Tax law may threaten Medicare, provider pay


Congress ended 2017 with its first big legislative win for the Trump administration: passing a sweeping tax bill that promises the biggest reform to the U.S. tax program in over 30 years. But despite Republican claims that the tax cuts will pay for themselves, numerous nonpartisan analyses estimate that the bill will add billions, if not trillions, to the national debt over the next 15 years, leaving many to worry that cuts to federal programs like Medicare and Social Security are inevitable.

Adding to these fears are recent statements by House Speaker Paul Ryan (R-WI), who specifically called out Medicare as being the “biggest entitlement that’s got to have reform.” Unfortunately, Speaker Ryan and other GOP lawmakers have given virtually no details on what “Medicare reform” on the horizon might look like, leaving the health care community to speculate on the details, particularly with respect to potential payment cuts for physicians.

Medicare crisis averted, but battle not over

When President Trump signed the tax bill into law in December 2017, he effectively reduced the potential revenue to the federal government by almost $1.5 trillion, according to the nonpartisan Joint Committee on Taxation. GOP lawmakers have continually claimed that the tax bill will “pay for itself,” but the reality is unless it generates a substantial amount of economic growth to offset the decrease in revenue, the new law will likely add to the national debt.

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A fiscal impact that large would have normally triggered the Pay-As-You-Go Act of 2010, which requires cuts to Medicare and other programs if a new law increases the deficit. Fortunately, both the Senate and the House passed a continuing resolution on Dec. 21 to prevent the automatic cuts to Medicare as a result of the tax bill, which was estimated to be around $25 billion.

But the threat to Medicare still looms. Speaker Ryan has made it clear that he plans to push entitlement reform in 2018, especially in the health care space: “Frankly,” he said, “it’s the health care entitlements that are the big drivers of our debt, so we spend more time on the health care entitlements—because that’s really where the problem lies, fiscally speaking.”

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