Will New Trump-GOP Tax Plan Trigger PAYGO Cuts to Medicare?

2017.12.04 United_States_Capitol_-_west_front

The Trump-GOP tax plan will add to the national debt by $1 trillion (Joint Committee on Taxation) or $1.4 trillion (Congressional Budget Office).

Under the pay-as-you-go (PAYGO) law, Congress will need to make a choice to cut Medicare or to allow the increase of the national debt.

The PAYGO law says that the revenue shortfall in the new tax plan will trigger across-the-board budget cuts (“sequesters”), including a $25 billion (4%) per year cut to Medicare spending in order to offset the debt, according to the Washington Post.

Congress could enact “exception” legislation to prevent these Medicare cuts. But such action would require 60 votes in the Senate under filibuster rules. Not everyone is confident that Democrats will cooperate with the slim majority of Republicans to win passage.

Another Choice: Fair Limit-Setting

But the country does have another choice: reform and restrain healthcare spending using cost-benefit analysis approach.

This is exactly what Oregon did in 1994 when faced with a similar Medicaid budget squeeze. Instead of further cutting Medicaid payments to doctors or dropping patients from Medicaid eligibility, Oregon used cost-benefit analysis to find the least costworthy services to eliminate from its list of covered services.

By doing this, it was able to maintain Medicaid coverage for all eligible Oregonians, keep primary doctor pay on par with other insurance plans, and stay within budget. This limit-setting approach could work on a national scale.

Now, take action

Enter your email address to subscribe to this blog and receive notifications of new posts by email.


Photo Credit:  By Architect of the Capitol (aoc.gov) [Public domain], via Wikimedia Commons 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s