No service cuts but the trust fund took a hit
Protecting Medicare was was one of Trump's earliest campaign pledges. "Save Medicare, Medicaid and Social Security without cuts. Have to do it," he said in his presidential campaign announcement speech.
So far, the promise of Medicare remains in force. There have been no cuts in services or a change in the government's responsibility to fund the program.
That said, Medicare's resources to pay for those services has shrunk, and both Trump and House Republicans have proposed ways to trim Medicare spending over the next decade.
On the resources side, a side effect of the Republican 2017 Tax Cut and Jobs Act was a loss of tax dollars flowing into Medicare's Hospital Insurance Trust Fund. That's the main pot of Medicare money, and the Medicare Trustees forecast in their 2018 report that the fund would run out of money in 2026. A year earlier, they said it would last until 2029.
On Trump's watch, it lost three years of solvency.
In a presentation at the American Enterprise Institute, a market-oriented think tank, the chief actuary at the Centers for Medicare and Medicaid Services, Paul Spitalnic, said two of the lost years were due to lower than expected wage growth.
But the other lost year came from the Republican tax cuts.
"The Tax Cuts and Jobs Act of 2017 decreased individual tax rates and as a result, there is somewhat less income coming into the trust fund," Spitalnic said. "That does have an effect of making depletion of the trust fund a year earlier."
Critics of this analysis counter that the Medicare actuaries made some poor assumptions in 2017, which made 2018 look worse than it really was. On the other hand, both parties have relied on the trustees' forecast for decades.
In terms of budgets, the White House FY 2019 budget plan proposed reducing the growth of Medicare to generate $236 billion in savings by 2028. The administration said it would save money through better negotiations on drugs, shifting some payments away from the trust fund and reducing Medicare fraud.
The House Republicans had their own package of changes that they said would trim spending by $537 billion by 2028.
As ever, the debate is whether slowing the growth of Medicare is the same as cutting it. But the House proposal would make real cuts. It raised the eligibility age from 65 to 67, and increased deductibles. It also turned Medicare into a voucher program. When the Congressional Budget Office scored a similar proposal, it found that people using traditional Medicare would end up paying more.
Still, neither Trump's nor the House Republican plans became law.
For now, benefits remain as they were, but there has been a modest impact on funding that could affect the program in the future.
We rate this as a Compromise.
Medicare Trustees, 2018 report, June 5, 2018
Medicare Trustees, Medicare amendments since the 2017 report, June 5, 2018
Centers for Medicare and Medicaid Services. 2018 Expanded and Supplemental Tables, June 5, 2018
American Enterprise Institute, The 2018 Medicare Trustees Report: Fiscal challenges and future reforms, June 6, 2018
No cuts to Medicare enacted yet
As a presidential candidate, Donald Trump pledged that he wouldn't cut Medicare, the federal health-care program that mainly serves Americans 65 and older.
So far, nothing has been enacted on Trump's watch that cuts Medicare benefits, said Erin A. Taylor, a policy researcher at the RAND Corp. "To my knowledge there has been no actual policy enacted yet during the Trump administration that would cut Medicare funding in such a way as to have significant impact on beneficiaries," she said.
However, Trump did offer a number of ideas for overhauling pieces of Medicare in his fiscal year 2019 budget proposal. Some, Taylor said, could leave Medicare beneficiaries better off, while some might not; it is hard to say at this time whether the gains for beneficiaries would outweigh the losses.
Over 10 years, Trump's 2019 budget proposal says it would cut Medicare spending by a cumulative $236 billion, including by reductions in "waste" and "fraud" and by changing the way drugs are priced and paid for in the program.
The largest cuts, Taylor said, would come from reducing Medicare's payments for uncompensated care in hospitals and from changing payments for graduate medical education. But "the effects of these changes may trickle down to beneficiaries in terms of changes in sites of service or effects on incentives on the parts of hospitals to provide care, but those effects may not be negative," Taylor said.
The changes to the Medicare Part D drug program would have a more direct impact on beneficiaries, though it's hard to tell how exactly the changes might flow through the system.
"On the positive side, requiring Medicare plans to pass through a proportion of manufacturer rebates to beneficiaries at the pharmacy could serve to reduce costs for beneficiaries," Taylor said, though she added that the system would be technically difficult to implement.
On the other hand, she said, the budget proposes not to count those cost reductions towards the calculation of the beneficiary's out-of-pocket spending. This means it would take beneficiaries longer to reach the catastrophic phase of the benefit.
Another possible benefit, at least for those with very high drug costs, is that those who reach the catastrophic phase would pay nothing for their prescriptions for the rest of the year, as opposed to the 5 percent share they would pay currently.
The budget also proposes to eliminate generic-drug cost sharing for low-income subsidy beneficiaries; this increases the government's cost burden, but it could encourage these beneficiaries to take needed medications, Taylor said.
A final potential negative: The budget proposes to reduce the number of drugs required to be covered on plan formularies. This could restrict the ability of beneficiaries to access the medicines they need, and may require them to go through an appeals process to gain coverage.
The budget proposal does call for $236 billion in Medicare reductions, which would contradict Trump's campaign promise. On the other hand, the budget proposal is a non-binding document, it includes some provisions that would benefit users of Medicare, and more than a year into Trump's presidency, nothing has been enacted that is contrary to his promise not to cut Medicare. So we rate the promise In the Works.
Email interview with Erin A. Taylor, policy researcher at the RAND Corp., Feb. 15, 2018
Future of Medicare funding uncertain under Trump presidency
President Donald Trump's vow to save Medicare from budget cuts is facing a snag as the 2018 budget makes its way through Congress.
The promise, along with maintaining current funding levels for other entitlement programs, was one of Trump's earliest campaign pledges. "Save Medicare, Medicaid and Social Security without cuts. Have to do it," he said in his presidential announcement speech.
The 2018 White House budget proposal released in May left Medicare benefits largely untouched compared with Medicaid, which would see a more than $600 billion decrease over 10 years compared to current spending levels. Still, Medicare spending would decrease by more than $50 billion in the next decade compared with current levels.
Though the proposed budget doesn't spell out large direct cuts to Medicare, cuts to other programs would indirectly affect the senior health insurance program. For instance, the budget included eliminating the State Health Insurance Assistance Program, which provides Medicare beneficiaries with counseling and assistance to navigate the health care system.
However, those cuts won't necessarily happen because the White House budget proposal is more of a wish list that the president gives to Congress, where both the House of Representatives and the Senate must create and agree on a final budget to be signed by the president.
The House's current budget resolution, which was released in July, asked to cut Medicare by $487 billion between 2018 and 2027. Much of this would be done by turning Medicare into a voucher-like program, increasing income-related premiums and limiting medical malpractice litigation by capping attorney fees and awards, according to the plan.
Again, that $487 billion cut won't necessarily make it into the final budget, especially since the House resolution currently doesn't contain legal language that would help ensure the full cut through a special legislative process called reconciliation.
Even though the budget resolution has a line that calls for reduced Medicare spending, it doesn't actually include a way to make that happen, said Marc Goldwein, the senior vice president of the Committee for a Responsible Federal Budget. He said Congress could end up making some moderate cuts to Medicare this year, but "they're clearly not prioritizing it."
Congress and the White House must agree on a budget before Oct. 1 or pass a continuing resolution to avoid a government shutdown during budget negotiations.
But even if Medicare doesn't undergo cuts in the next budget, it's still possible that the program could be affected by an Obamacare repeal or replacement.
"It's unclear given the uncertainty surrounding dealings in Washington right now," said David Lipschutz, an attorney with the Center for Medicare Advocacy. "But we are certainly not out of the woods."
An effort to repeal portions of the health care law died on the Senate floor on July 28 when Republican Sen. John McCain voted against it, but that hasn't stopped the GOP from trying again. Another Obamacare partial repeal proposal by Sens. Bill Cassidy, R-La,, Lindsey Graham, R-S.C., and Dean Heller, R-Nev., has the support of McCain and Trump, according to press reports.
A process that temporarily allowed health care legislation to advance in the Senate with 50 votes rather than the usual 60 votes -- Republicans' best chance at passing a health care bill -- will end on Sept.30.
Lipschutz said the upcoming deadline could pressure Republicans to hastily pass legislation on health care.
If a new partial repeal looks anything like past efforts to change health care, Medicare would likely be affected by cuts to Medicaid spending, one-third of which goes to low-income seniors who are enrolled in both Medicare and Medicaid. (The Congressional Budget Office projected over $800 billion in cuts to Medicaid by 2026 in its analysis of the Obamacare Repeal Reconciliation Act of 2017.) The Commonwealth Fund calculated that, under the previous repeal bill, around 11 million Medicare beneficiaries would lose coverage for long-term services under Medicaid, such as nursing home care.
The overall change to Medicare spending will depend on what makes it into the final 2018 budget and what happens with Obamacare. But current legislative proposals, some of which have garnered Trump's support, plan for funding cuts that affect Medicare in some way, whether directly or indirectly. Trump has not signed either into law yet, so for now we rate this promise Stalled.
Congressional Budget Office, Obamacare Repeal Reconciliation Act of 2017 cost estimate, July 19, 2017
U.S. House of Representatives, 2018 spending plan blueprint, July 19, 2017
The White House, 2018 budget proposal, May 23, 2017
Office of Sen. Bill Cassidy, press release, Sept. 12, 2017
The Commonwealth Fund, "AHCA Would Affect Medicare, Too," May 17, 2017
Donald Trump campaign website, copy of interview with The Daily Signal, "Why Donald Trump Won't Touch Your Entitlements," screengrab from Jan. 28, 2017
Time, "Here's Donald Trump's Presidential Announcement Speech," June 16, 2015
USA Today, "Senate narrowly defeats 'skinny repeal' of Obamacare, as McCain votes 'no,'" July 28, 2017
The Hill, "McCain backs Graham-Cassidy Obamacare repeal effort," Sept. 9, 2017
POLITICO, "Trump wants one last Senate push on Obamacare repeal," Sept. 5, 2017
Los Angeles Times, "Republicans face Sept. 30 deadline for fast-track Obamacare repeal," Sept. 1, 2017
Phone interview with David Lipschutz, an attorney with the Center for Medicare Advocacy, Sept. 12, 2017
Phone interview with Marc Goldwein, the Senior Vice President of the Committee for a Responsible Federal Budget, Sept. 12, 2017