Medicare What's Buzzing

Trump’s tax bill means a $500 billion cut to Medicare

Written by Diane Archer

David Dayen writes for The American Prospect about the grave consequences of President Trump’s tax bill for older and vulnerable Americans. The bill extends tax cuts for the ultra-wealthy for another ten years. It does so largely by depriving millions of Americans of health care and increasing the deficit significantly.

The deficit increase not only weakens the US economy, it requires $490 billion dollars in Medicare cuts. These cuts are automatic under the law, because of the deficit increase. And, these cuts must begin next year.

The law requiring these automatic cuts to Medicare, the Statutory Pay-As-You-Go (PAYGO) Act of 2010, mandates that the US Office of Management and Budget (OMB) must track how legislation affects the deficit, using estimates of the Congressional Budget Office. The CBO projects $3.3 trillion in debt over the next decade, as a result of Trump’s tax bill.

The only way Republicans can avoid these massive Medicare cuts would be for them to pass a bill later this year that reduces the deficit massively. While the cuts are mandatory, Republicans apparently could have kept their tax bill off of the Pay-Go scorecard to ensure no Medicare cuts. They did not.

Medicare cuts can be as much as four percent. This means a $45 billion cut in fiscal year 2026. The cuts grow as the size of Medicare grows. They are projected to total $490 billion over ten years.

OMB will be required to issue an order reducing Medicare spending by $330 billion by January 2026. Many accounts are exempted from sequestration, including Social Security and several programs affecting low-income Americans. But Medicare is not.

In short, President Trump is cutting both Medicaid and Medicare, though he had promised he would not do so. Medicare cuts of the size on the table will further endanger health care in America, lowering Medicare provider payments, making it harder for physicians, hospitals and other health care providers to survive financially as well as for people with Medicare to find providers to treat them, and driving up health care costs for older adults and people with disabilities.

The Pay-Go cuts are not the only cuts to Medicare. The other big cut is to the Medicare Savings Program. This program relies on Medicaid to help cover Medicare premiums and cost-sharing for people with Medicare with low incomes. More than 1.3 million people could lose this financial assistance.

Without help covering Medicare health care costs, it’s all too likely that hundreds of thousands of older adults and people with disabilities will forgo health care. Many will die needlessly.

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