If you add up the proposed Medicare changes in President Trump’s 2020 budget, it looks like he would cut the program by $845 billion over the next decade. That’s generated outrage from Democrats, but a closer look suggests that the reductions are much smaller, most would affect providers rather than beneficiaries, and many recycle old ideas that have little chance of ever being adopted.
Make no mistake, the Trump budget is hardly senior-friendly. He’d freeze or reduce spending for many federal senior service programs—continuing a trend that has gone on for more than a decade. And his proposed cuts to Medicaid could hurt family caregivers of parents or younger relatives with disabilities. But the Medicare cuts? There is much less there than meets the eye.
The Committee for a Responsible Federal Budget does a nice job walking through the math, and concludes that the net reduction in Medicare spending would be between $515 billion and $575 billion, not $845 billion. The White House projects that total Medicare spending over the next decade will top $10 trillion.
While even $515 billion is a lot of money, very little would directly affect beneficiaries. CRFB figures about 85 percent of the cuts would come from hospitals, doctors, skilled nursing facilities, and other providers.
To start, Trump is moving about one-third of the money–$269 billion—into a different section of the budget. He would not reduce spending for these two programs, which fund certain hospitals and medical education, he’d just shift them out the Medicare account to somewhere else.
Of the rest, Trump’s budget saves $360 billion mostly by recycling or building on ideas first suggested by President Obama. Among the proposals: Paying post-acute and long-term care providers based on the clinical needs of beneficiaries rather than the site the care is offered, and reducing payments to hospitals for the cost of patients who don’t pay their bills. In some cases, hospital-owned medical practices would be paid lower, out-patient rates even when they are located on a hospital campus.
None of these changes would increase costs to beneficiaries and some could, at least in theory, lower Medicare premiums. The potential downside: Some hospitals or nursing homes may stop providing services if they are no longer profitable.
Little chance of becoming law
About 11 percent of the cost savings would come from changes in the Medicare Part D drug benefit. Some beneficiaries would pay more out-of-pocket for prescription drugs and others less, depending on what medications they take and how much they cost. The administration also claims Medicare would save about $30 billion from broad changes to medical malpractice laws.
In another change that could directly affect patients, the budget also would expand the requirement that they get prior authorization for Medicare fee-for-service treatment, an initiative the White House says would save about $6 billion.
Keep in mind, however, that there is little chance any of these ideas will become law. Most have been around in one form or another for decades, and health care lobbyists always shoot them down. In the absence of broad-based Medicare reform, that is likely to happen again.
Older adults and their caregivers ought to be more concerned with other ideas in Trump’s 2020 budget. For example, he has once again proposed freezing or cutting federal senior services programs ranging from Meals on Wheels to falls prevention to the State Health Insurance Assistance (SHIP) program that helps seniors manage the increasingly complex world of Medicare.
Medicaid block grants
Last year, Trump proposed even deeper cuts. However, Congress rejected nearly all and even raised the budgets for some programs. With control of the House flipping from Republican to Democrat this year, it is highly unlikely any of these programs will get cut. However, it is not clear that many will be increased either, even though the population of older adults is growing rapidly.
Trump is proposing major changes to Medicaid. He’d turn the program largely into a block grant, where the amount the federal government contributes to a state program is capped each year. Today, the feds pay on average about 60 percent of the cost of Medicaid, no matter how rapidly it increases.
Finally, Trump’s budget would impose a national work requirement on Medicaid enrollees, an idea that some states have adopted over the past year. While the states include exceptions for family caregivers, the rules vary widely and often are ambiguous, according to a 2018 study by the advocacy group Justice in Aging.
Congress will approve few if any of Trump’s budget initiatives, though he may try to implement some administratively. Cuts could be problematic for seniors and their families. But his Medicare reductions, at least, would be far less important to older adults than they seem at first glance.