Tag Archives: PAYGO Rules

AARP: Congress must prevent ‘sudden cut’ to Medicare in 2018

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AARP: Congress must prevent ‘sudden cut’ to Medicare in 2018

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The AARP is urging House and Senate leaders to waive congressional rules so the Republican tax bill doesn’t trigger deep cuts to Medicare.

If Republicans pass their tax bill, which would add an estimated $1 trillion to the federal deficit, congressional “pay-as-you-go” rules would require an immediate $150 billion in mandatory spending cuts to offset the impact.

“The sudden cut to Medicare provider funding in 2018 would have an immediate and lasting impact, including fewer providers participating in Medicare and reduced access to care for Medicare beneficiaries,” AARP said in a letter sent to congressional leaders Thursday.

Under the bill, according to the Congressional Budget Office, Medicare would be faced with a $25 billion cut in fiscal 2018.

But Senate Majority Leader Mitch McConnell (R-Ky.) and Speaker Paul Ryan (R-Wis.) have promised the cuts won’t happen.

In a joint statement sent just ahead of the Senate vote on the tax bill last week, Ryan and McConnell said there is “no reason to believe that Congress would not act again to prevent a sequester, and we will work to ensure these spending cuts are prevented.”

Lawmakers have voted numerous times in the past to waive the rule, and even House conservatives have said they’ll likely support a waiver once the tax bill passes.

“I can’t imagine any scenario where there’s not a waiver for PAYGO,” House Freedom Caucus Chairman Mark Meadows (R-N.C.) said Wednesday. “It’s using a hammer when maybe a scalpel would do.”

But in the Senate at least, Republicans will need the support of Democrats to waive the rules. So far, they have been reluctant to offer it.

 

AARP to Congress: Don’t Cut Medicare

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https://www.aarp.org/politics-society/advocacy/info-2017/medicaid-medicare-tax-reform-fd.html?cmp=EMC-DSO-NLC-WBLTR—MCTRL-120817-F1-2613065&ET_CID=2613065&ET_RID=33152417&mi_u=33152417&mi_ecmp=20171208_WEBLETTER_Member_Control_Winner_251100_391403&encparam=rGtTYC48LtlDepUYFPD2E6KmzkAw6WgcgwvDlv37DZs%3D

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The tax bill would trigger an automatic funding cut in the vital program.

AARP Chief Executive Officer Jo Ann Jenkins called on congressional leaders Thursday to keep their promise to America’s seniors and prevent a large cut to Medicare that the tax bill now being debated on Capitol Hill would trigger.

The tax measure would result in a $1.5 trillion increase in the federal deficit over the next decade, according to the nonpartisan Congressional Budget Office (CBO). Such a deficit would prompt an automatic $25 billion cut to Medicare as soon as January because of the “pay-as-you-go” law, commonly referred to as PAYGO.

The law was designed to keep the deficit in check by requiring the administration to reduce spending in many mandatory federal programs if Congress enacts a law that increases the deficit but doesn’t provide offsetting revenue.

In a letter to Senate Majority Leader Mitch McConnell, Minority Leader Charles Schumer, House Speaker Paul Ryan and Minority Leader Nancy Pelosi, Jenkins reminded McConnell and Ryan that they had recently issued a statement promising that “we will work to ensure these spending cuts are prevented.”

In their statement, the Republican leaders pointed out that the PAYGO law has never been enforced since it was passed in 2010 and “we have no reason to believe that Congress would not act again” to forestall the cuts PAYGO would require.

Medicaid, Social Security, food stamps and some other social safety net programs are exempt from the PAYGO law. But Medicare and programs like federal student loans, agricultural subsidies and the operations of U.S. Customs and Border Protection are not exempt.

The law caps how much the government can trim from Medicare at 4 percent. That’s $25 billion the first year, according to CBO. The amount could be higher in subsequent years, depending on the size of the deficit and Medicare’s budget.

The reduction would affect the payments that doctors, hospitals and other health care providers receive for treating Medicare patients. Individual benefits would not be directly cut, but the reduction could have implications for the care beneficiaries receive.

“The sudden cut to Medicare provider funding in 2018 would have an immediate and lasting impact, including fewer providers participating in Medicare and reduced access to care for Medicare beneficiaries,” Jenkins wrote. Health care providers might stop taking Medicare patients, she added, even as 10,000 older adults are enrolling in the health program each day.

In addition, Medicare Advantage plans and Part D prescription drug plans may compensate for the cuts by charging higher premiums or shifting more costs to beneficiaries in future years.

“Our members and other older Americans are counting on you to preserve their access to Medicare services, including their doctors and hospitals,” Jenkins wrote.

How the GOP Tax Bill Could Trigger $25 Billion in Medicare Cuts in 2018

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As they look to advance their tax bills, Congressional Republicans will have to work through — or around — a few potentially problematic budget rules. One is the Senate’s Byrd Rule, which says that any legislation passed by a simple majority, as the Republicans plan to do with the tax bill, can’t add to the deficit beyond the 10-year budget window. The other obstacle comes from “Pay As You Go,” or PAYGO, rules that require across-the-board cuts to certain mandatory spending programs when enacted legislation increases the deficit over the course of a year.

Because the GOP tax plan would add $1.5 trillion to the debt over the next decade, those automatic cuts would kick in, meaning that the government would have to slash spending by $150 billion a year for 10 years — including about $25 billion annually from Medicare, plus billions more from agricultural subsidies, Customs and Border Patrol, student loans and other programs.

The full accounting gets a bit more complicated. Because the official PAYGO scorecard shows a positive balance of $14 billion for 2018, spending would only have to be cut by $136 billion next year — but because only certain programs can be cut, that number is impossible to reach, as the Congressional Budget Office explained in a letter Tuesday. Besides the $25 billion from Medicare, the Office of Management and Budget would still need to find $111 billion in other reductions, but CBO estimated that only $85 to $90 billion in cuts are available.

The Senate does have another option, though. It can waive the PAYGO rules and avoid the automatic spending cuts, as it has done in the past, but that would require 60 votes. As The Washington Post’s Heather Long notes, that could give Democrats their only point of leverage in the tax reform process. “Congressional staff on both sides of the aisle admit that it’s unlikely Democrats would stand by and allow those painful cuts to popular programs to happen,” Long reports. “But Democratic leaders, including Sen. Minority Leader Charles E. Schumer (D-N.Y.), are well aware they could have leverage in this situation if they can convince the public that it would be Republicans, not them, who would be to blame” for the cuts.

Such a waiver could also threaten the support of some fiscally conservative Republicans. And even if the PAYGO rules are waived again, it’s a safe bet that Democrats and fiscal hawks will continue to warn about the longer-term costs of deficit-financed tax cuts. Many on the left have warned that the GOP tax plan and its increased deficits will lead to renewed GOP calls for cuts to social safety net programs.