bag — but both parties have found ways to cut it in recent years. As with Medicaid, Ryan has mapped out his own preferred reforms, but it’s unclear whether those specific proposals will end up in the GOP’s final budget.

Republicans say they still haven’t settled on a plan for Social Security. It was just six years ago that they were burned by former President George W. Bush’s proposal to create private accounts in the system. And with Obama having left Social Security untouched in his budget, there’s little will for Republicans to lead on a budget resolution that will likely never be implemented.