“The new Republican tax bill could cut taxes – as well as spending for Medicare.”
People receiving Medicare benefits get nervous every time lawmakers start talking about cutting the amount of money spent on entitlements. The new tax bill Republicans are promoting could cut taxes – as well as spending for Medicare. It may not seem logical that a tax cut could hurt Medicare, so you may be wondering, how might the new tax bill affect Medicare?
The New Tax Plan Could Result in Billions of Dollars Taken from Medicare
In an effort to keep our national debt from going completely out of control, budgetary rules require automatic spending cuts whenever Congress passes bills that increase the deficit more than $1.5 trillion over a ten-year period. The Republican tax plan is expected to do just that, so statutory “paygo” (pay-as-you-go) rules will impose automatic cuts to many programs. The Committee for a Responsible Federal Budget (CFRB) estimates that the new tax bill will result in mandatory cuts to these programs:
018 2027 Program
$28 billion $56 billion Medicare
$5 billion $9 billion Affordable Care Act’s Risk Adjustment Program
$80 billion $85 billion All other programs
$114 billion $150 billion Total cuts
The Congressional Budget Office says that Medicare will get hit with $25 billion in spending cuts, unless Congress works out a way to avoid hurting the program. It is possible for Congress to prevent the automatic cuts, but it would take votes from both Republicans and Democrats to make that happen. It would take 60 votes to override the automatic cuts, and there are 52 Republican senators. In the current political climate, Republicans and Democrats are struggling to work together.
Even if Medicare Dodges the Paygo Bullet
If Congress manages to work together to save Medicare from massive automatic spending cuts in 2018, Republicans have made it clear that they plan to make changes to American entitlement programs next year. According to House Speaker Paul D. Ryan (R-Wis.), Republicans in Congress intend to reduce the national deficit by cutting federal health-care and antipoverty programs. “It’s the health care entitlements that are the big drivers of our debt,” he said in a recent radio interview.
Ryan is trying to talk President Trump into going back on his campaign promise not to cut spending for Medicare, Medicaid, or Social Security. Other congressional Republicans blame Social Security and Medicare for our national debt, saying that entitlement programs do not help the poor, they just trap people in poverty and increase the deficit. THIS IS YOUR MOTHER AND GRANDMOTHER THEY ARE TALKING ABOUT who paid into Medicare their entire life so they would have these benefits when they couldn’t work anymore.
Some argue that Republicans are using the new tax plan to intentionally create a large deficit, in order to trigger the “paygo” automatic cuts to Medicare. Republicans counter that they want to enact reforms that give people more choices and create more competition in the healthcare industry. They claim their reforms will improve the quality and reduce the cost of healthcare. They suggest that government-run healthcare is a big part of the problem.
These laws can change rapidly and with little notice and the administration of federal healthcare is different in every state, so please talk with an elder law attorney near you.
MarketWatch. “How Medicare could see a cut thanks to the Republican tax plan.” (accessed December 19, 2017) https://www.marketwatch.com/story/how-medicare-could-see-a-cut-thanks-to-the-house-tax-bill-2017-11-06
The Washington Post. “Ryan says Republicans to target welfare, Medicare, Medicaid spending in 2018.” (accessed December 19, 2017) https://www.washingtonpost.com/news/wonk/wp/2017/12/01/gop-eyes-post-tax-cut-changes-to-welfare-medicare-and-social-security/?utm_term=.c5d6521eca26