Rep. Paul Ryan rolls out budget plan that overhauls Medicare, Medicaid

House Budget Committee Chairman Paul Ryan, R-Wis. touts his 2012 federal budget during a news conference on Capitol Hill in Washington, Tuesday, April 5, 2011. (AP Photo/J. Scott Applewhite)
AP Photo/J. Scott Applewhite
Paul Ryan, budget
House Budget Committee Chairman Paul Ryan, R-Wis. touts his 2012 federal budget during a news conference on Capitol Hill in Washington, Tuesday, April 5, 2011.
AP Photo/J. Scott Applewhite

Updated at 12:35 p.m. ET

Republican Rep. Paul Ryan of Wisconsin, chairman of the House Budget Committee, is knowingly taking a big political gamble by introducing a 2012 federal budget today that proposes to dramatically transform Medicare and Medicaid -- two government programs that provide health care for a significant portion of the country.

As the GOP readies for the political attacks they'll surely suffer in the coming days, the party is framing their budget as a moral imperative.

"We believe we have a moral responsibility to step in and provide the leadership the president has not been providing," Ryan said at a press conference today, where he officially unveiled the budget. "We ought to have a social safety net to help people who are down on their luck and people who cannot help themselves... The problem is, our social safety net is fraying at the seams."

House Speaker John Boehner endorsed the plan -- and the narrative of a moral responsibility.

"Our budget will help spur job creation today, stop spending money we don't have, and lift the crushing burden of debt that threatens our children's future," he said in a statement.

Ahead of the formal introduction, Ryan today rolled out a polished presentation of his plan, which he calls the "Path to Prosperity." (Read it below.) With explanations on opinion pages and on YouTube, the GOP is readying for the political attacks that will surely follow as they attempt to revamp popular and vast health care systems.

Ryan's budget proposal aims to slash government spending by about $6 trillion over the next 10 years, compared with President Obama's budget. It would in part accomplish that by changing Medicaid -- which serves low-income families -- from a government-run insurance program to a system of block grants distributed to states.

Medicare, a government-run health care program for those over 65, would essentially turn into a "premium support" program -- the government would essentially provide vouchers for health care, but the funds would go directly to the insurer rather than the consumer. The government would give private health insurers a set amount of money to cover senior citizens. The change to Medicare would go into effect in 2022 under the plan.

It's a risky proposal politically, given Medicare's overwhelming popularity, but Ryan and the GOP are prepared to argue the changes are necessary.

"This is a plan not only to pay off our debt over time, but to get the budget under control to keep the government going," Ryan said on the CBS' "The Early Show" today. (Watch at left.)

Ryan explained that his Medicare plan is modeled after the government insurance program offered to congressmen.

"The sooner we tackle the problems, the better off all of us are," he said. "We can't keep kicking the can down the road."

Ryan's plan would subtract $389 billion in Medicare expenses over the next decade, compared with President Obama's budget, as well as $735 billion in Medicaid expenses.

A huge part of Ryan's overall savings come from simply repealing Mr. Obama's health care reform package. That's estimated to save $1.4 trillion, though it would not all go to deficit reduction, since repealing health care reform would mean losing some of the Democrats' cost-saving measures.

Ryan argues that the significant changes are necessary in a slickly produced web video released today, featuring subtle but somber music and a series of charts with sobering statistics about the future of the nation's debt.

"Washington has not been telling you the truth," Ryan says in the video. "If we don't reform spending on government health and retirement programs, we have zero hope of getting our spending and as a result our debt crisis under control."

Ryan says his budget "fixes the flaws in Medicare and Medicaid that have made rising costs nearly impossible to check."

The congressman told reporters today that shifting Medicare recipients to private health insurance will make the system more efficient.

"We want to harness the power of patient choice, of competition," he said.

Liberal economists like Dean Baker, however, argue that Ryan's plan simply shifts the costs from the government to the backs of consumers. Ryan's plan "does nothing to address our broken health care system while virtually guaranteeing that most seniors will not be able to afford decent health care," Baker writes for the Center for Economic and Policy Research.

In an op-ed in the Wall Street Journal this morning, Ryan writes that President Obama's efforts to address the growing deficit -- or lack of effort -- have only made things worse.

"Major spending increases have failed to deliver promised jobs," he wrote. "The safety net for the poor is coming apart at the seams. Government health and retirement programs are growing at unsustainable rates. The new health-care law is a fiscal train wreck. And a complex, inefficient tax code is holding back American families and businesses."

Along with overhauling government health care systems, Ryan's plan scales back non-security discretionary spending to 2008 levels and cuts the top income tax rate from 35 percent to 25 percent. The budget proposal says the lost tax revenue from the lower rate will be made up by eliminating deductions and credits, broadening the base and eliminating incentives for corporations to keep profits overseas. However, it does not say which deductions or carve-outs will be eliminated.

Ryan's proposal makes no tax increases because, as the congressman said today, "You raise taxes... you don't get [economic growth]."

There are minimal changes to Social Security. Ryan said today that he's "cautiously optimistic" about reaching a bipartisan agreement down the road for modifying Social Security.

Ryan also proposes a defense budget similar to Mr. Obama's. Special Report: Health Care and Medicare

To drive home the point that his plan represented the necessary course of action, Ryan today likened the projected deficit increases, entitlement shortfalls and other predicted future budgetary problems to the financial crisis of 2008.

"What if your congressmen, your president, saw it coming," Ryan said. "What if they knew it was going to happen... what could be done to prevent it from happening, and they had time to prevent it, but they decided not to because it wasn't good politics."

"This is the most predictable economic crisis in our history, and what are we doing playing politics?" he continued. "We decided it is time to stand up and do what is necessary to fix this country... We cannot keep going down the path of fearing what the other political party would do to us if we try to solve a problem."

Check out Paul Ryan's 2012 budget plan below: