Romney-Ryan plan would repeal Reagan's spousal safety net

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Perhaps the greatest fear facing senior citizens and their children is that they will be stricken with a long-term illness that will destroy all of their savings. This is still a concern today, but it was a much greater concern 30 years ago until President Ronald Reagan stepped up to protect spouses from impoverishment. Now, the two Republicans atop the presidential ticket in 2012 want to gut those protections.

Here’s what’s at stake. Medicare covers doctor bills and hospital bills but it provides for only a short period of nursing home care. If a nursing home patient exhausts his or her own Medicare coverage and all of his or her personal resources, which happens to most Americans after a year or so in a nursing home, Medicaid will then cover the cost of the care. About one-third of all Medicaid payments are for long-term care.

But in the early 1980s, most if not all state Medicaid programs required a patient to deplete not only all of his or her resources but those of their spouse as well. If a wife or husband was in a nursing home, their combined savings and income were reduced to near poverty levels before the spouse could get Medicaid coverage. People who had worked and saved all of their lives were in many instances living on a budget that allowed little recreation, nothing more than a very frugal diet, and in some instances moving to substandard housing because of their spouse’s illness.

That changed in 1988 when President Reagan signed legislation that forced states to grant Medicaid coverage based on the financial condition of the patient and allowed the spouses of patients to protect enough assets and income to live with some degree of comfort and dignity.

But twice in the past two years, former Massachusetts Gov. Mitt Romney’s newly announced choice for his vice presidential running mate, Rep. Paul Ryan (R-Wis.), has taken a budget proposal to the floor of the U.S. House of Representatives that would not only drastically slash federal support for state Medicaid programs over the next decade but also eliminate all mandates—including the ban on spousal impoverishment. Disturbingly, that plan developed and pushed by Rep. Ryan, the House Budget Committee chairman, was adopted in the House on both occasions. The Ryan budget failed to become law only because of objections in the U.S. Senate and the threat of a veto from the White House.

A report that I issued more than one year ago, “The Ryan Medicaid Plan: A Threat to Middle Class Security", outlined the problem. In addition to eliminating the expansion of Medicaid eligibility provided under the Affordable Care Act, the Ryan budget proposal would turn Medicaid funding into block grants for the states, providing far less funding in future years than will be needed to keep pace with the increased numbers of elderly or others currently eligible for Medicaid benefits or the increased costs of providing medical care. Based on estimates by the nonpartisan Congressional Budget Office, Rep. Ryan’s plan would cut the expected federal contribution to state Medicaid plans from a projected level of $428 billion in fiscal year 2021 to $307 billion. That would cover only 37 percent of the federal share of the increased cost of the program, and leave the states to not only deal with their share of the increased costs but also a $122 billion federal shortfall.

How could states do that? Rep. Ryan says it’s easy—the federal government removes all of those troublesome mandates that states have to comply with. And his running mate Gov. Romney apparently agrees, having said he’s fully behind the Ryan budget plan.

In fact, Rep. Ryan’s proposed repeal of these mandates would make life incredibly hard for millions of seniors and their children who are hoping for a modicum of comfort and dignity in their old age. Don’t be fooled by Republican talk of Medicaid reform in this election campaign. The Gipper wouldn’t be.

Lilly is a senior fellow at the Center for American Progress Action Fund.