Medicare cuts in 2018 are on the horizon.
The Department of Health and Human Services (HHS) has proposed cutting about $9 billion from the program.
While those cuts won’t be made public until 2019, they represent a significant decrease in the $8.6 trillion cost of the Affordable Care Act.
What happens next?
If the Trump administration follows through on the $9.6 billion in cuts outlined in the memo, that would put the program’s total spending under the president’s cap at about $1.2 trillion for 2019.
That means the Trump healthcare plan would be significantly less expensive than the program he campaigned on, President Donald Trump told reporters on Wednesday.
Under the current law, Medicare beneficiaries will face a 25 percent increase in monthly premiums for 2017.
But in 2018, a combination of the Trump plan and the budget proposal from House Speaker Paul Ryan, R-Wis., would reduce that 25 percent figure to 7.5 percent, leaving the program under the Trump cap at $1,300 per month.
It’s unclear what the new cuts would mean for beneficiaries.
There are three options: The president could delay the payments, making them less generous.
In that case, the TrumpCare plan would reduce the amount of the federal government’s funding to Medicare by $500 billion.
If he does this, the savings to the federal budget would be about $100 billion.
The savings would only be available for beneficiaries who had incomes below 138 percent of the poverty level.
Alternatively, the president could cut the payments altogether, which would save the government $2.5 trillion.
Both of these options would require Congress to vote on legislation.
Why does this matter?
The Trumpcare cuts would come just days after a CBO analysis found the bill would leave beneficiaries worse off than they were under the current Medicare program.
Under the Trumpcare proposal, Medicare would pay for 85 percent of medical expenses for beneficiaries, with the remaining 25 percent going to the insurance companies.
For example, if the premium increases were $50 per month for the average beneficiary, and the plan paid the same amount to all beneficiaries, the federal spending on medical care would be $1.,527.28.
As of 2019, that number is projected to be $2,077.27 per beneficiary.
This would leave the federal deficit for 2018 at $10.664 trillion, which is slightly lower than the current $11.1 trillion, according to the Congressional Budget Office.
Ryan’s plan, which he co-authored with House Speaker John Boehner, R, Ohio, would leave Medicare spending at $2 trillion per year.
Democrats have argued that the administration’s approach to the law’s cost-sharing reduction program would leave some people worse off under the bill, which they call “TrumpCare 2.0.”
The CBO estimated that if Trump’s plan were enacted and the cost-share reductions were phased in over two years, it would reduce federal spending by about $800 billion in 2021.
Even without those costs, the bill is expected to result in millions of people losing their Medicare coverage and could lead to a massive increase in the number of people with pre-existing conditions.
How will Trump’s healthcare plan affect people?
Under TrumpCare 2, Medicare is paid for at a single-payer system.
Medicare is funded by a combination inpatient and outpatient benefits, which are paid for by the federal and state governments.
Individuals who are eligible for Medicare are paid a set amount per month based on their income.
The federal government pays the rest of the cost.
Under TrumpCare, that amount would change.
Instead of being paid directly to the patient, Medicare payments would be split between the states.
States would receive a portion of Medicare payments based on the number and severity of their pre-existing conditions, as well as the amount that would be covered by a health insurance exchange.
TrumpCare would also expand Medicaid coverage to more people.
The TrumpCare bill also creates an additional tax deduction for high-income Americans who have income above $250,000.