For Republicans, tax reform math hinges on cutting Medicare

Retirement savers dodged a speeding train last week when Republican lawmakers racing toward tax reform dropped their plan to sharply reduce allowable tax-deferred contributions to 401(k) plans. That idea is off the table – at least for now.

But listen carefully and you can hear the whistle blowing on another train barreling down the tracks.

A 2018 budget blueprint approved by Congress late last month would reduce Medicare spending by $473 billion over 10 years compared with the current baseline projection, and proposes $1.3 trillion in cuts to Medicaid, various Affordable Care Act (ACA) tax credits and cost sharing subsidies and other health spending. Republicans need the spending reductions to make room for $1.5 trillion in tax cuts, mostly for corporations and wealthy households.

The budget plan does not include the specifics on how these cuts will be achieved. But previous Republican plans for Medicaid – the joint federal and state health insurance program for lower-income people and children – would have been disastrous for millions of older Americans.

How about Medicare? Republicans have repeatedly called for two Medicare “reforms” in the past that would be devastating for older Americans. They would raise the age of Medicare eligibility to 67 from 65, and shift Medicare to a flat premium-support payment, or voucher, that beneficiaries would use to help buy either private health insurance or a form of traditional Medicare.

Learn more at Reuters Money. Also see a detailed study on premium support from the Urban Institute.

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