Did Trump Propose Deep Medicare Cuts?

In a recent report, “The Trump-Vance ‘Concept’ on Health Care,” Vice President Kamala Harris’s presidential campaign claims that former President Donald Trump proposed “deep cuts to Medicare and Medicaid” in his budgets submitted during his term as President, including cuts that would “undermine Medicare’s fiscal position and cut benefits for seniors.”

When it comes to Medicare, these claims are largely false, misleading, and counterproductive.

President Trump’s budgets included proposals to reduce the cost of Medicare through changes to provider payments and drug pricing reforms that have generally received bipartisan support. Specifically, his final budget proposal for Fiscal Year (FY) 2021 included proposed Medicare changes that we find would have:

• Modestly slowed Medicare cost growth – with costs rising by 89 percent over a decade rather than 104 percent and proposed savings representing one-twentieth of projected costs.
• Improved rather than cut benefits by lowering premiums and cost-sharing without reducing covered benefits or meaningfully changing access to care.
• Strengthened rather than undermined the program’s fiscal position, including by extending the solvency of the Hospital Insurance (HI) trust fund by at least 25 years.

Health care spending is the largest area of the federal budget and is experiencing rapid growth that threatens to widen deficits and drive the Medicare HI trust fund to insolvency in just 12 years. Lawmakers will need to consider meaningful savings to lower the cost of Medicare and Medicaid, along with other parts of the budget and tax code.

This presidential campaign has been damaging and unhelpful toward efforts to thoughtfully reform Medicare, with both candidates attacking their opponents for cutting benefits while shying away from offering their own comprehensive plans to address these issues.

This ‘Medi-scare’ tactic only increases the difficulty of implementing urgently needed reforms, thereby making it harder to restore solvency to Medicare HI, lower health care costs for seniors, and reign in deficits.

US Budget Watch 2024 is a project of the nonpartisan Committee for a Responsible Federal Budget designed to educate the public on the fiscal impact of presidential candidates’ proposals and platforms. Through the election, we will issue policy explainers, fact checks, budget scores, and other analyses. We do not support or oppose any candidate for public office.

Trump Administration Medicare Savings Were Not “Deep Cuts”

In their recent report, the Harris campaign claims “Trump will Slash Medicare and Medicaid” and says that “Trump proposed deep cuts to Medicare and Medicaid” in the past.

While some of President Trump’s budgets did propose large reductions to federal Medicaid spending, and there will be reasonable disagreements about this approach to health care savings, none of President Trump’s budgets slashed Medicare or proposed deep cuts to the Medicare program.

Under President Trump’s FY 2021 budget, which the Harris campaign specifically cites, the Congressional Budget Office (CBO) projected Medicare costs would have still grown by 89 percent between FY 2020 and 2030 compared to 104 percent under then-current law.

The total Medicare savings proposed in President Trump’s budget were about 5 percent of total Medicare costs from FY 2020 through 2030 – $500 to $600 billion out of more than $10 trillion. For perspective, prescription drugs savings in the Inflation Reduction Act are projected to reduce Medicare costs by 3 percent by FY 2031 compared to current law, and the insolvency of the Medicare HI trust fund is projected to lead to an abrupt 11 percent cut in benefits.

Trump Administration Medicare Policies Would Have Cut Costs, Not Benefits

The Harris campaign claims that “independent analysts have noted that in every single one of his budgets as president, Trump sought to make significant cuts to both Medicare and Medicaid,” and that these cuts “are plainly intended to… cut benefits for seniors.”

This paints a misleading picture, since President Trump’s proposals generally focused on lowering provider payments and drug costs in a way that would have also reduced premiums and cost-sharing paid by seniors, rather than cutting their benefits.

Included in the FY 2021 budget were proposals to reduce bad debt reimbursements, lower excessive post-acute care payments, and adopt site-neutral payments that avoid paying hospitals and hospital-owned clinics more than private doctors’ offices for the same services. These reforms all resemble policies proposed by President Obama. The budget would have also reformed Medicare payments to hospitals for graduate medical education and uncompensated care, and effectively embraced the bipartisan Drug Pricing Act, which was sponsored by Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR) and ultimately became the basis for some parts of the drug savings provisions in the Inflation Reduction Act. Prior budgets included similar proposals, with few if any changes to Medicare benefits.

Medicare Proposals in President Trump's FY 2021 Budget (2021-2030)

Sources: Congressional Budget Office and Office of Management and Budget.
*Similar policy in Obama Budget.
'Policies affect multiple health care programs. Savings represent total fiscal impact; percentage range depends on how savings are apportioned.
 

We have previously described these policies as smart health savings, and the Center on Budget and Policy Priorities – cited in the Harris campaign’s report – has written favorably about them. They would all increase the value of Medicare to beneficiaries and make the program more efficient, not cut benefits for seniors.

It is worth noting that, while the Trump Administration’s budgets included bipartisan savings proposals that would have improved the overall financial health of the HI trust fund and lowered costs for taxpayers and Medicare beneficiaries, President Trump has not embraced any of these proposals as part of his 2024 campaign platform.

Trump Administration Medicare Policies Would Have Strengthened the Program’s Fiscal Position

The Harris campaign has claimed that President Trump’s “proposed budgets identify numerous cuts that are plainly intended to undermine Medicare’s fiscal position...”. However, the savings in President Trump’s budgets would have improved Medicare’s fiscal position.

Under current law, the Medicare Trustees project the HI trust fund will run out of reserves in 2036, while CBO estimates the overall cost of Medicare will rise from 3.2 percent of Gross Domestic Product (GDP) in FY 2024 to 5.4 percent by 2054.

According to his FY 2021 budget, President Trump’s Medicare proposals would have “extend[ed] the solvency of the Medicare program by at least 25 years” by reducing the cost of some parts of the Medicare HI program and moving funding for medical residents outside of Medicare. 

Furthermore, while the overall Medicare savings in the FY 2021 budget were relatively modest, they would have slowed the average annual growth rate of Medicare spending from 7.4 percent per year to 6.6 percent through FY 2030. If Medicare growth were to slow by 0.8 percentage points annually for the next 30 years, costs would rise to 4.3 percent of GDP by FY 2054 instead of the 5.4 percent projected in the baseline – a meaningful improvement.

“Medi-scare” Tactics Are Harmful and Counterproductive

Accusing opponents of trying to slash Medicare and conflating reductions in Medicare spending with cuts to benefits is an all too common tactic employed by both political parties. Sometimes described as “Medi-scare,” this approach has not only been used against former President Trump, but also against GOP presidential candidates Bob Dole and John McCain, Presidents Barack Obama and Joe Biden, and even against Vice President Kamala Harris. And time and again, these claims have been debunked.

With health care costs continuing to grow and the Medicare HI trust fund less than 12 years from insolvency, there is an urgent need for policymakers to find ways to shore up the program and avoid large automatic cuts to hospitals and other providers, which would lead to a shortage of care.

There are numerous ways to lower health care costs and restore solvency to Medicare – many with bipartisan support.

Ultimately, the efforts of both 2024 presidential candidates to gain political advantage by describing reasonable Medicare cost savings as “deep cuts” only serve to take needed solutions for dealing with the unsustainable growth of Medicare and other government programs off the table.

Ruling: Largely False, Misleading, and Counterproductive

*****

Throughout the 2024 presidential election cycle, US Budget Watch 2024 will bring information and accountability to the campaign by analyzing candidates’ proposals, fact-checking their claims, and scoring the fiscal cost of their agendas. 

By injecting an impartial, fact-based approach into the national conversation, US Budget Watch 2024 will help voters better understand the nuances of the candidates’ policy proposals and what they would mean for the country’s economic and fiscal future. 

You can find more US Budget Watch 2024 content here. 

Updated from simple averages to compound averages.