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Jon Greenberg
By Jon Greenberg March 26, 2019

It's wrong to claim Trump budget cuts $845 billion from Medicare

As Joe Biden edges toward officially running for president, he has been taking on President Donald Trump over his plans for U.S. health care programs.

"Did you see the budget that was just introduced?" Biden said in a March 12 speech to International Association of Fire Fighters. "It cuts $845 billion, almost a trillion dollar cut in Medicare. And almost a quarter trillion, $240 billion, in Medicaid. Why? Because of a tax cut for the super wealthy that created a deficit of $1.9 trillion, and now they got to go make somebody pay for it."

Other Democratic presidential candidates and other leaders, including Senate Minority Leader Chuck Schumer, have used the $845 billion figure. But there are a couple of problems with it.

The correct amount is closer to $595 billion — or less, depending on the method used.

And the use of the word "cuts" is debatable, because spending rises steadily from year to year in Trump’s proposed 2019-20 budget. The reduction is from the path Medicare would be on, if nothing changed. Slowing the growth of Medicare is an approach President Barack Obama advanced in his last two budgets. (As Obama’s vice president, those were Biden’s budgets, too.)

Trump’s Medicare budget

The administration would spend $9.398 trillion on Medicare between 2020 and 2029. But the White House predicts that the government would have spent $10.244 trillion in the same time frame. The difference is $846 billion.

But dig deeper, and the numbers change.

First, Trump’s plan takes two hefty pieces of Medicare — extra payments to hospitals that serve a lot of uninsured patients and funds for teaching hospitals — and moves them out of Medicare and into the regular general fund budget. Hospitals still get paid, but the money doesn’t come from the main Medicare trust fund. Spending does fall a bit, but not nearly by as much as the Medicare line items suggest.

Factoring in those dollars — about $250 billion — reduces the total ten-year spending reduction to $595 billion for Medicare.

Some analysts push the number even lower.

The Committee for a Responsible Federal Budget, a think tank that aims to reduce deficits, noted that the administration’s spending plan includes hoped-for savings from changes in medical liability laws, drug regulations and other elements that lie outside of Medicare. Those wouldn’t curtail Medicare services but could result in Medicare cost savings. All told, the committee said the spending reductions could be as low as $515 billion over 10 years.

Less money for providers, not Medicare patients

Most of the proposed changes target payments to hospitals and other providers — and that might not affect the 58 million elderly and disabled people on Medicare.

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While hospital trade groups push back, many analysts believe there is room to spend less without hurting recipients.

"In general, these proposals are in areas where there is evidence we pay providers too much," Matthew Fiedler, at the Brookings Institution Center for Health Policy, told us recently. "One big proposal is to make payments site-neutral. Currently, we often pay more for the same service when it’s delivered in a hospital rather than in a doctor’s office, even when there’s no evidence the site of service makes a difference."

Two of the plans along these lines would save a combined $160 billion, according to the Health and Human Services Department.

It’s important to note, though, that not all of the proposed cuts land on providers.

Changes in Medicare’s Part D prescription drug insurance program would directly affect recipients. While one proposal would cap out-of-pocket costs for people with the very highest drug costs, another would expose people below that cost level to higher fees. At the end of the day, the Trump budget reduces payments for people who rely on prescription drugs by $50 billion.

The prescription drug changes might be the clearest example of Medicare cuts in the Trump budget that affect ordinary Americans. The remaining $545 billion potentially could be absorbed by providers.

Reductions vs. cuts

While Democrats criticize Trump for cutting Medicare, Obama regularly offered his own version of steps to rein in the growth of Medicare. In his last budget, Obama proposed trimming spending by about $420 billion over 10 years.  In effect, Biden is chastising Trump for something close to the budget he was part of. (Republicans accused Obama and Democrats of cutting Medicare many times, a claim we never rated better than Half True.)

The reality is, program spending rises every year in Trump’s budget, except for the last one in 2029 (which is mainly a fluke of timing related to when Medicare pays its bills).

So, what’s the difference between a cut and a reduction?

"This issue has been around for decades," said Tricia Neuman, the Kaiser Family Foundation’s Medicare policy director. "It is a proposed reduction relative to the baseline. A cut sounds worse than a reduction, but the effect is the same. If these proposals were adopted, there would be less money paid to providers for specific Medicare services than there would have been."

Our ruling

Biden said Trump’s budget cuts $845 billion, "almost a trillion dollar cut," in Medicare. There are several problems with this.

A more accurate figure lies between $515 billion and $595 billion. Just about all of the reductions target providers and there’s broad agreement that hospitals and other providers could be more efficient. These are reductions against a baseline, but spending rises steadily year to year.

Biden pushed the numbers even further by calling it an "almost a trillion dollar cut."

We rate this claim Mostly False.

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Mostly False
The Trump budget "cuts $845 billion, almost a trillion dollar cut in Medicare."
In a speech to the International Association of Fire Fighters
Tuesday, March 12, 2019

Our Sources

International Association of Fire Fighters, Joe Biden’s keynote address, March 12, 2019

White House, A Budget for a Better America, March 11, 2019

US. Health and Human Services Department, FY 2020 Budget in brief, March 11, 2019

Committee for a Responsible Federal Budget, Does the President's Budget Slash Medicare by $845 Billion?, March 12, 2019

Congressional Budget Office, Medicare—CBO’s April 2018 Baseline, April 2018

White House, FY 2017 Budget, Feb. 9, 2016

Medicare Payment Advisory Commission, Medicare payment policy, March 2019

Medicare Payment Advisory Commission, Report to the Congress: Medicare and the Health Care Delivery System, June 2018

Office of Management and Budget, Fiscal Year 2016 budget, Feb. 2, 2015

Centers for Medicare and Medicaid Services, CMS Office of the Actuary releases 2018-2027 Projections of National Health Expenditures, Feb. 20, 2019

Centers for Medicare and Medicaid Services, Projected Medicare Expenditures under an Illustrative Scenario with Alternative Payment Updates to Medicare Providers, June 5, 2018

Committee for a Responsible Federal Budget, Analysis of the President’s FY 2020 Budget, March 11, 2019

Dartmouth Center for Health Policy and Clinical Practice, Health Care Spending, Quality, and Outcomes, Feb. 27, 2009

PolitiFact, GOP ad says Bruce Braley 'voted to cut $700 billion from Medicare to support Obamacare', Sept. 9, 2014

Washington Post, Democrats engage in ‘Mediscare’ spin on the Trump budget, March 15, 2019

Interview, Matthew Fiedler, fellow, Center for Health Policy, Brookings Institution, March 18, 2019

Interview, Tricia Neuman, senior vice president, director, Program on Medicare Policy, Kaiser Family Foundation, March 19, 2019

 

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