You Thought Medicare Was Safe? Think Again.
Sequestration threatens more than $530 billion in cuts to the program over nine years. The results will be catastrophic.
By Donald M. Berwick
In the rush to fund tax cuts for the wealthy, Congress is targeting massive Medicaid reductions—$800 billion or more over ten years. On the other hand, we’ve heard little to nothing about Congressional Republicans’ plans to cut Medicare. No wonder they’ve been trying to keep it under wraps, because Medicare is one of the most popular major government programs in recent history. Indeed, President Donald Trump has promised to protect Medicare.
Don’t believe him. In reality, the “One Big Beautiful Bill Act”—also known as congressional Republicans’ budget reconciliation bill—would cause automatic cuts to Medicare payments to the tune of $535 billion over the next nine years, harming providers, forcing hospital closures (especially in rural areas), and raising costs for everyone.
These enormous Medicare cuts are the result of a rule Congress set for itself in the Pay-As-You-Go Act of 2010, also known as “PAYGO.” According to PAYGO, as Congress enacts laws that change taxes, fees, or mandatory expenditures (such as Medicare, Medicaid, and Social Security), the Office of Management and Budget (OMB) keeps track of those changes on a scorecard. If, at the end of the session, that scorecard indicates more costs than savings, the president must order the sequestration of enough funds from mandatory programs to balance the books. Some mandatory programs are exempt, including Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and Social Security. Medicare is the biggest program subject to sequestration, though it cannot be cut by more than 4%.
This reconciliation bill, according to the non-partisan Congressional Budget Office, will increase deficits by $2.4 trillion over ten years—more than enough to trigger a sizeable sequestration under PAYGO. Even with the 4% limit, the budget bill will force massive reductions in Medicare payments by about $45 billion in 2026 and about $535 billion over nine years.
Who gets hurt? First, hospitals. Combine those cuts with the Medicaid reductions, and it’s likely that many rural and safety-net hospitals will shutter their doors. When hospitals close, it isn’t just Medicaid and Medicare beneficiaries who lose access—in the affected communities, everyone will. Non-hospital providers, including nursing homes, home health care, and community-based services, will get slashed as well.
Beyond the 4% Medicare cuts, other non-exempt mandatory programs will be completely zeroed out by sequestration. Those include farm price supports, farm security and rural investment programs, the Social Services Block Grant, Vocational Rehabilitation Services programs, and more. Farmers, children, older adults, and people with disabilities will feel severe pain. And as Medicaid cuts bite, states will end up holding the bag for the care of Medicaid enrollees who lose coverage—as many as 7.8 million in recent estimates—and to make up the difference they’ll have to close health care services, reduce payments to providers, or take the money from roads, schools, and other community supports that depend on state subsidies.
Congress can nullify the PAYGO sequestration requirements through waivers, and it has done so. But this time that escape hatch might remain locked. A waiver cannot be included in the reconciliation bill because it is in the jurisdiction of the Budget Committee and would violate a Congressional Budget Act rule. Waiving that restriction requires 60 votes in the Senate, unlike the simple majority vote needed to pass a reconciliation bill. Getting to 60 votes would require bipartisan support. A waiver could also be included in a separate, stand-alone bill or in another legislative vehicle, but that would also require 60 votes to overcome a filibuster. Any way you slice it, waiving the sequester could only occur if there was bipartisan support for avoiding sequestration from a bill that results in massive Medicaid and SNAP cuts, tax breaks for the wealthy, and a giant increase in deficits and debt. Don’t count on that.
The president’s promises to protect Medicare, even while devastating Medicaid, are empty. According to statutory rules, the reconciliation bill will trigger massive Medicare cuts and cause immense harm to patients, caregivers, families, and entire communities.
Donald M. Berwick, a physician, is a senior fellow at the Center for American Progress and at the Institute for Healthcare Improvement. He served as administrator of the Centers for Medicare and Medicaid Services under President Barack Obama.
I have never thought Medicare is safe. The only way to give billionaires a massive tax cut is to cut everything. This includes essential services such as Medicare and Medicaid, Social Security, educational programs, food assistance programs. Medicare is a health insurance program for people 65 and older who have paid into it. It also benefits people who are physically disabled eg. organ transplant recipients. This is a break the bank reconciliation bill. Hands off of Medicare, Medicaid and Social Security.
Does it really matter. Both Social Security and Medicare are going to be insolvent by 2032. As long as the GOP holds power, there will no effort to fix either Social Security or Medicare.