On April 5, 2011, Representative Paul Ryan, the Chairman of the House Budget Committee, released the Chairman's mark of the FY2012 House budget resolution. Additional detail on budgetary objectives and justifications was provided in Chairman Ryan's report entitled "The Path to Prosperity: Restoring America's Promise," issued the same day. The House Budget Committee considered and amended the Chairman's mark on April 6, 2011 and voted 22-16 to report the budget resolution to the full House. H.Con.Res. 34 was introduced in the House on April 11, 2011, and was accompanied by the House Budget Committee Report, H.Rept. 112-58 . On April 15, 2011, the House passed H.Con.Res. 34 by a vote of 235-193. The House budget resolution sets general budgetary parameters. Among other things, it expresses the desired levels of spending for government health programs over 10 years (FY2012-FY2021), it creates two health care related reserve funds, and presents a policy statement regarding assumptions about future Medicare reforms. The budget resolution does not include instructions for reconciliation. A budget resolution is not intended to establish details of spending or revenue policy and does not provide levels of spending for specific agencies or programs; it is not a law and is not signed by the President. Rather, the budget resolution provides the framework for the consideration of other legislation. While the House budget resolution suggests and assumes certain health care related policy changes, separate legislation would need to be developed (by the committees of jurisdiction) and passed to actually modify federally funded health care programs. CBO was asked to provide an analysis of the long-term budgetary impact of Chairman Ryan's budget proposal, and issued its report on April 5, 2011. CBO was provided additional detail by the staff of the House Budget Committee regarding assumptions that should be made while conducting the analysis that was not included in the budget resolution or the accompanying report. CBO's analysis, however, does not provide an official cost estimate for legislation that might implement the proposal, as it did not conduct its analysis using actual legislative language and was asked to provide an impact analysis beyond the 10-year budgetary window. CBO's most recent long-term projections, which were the basis for its analysis, were issued in June 2010 and were derived from the agency's March 2010 baseline projections. In general, Chairman Ryan's budget proposal, as outlined in his "Path to Prosperity," in the Committee Report, and in CBO's analysis, suggests a change in the structure of the Medicare and Medicaid programs, the repeal many of the provisions in the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148 ) and the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ) including those that establish insurance exchanges, and changes to tort law governing medical malpractice. Chairman Ryan provided unofficial 10-year spending estimates in the "Path to Prosperity" report. These estimates suggest that the budget plan would reduce federal health care spending about $2.2 trillion over FY2012-FY2021 from CBO's baseline estimate. This would include a reduction of approximately $1.4 trillion that would have been spent to implement PPACA health insurance reforms, and a reduction of $771 billion for Medicaid and $30 billion for Medicare during this time period. In its long–term analysis of the proposal, CBO estimated that government mandatory spending for healthcare would be about 6% of GDP in 2030, 5.75% in 2040, and 4.75% in 2050, compared to 8.75%, 10.75% and 12.25% for the same years under CBO's baseline current-law projections. This report provides a synopsis of the health care related changes in Chairman Ryan's FY2012 budget proposal. Our summary is based on the text of H.Con.Res. 34 , the Chairman's "Path to Prosperity" report, the House Budget Committee Report, and the CBO analysis of the proposal. The collective details are referred to in this report as the "budget proposal" or Chairman Ryan's proposal. Medicare is the nation's federal insurance program that pays for covered health services for most persons 65 years and older and for most permanently disabled individuals under the age of 65 years. Generally, individuals are eligible for Medicare if they or their spouse worked for at least 40 quarters in Medicare-covered employment, are 65 years old, and are a citizen or permanent resident of the United States. Individuals under the age of 65 may also qualify for coverage if they have a permanent disability, have End-Stage Renal disease, or have amyotrophic lateral sclerosis (ALS). In FY2011, the program will cover an estimated 48 million persons at an estimated total cost of about $569 billion, accounting for approximately 3.7% of GDP. CBO estimates that federal Medicare spending (after deduction of beneficiary premiums and other offsetting receipts) will be about $485 billion in FY2011, accounting for over 15% of total federal spending. Medicare is an entitlement program, which means that it is required to pay for covered services provided to eligible persons so long as specific criteria are met. Spending under the program (except for a portion of the administrative costs) is considered mandatory spending and is not subject to the appropriations process. The Medicare program has four parts, each responsible for paying for different benefits, subject to different eligibility criteria and financing mechanisms. Part A (Hospital Insurance, or HI) covers inpatient hospital services, skilled nursing care, and home health and hospice care. The HI trust fund is mainly funded by a dedicated payroll tax of 2.9% of earnings, with employers and workers each paying 1.45%. (The self-employed pay 2.9%.) PPACA added an additional 0.9% hospital insurance tax on high-income taxpayers. Part B (Supplementary Medical Insurance, or SMI) covers physician services, outpatient services, and some home health and preventive services. The SMI trust fund is funded through beneficiary premiums (set at 25% of estimated program costs for the aged) and general revenues (the remaining amount, approximately 75%). High income enrollees pay higher premiums. Enrollment in Part B is voluntary, with over 90% of Medicare beneficiaries choosing this option. Part C (Medicare Advantage, or MA) is a private plan option for beneficiaries that covers all Part A and B services, except hospice. Individuals choosing to enroll in Part C must also enroll in Part B. Part C is funded through both the HI and SMI trust funds. Part D covers prescription drug benefits. Funding is included in the SMI trust fund and is financed through beneficiary premiums (about 25.5%) and general revenues (about 74.5%). High income enrollees pay higher premiums. This portion of the program is also voluntary; about 60% of eligible Medicare beneficiaries are enrolled in a Part D plan, while another 14% are enrolled in an employer plan subsidized by Medicare. Under traditional Medicare, Parts A and B, services are generally paid directly by the government on a "fee-for-service" basis, using different prospective payment systems or fee schedules. Under Parts C and D, private insurers are paid a monthly "capitated" amount to provide enrollees with at least a minimum standard benefit. Premium amounts may vary depending on which plan the enrollee selects. The capitated payment is adjusted to reflect the higher relative cost of older or sicker beneficiaries, but is not adjusted for the actual amount of health care used. Since its establishment in 1965, the Medicare program has undergone considerable change. Most recently, PPACA made numerous changes to the Medicare program that modify provider reimbursements, provide incentives to improve the quality and efficiency of care, and enhance certain Medicare benefits. Chairman Ryan's budget proposal would repeal certain Medicare provisions in PPACA while retaining others. Additionally, his proposal calls for a fix to the Medicare physician payment system. According to unofficial House Budget Committee estimates, the proposal would reduce Medicare spending by $30 billion over FY2012-FY2021 compared with CBO baseline estimates. The budget proposal would repeal some of the Medicare related changes made by PPACA while it would retain others. Specifically the proposal would repeal: Provisions that created the Independent Payment Advisory Board (IPAB; Section 3403, as modified by 10320). Under current law, beginning in 2014, the IPAB is required to develop proposals to reduce the Medicare per capita expenditure growth rate if Medicare spending is projected to exceed a certain target. Subsidizes related to closing the Part D prescription drug benefit coverage gap (doughnut hole). Prior to PPACA , under the standard benefit, most enrollees paid all of their drug costs during a period between an initial coverage limit and a catastrophic threshold when there was a gap in coverage. PPACA (Section 3301) and the Reconciliation Act (Section 1101) phase out the doughnut hole until it is closed in 2020. At that time, 75% of the cost of generic drugs and 25% of the cost of brand name drugs incurred during the coverage gap would be subsidized by Medicare. Also beginning in 2011, drug manufacturers are required to provide a 50% discount to enrollees off the cost of brand name drugs during the doughnut hole phase; it is unclear whether this discount would be retained or repealed under the budget proposal. The high-income payroll taxes. Under current law, employers and employees each pay a payroll tax of 1.45% to finance Medicare Hospital Insurance (Part A). Section 9015 of PPACA includes an additional 0.9% hospital insurance tax on high-income taxpayers levied on wages over $200,000 for single filers and $250,000 for joint filers effective for taxable years after December 31, 2012.