Price Confirms Double-Counting in President's Budget

One source of uncertainty in the President's budget is how much savings it contains from reducing Medicaid spending. In testimony last week to the Senate Finance Committee, Health and Human Services Secretary Tom Price seems to have resolved this ambiguity: the budget in reality has less in Medicaid savings than it claims, as it double-counts some amount of those savings.

The budget proposes $610 billion of Medicaid savings, which would come from a per-capita cap and/or block grant, but it is not specific on the details of how the cap or block grant would work. At the same time, it assumes a generic Affordable Care Act “repeal and replace” plan and makes it clear that the President supports something similar to the House-passed American Health Care Act (AHCA).

The AHCA already includes $834 billion of Medicaid savings, some of which would come from a per-capita cap like the one described in the budget. Thus, it seemed like there might be overlap between the $610 billion of assumed Medicaid savings and the $1.25 trillion of assumed spending cuts from repeal and replacement. In order to reach balance, the budget relies on the full $1.86 trillion total of those savings.

For that reason, we described the budget as "call[ing] for an additional $610 billion in Medicaid reductions on top of any coming from 'repeal and replace,'" because those are the numbers the budget uses to add up. However, in a committee appearance last week, Price testified that the President's Budget's $610 billion in Medicaid savings are not all on top of the AHCA:

Sen. Nelson: Does it cut more than 600 billion from the Medicaid program on top of the cuts included in the House-passed healthcare bill?

Sec. Price: No.

Sen. Nelson:  Your budget does not. Ok.

Those comments are in line with a similar quote by Office of Management and Budget (OMB) Director Mick Mulvaney, in front of the Senate Budget Committee that suggests there would be at least some double-counting.

“The number I've heard is $1.4 trillion, and that's drawn from the $800 billion from the AHCA and $600 billion from some of the other reforms that we proposed…However, you can't add those two numbers together because there are components of those that overlap…It's someplace between $800 and $1.4 trillion. So, if you wanted to round the difference off, what is that, $1.1 trillion?”

The budget relies on both sets of Medicaid cuts in order to balance. If there are not any additional Medicaid cuts on top of the AHCA, then they are being double-counted. Without the additional cuts, the budget would show a roughly $170 billion deficit in 2027.

Our recent paper All the President's Budget Gimmicks explained this double-counting gimmick and others in the President's budget, such as rosy growth assumptions, arbitrary expiration dates, and a missing tax reform plan, many of which could potentially be very expensive. When all of these gimmicks are removed from the President's Budget, the budget leaves debt on a slight upward path, instead of the downward one it projects. Depending on the cost of the Administration's tax plan, debt could rise significantly.

Read the full paper.