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Budget Proposal to Slash Medicare, Medicaid Unlikely to Fly

Congress rarely adopts presidential spending requests

spinner image President Donald Trump's budget
The House Budget Committee displays copies of President Trump's fiscal year 2020 budget proposal.

Headlines and social media posts this week have alarmingly described the potential for massive cuts to Medicare and Medicaid under President Trump's annual budget proposal. While the proposal requests $845 billion less for the health care program for older adults and people with disabilities and a reduction of nearly $1.5 trillion from the safety net for low-income Americans, the vast majority of the administration’s wish list will never happen, according to experts.

That’s because the power to fund the nation’s government and its programs lies with Congress. And regardless of which party is in control, analysts say presidential spending plans are usually deemed dead on arrival.

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“A president’s budget is essentially a fantasy wish list of priorities,” says Patrick Newton, spokesman for the Committee for a Responsible Federal Budget. “It would never be adopted in its entirety.” In addition, Democrats, who control the House of Representatives, have already said that the president’s budget is a nonstarter and are unlikely to allow any substantial cuts to Medicare or Medicaid.

This year’s budget blueprint from President Trump is no exception. Here’s a brief look at a few of his proposals for Medicare and Medicaid. His plan would:

  • Cut $845 billion from Medicare over the next 10 years, mainly, the proposal says, by eliminating waste, fraud and abuse and by cutting payments to certain hospitals and other providers. For example, it would reduce payments to hospital outpatient departments and teaching hospitals and provide less money to compensate hospitals for treating patients who don’t — or can’t — pay their bills. The proposal also calls for requiring Medicare beneficiaries to get prior approval for certain medical services that the administration says are ripe for waste and fraud, although it doesn’t specify which services. The budget also says that some savings would come from lowering prescription drug prices, something that would save Medicare beneficiaries and the government money.
  • Reduce Medicaid spending by nearly $1.5 trillion over the next decade. It would eliminate the extra Medicaid funding for states that expanded their programs under the Affordable Care Act (ACA). About 15 million more Americans have joined Medicaid since the ACA expansion was enacted. The budget plan would also give states more power to design their Medicaid programs, including allowing states to get a block grant or institute a per-person cap for Medicaid recipients.

“We are heartened that President Trump’s budget continues to highlight the need to address prescription drug prices,” says John Hishta, AARP’s senior vice president for campaigns. “But we’re also concerned about proposed cuts to programs important to seniors.”

The budget plan would also cut $220 billion from the Supplemental Nutrition Assistant Program (SNAP) — formerly known as food stamps. It also would expand work requirements to those able to work up to age 65 and use food box delivery services for some recipients instead of cash payments.

“These boxes would stigmatize people struggling to make ends meet by taking away their right to select food for their families, and would not be attuned to families’ particular dietary needs,” Jim Weill, president of the Food Research and Action Center, says in a statement. Nearly 5 million households who receive SNAP benefits have at least one member who is 60 or older.

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Congress must pass and the president sign new spending plans for every government agency by Oct. 1, which is the start of the 2020 federal fiscal year, in order to keep federal services running.

The process has already started. Lawmakers have begun holding hearings on the president’s requests. Then the House and Senate will decide how much money in total they want the government to spend next year. Once they agree on that big number, the budget pie is divided up among appropriations committees in each chamber, and those panels decide how to spend their share of the federal budget. Each chamber has to pass the same bill or they have to iron out their differences in what’s called a conference committee.

Once lawmakers agree on the budget for a particular agency, the bill goes to the president for his signature. But often, representatives and senators don’t agree by the Oct. 1 deadline and they pass what are called continuing resolutions that fund the various government agencies — usually at the same level as the current year.

Sometimes, however, they can’t even agree to the terms of continuing resolutions or the White House doesn’t like the agreement they reached. That’s when  — as what happened at the end of 2018 and beginning of this year — government agencies that are not funded are shut down until lawmakers and the White House agree on a spending plan.

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