Shortly before passing tax reform into law, Republicans announced plans to go after “entitlement spending” in 2018 to reduce the federal debt. Passage of the tax bill is estimated to increase the federal deficit by $1.5 trillion over the next ten years, primarily through tax cuts that give the biggest benefit to corporations and the wealthiest families. Now House GOP Members say they plan to write the fiscal year 2019 budget blueprint to call for cutting spending on Medicare, Medicaid and Social Security.
Medicare and Medicaid will likely be the biggest target for immediate cuts. Republicans have called for increasing the Medicare eligibility age from 65 to 67. In addition, they support a plan to transform Medicare into a “premium support” system that would provide beneficiaries with a fixed subsidy or voucher to purchase their health coverage from private insurers on a government exchange. While supporters of premium support say that the change would bring down costs through competition, the Congressional Budget Office has said in the past that such a proposal would shift a greater portion of costs from the government to Medicare beneficiaries over time.
Congress spent the first nine months of 2017 unsuccessfully attempting to cut Medicare and Medicaid, as part of efforts to repeal and replace the Affordable Care Act. The legislation considered in both the House and the Senate attempted to eliminate two sources of Medicare funding from taxes paid by high-income earners and the wealthiest families. In addition, both bills attempted a far-reaching overhaul of Medicaid that would have cut the program by more than $834 billion over ten years.
TSCL remains highly concerned that bigger deficits created by tax reform would make continued attempts to cut entitlements much more likely. TSCL’s surveys indicate there’s little support from the public for cutting benefits.
Sources: “Column: U.S. Republicans Sharpen Knives For Retirement Program Cuts,” Mark Miller, Reuters, December 7, 2017. “Entitlements Targeted By House Republicans After Tax Overhaul,” Jack Fitzpatrick, Bloomberg Government, December 15, 2017.