White House Budget Proposes Cuts to Medicare, Medicaid

Drew Thies

The official White house budget released by President Trump last week proposes steep cuts to the Medicare and Medicaid programs. The annual policy paper’s proposals, however, are unlikely to be passed in Congress.

Included in the proposed budget is the Affordable Care Act (ACA) repeal and replace plan known as Graham-Cassidy. In addition to fundamentally changing the health care exchanges, the plan block grants the Medicaid program and decreases the maximum allowable provider tax rate to 4 percent. The represents billions of dollars cut from the Medicaid program.

The budget also proposes a unified payment model for all post-acute care (PAC) providers. Under this model, all PAC providers would be paid based on patient characteristics rather than setting.

The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT) included provisions for exploring the development of a prospective payment system spanning the four PAC settings.

Other Medicare changes proposed in the budget include provisions incentivizing the increased use of Accountable Care Organizations (ACOs), prior authorization for certain Medicare services, and eliminating excessive Medicare Advantage payments.

The budget is unlikely to gain traction in Congress, where Republican lawmakers need an outsized majority to pass the President’s priorities, particularly in the Senate. Many of the changes need a 60-vote supermajority to avoid a filibuster. While some items can be passed with budget reconciliation instructions, which only requires 50 votes, the slim Republican majority in the Senate and the failure of last year’s efforts to make changes to the Medicaid program do not suggest items from this budget could become law.