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Former Congressman Dr. Phil Gingrey provides public policy and government relations counsel to clients on a variety of issues. Here at Phil on the Hill, Phil draws upon his long career in public service to provide perspective and context on policy topics such as health care, the federal budget, annual appropriations, regulatory reform, and life sciences.

Medicare Providers Are Not the Government’s ATM

Friday, December 08, 2017

While I applaud the Senate passing its version of the Tax Cuts and Jobs Act, I am uncomfortable with the open issue of potential cuts to Medicare. 

As passed by the Senate, the bill will trigger mandatory cuts to Medicare. The pay-as-you-go plan (commonly known as PAYGO) mandates that whenever Congress passes an act that increases the national deficit, it must cut something else to pay for it. The Joint Committee on Taxation estimates the bill may raise the deficit by $1 trillion over the next decade. I question whether the Joint Economic Committee’s scoring method fully accounts for the dynamic effects of this tax cut and reform, but I agree that worries about adding to our national debt are not unfounded.

In my opinion, the most significant cut – and one most likely to affect the average American – is the up-to-4 percent mandated PAYGO cut to Medicare. It will result in a $25 billion cut to Medicare spending unless Congress takes action to waive the requirement. Speaker Ryan and Senate Majority Leader McConnell have promised that they will move to waive PAYGO but will need Democrats to do so. If Congress does not waive the PAYGO rules, these cuts will happen.

Most of you have probably heard alarm bells on Medicare ring before. Many horror stories and worst-case scenarios have been put forward over the years and have largely been proven to be unfounded. But the simple fact is that cuts in payments to Medicare providers will start to add up and even seemingly minor disruptions can have far-reaching consequences for individuals.

These PAYGO cuts will be stacked on top of the 2 percent Medicare sequestration spending reductions enacted in 2011. Together, these budget reductions will not cripple Medicare or bring down the American healthcare system. However, they will force doctors, hospitals and other health care providers to make tough choices that will endanger the current level of care. 

There are good arguments behind the Tax Cuts and Jobs Act. Done correctly, I think these changes will boost the economy and prove beneficial. But the increase in the deficit must be offset all the same. This time lawmakers must tread lightly around Medicare or risk death by a thousand cuts. It is time to declare once and for all that Medicare providers are not the government’s ATM.