$490 billion and Counting – Medicare Cuts

Something that few are talking about in Congress or the news, cuts to Medicare.

Brendan Boyle is a House Representative (D) and the ranking member of the House Budget Committee. Boyle is saying Medicare and Medicaid are both in the mix to fund Tr__p’s BBB. Look at the date of the letter to Representative Brendan Boyle. If the claim is accurate, nobody has let the constituency know Medicare will be harmed. Everybody was under the impression Medicare would not be touched. Hopefully, we are wrong.

Letter to House Representative Brendan Boyle.

~~~~~~~

May 20, 2025

Dear Ranking Member Rep. Brendan Boyle:

Today the Congressional Budget Office transmitted an estimate of the budgetary effects of the 2025 reconciliation bill, as ordered reported by the House Committee on the Budget on May 18, 2025.¹ CBO has not yet completed estimates of the effects of interactions among the titles of the legislation.

This letter responds to your questions concerning the sequestration (the cancellation of budgetary resources) in accordance with the Statutory Pay‑As‑You‑Go Act of 2010 (S-PAYGO) that would occur if an enacted bill raised deficits by $2.3 trillion over 10 years.

Under S-PAYGO, the Office of Management and Budget (OMB) is required to maintain 5- and 10-year score-cards that it updates with the estimated cumulative changes in revenues and outlays generated by newly enacted legislation. If either scorecard indicates a net increase in the deficit, OMB is required to order a sequestration to eliminate the overage. The balance used to determine the amount of a sequestration is not the projected increase in the deficit for that particular year. Rather, OMB’s 5 – and 10 – year scorecards identify the
average annual effects of a piece of legislation over those periods and assign the average to each year in the period. Before an average is calculated, any current-year effects are combined with those for the budget year.²

Would Enactment of Legislation That Increases Deficits by $2.3 Trillion Over the 2025–2034 Period Trigger Sequestration?

Yes, in accordance with S-PAYGO, OMB would record the average increases in deficits over the period, in this case $230 billion each year, on the PAYGO scorecard. Without enactment of subsequent legislation that would offset the deficit increase, waive the recordation of the bill’s effects on the scorecard, or otherwise mitigate or eliminate the statutory requirements, OMB would be required to issue a sequestration order not more than 14 days after the end of the current session of Congress (excluding weekends and holidays) to reduce spending by $230 billion in fiscal year 2026 (or by a larger amount if the 5‑year average increase in deficits was greater than the 10-year average).

How Would Sequestration Affect Medicare and Other Programs, Assuming That Funding Subject to Sequestration Remained Equal to the Amounts in CBO’s January 2025 Baseline Projections?

Under S-PAYGO, reductions in Medicare spending are limited to 4 percent or an estimated $45 billion for fiscal year 2026. That would leave $185 billion to be sequestered from the federal budget’s remaining direct spending
accounts in that year.

S-PAYGO exempts many large accounts, including those that provide funding for Social Security and low-income programs. Therefore, in CBO’s estimation, OMB would have roughly $120 billion in budgetary resources
available for cancellation in 2026—less than the remaining amount that would be required to be sequestered.³

How Would Medicare Be Affected After 2026?

The 4 percent maximum reduction in Medicare spending would apply to sequestration orders for years after 2026. If OMB ordered a sequestration of $230 billion for each year through 2034, the ordered reductions in Medicare spending would increase to about $75 billion in 2034 and would total roughly $490 billion over the 2027–2034 period.

How Would All Other Programs That Are Subject to Sequestration Be Affected?

After accounting for the reduction in Medicare spending, the required reduction in spending for other programs would exceed the estimated amount of resources available to those programs in each year over the 2027–2034
period. If OMB sequestered all of the funding for those programs, the total amounts would be less than the reductions required by S-PAYGO.

I hope this information is useful to you. Please contact me if you have further questions.

Sincerely,

Phillip L. Swagel
Director CBO

Ranking Democrat Member Rep. Brendan Boyle: “For months now, I have been sounding the alarm on the devastating Medicare cuts caused by Trump’s Big Ugly Law,” he said. “Republicans knew their tax breaks for billionaires would force over half a trillion dollars in Medicare cuts—and they did it anyway. American families simply cannot afford Donald Trump’s attacks on Medicare, Medicaid, and Obamacare.”

I first saw this at Naked Capitalism, which posted on a Common Dreams article. I chose to use the CBO document to discuss the Medicare cuts. Both are saying similar.

1. Estimated Budgetary Effects of a Bill to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, the One Big Beautiful Bill Act | Congressional Budget Office
2. The Statutory Pay-As-You Go Act and the Role of the Congress | Congressional Budget Office
3. BBEDCA_251A_Sequestration_Report_FY2025.pdf