Preventing Over $100 Billion in Automatic Spending Cuts to Medicare & Other Programs Triggered by Democrats’ $1.9 Trillion ‘American Rescue Plan’ (Original House Bill)
Do you support or oppose this bill?
by Legislative Vehicle 'Junkyard' | 3.25.21
The Senate amended H.R. 1868 after it initially passed the House to remove provisions related to spending cuts under the PAYGO rule following the enactment of the American Rescue Plan. This summary represents the original House bill. The summary of the current version of the bill can be found here.
What is House Bill H.R. 1868?
This bill would exclude the $1.9 trillion American Rescue Plan (ARP) Act of 2021 from the budgetary scorecards established by the Statutory Pay-As-You-Go (PAYGO) Act of 2010 to prevent across-the-board spending cuts from being triggered by the ARP’s enactment. Among the budget cuts caused by the ARP that this bill would prevent include $36 billion from Medicare and $80 billion to $90 billion from other mandatory spending programs in fiscal year 2022.
It would also extend a moratorium on Medicare sequestration under the Budget Control Act through December 31, 2021, that is set to expire on March 31, 2021. Additionally, the bill would:
- Ensure that benefits under the Coronavirus Aid, Relief, and Economic Security (CARES) Act are treated the same way when determining income under Medicaid and the Children’s Health Insurance Program (CHIP).
- Clarify that the Dept. of Labor should use a broader definition of unemployment insurance recipients when determining eligibility for services funded by Reemployment Services and Eligibility Assessment grants.
- Correct the grandfathering deadline for Medicare rural health clinic payment changes to include clinics enrolled as of December 31, 2021, rather than December 31, 2019.
- Prevent certain hospitals from inadvertently receiving a reduction to their Medicare Disproportionate Share Hospital payments.
Argument In Favor
Congress needs to act to prevent automatic spending cuts to Medicare and other mandatory spending programs from being triggered by the recent enactment of the American Rescue Plan, as lawmakers have done every other time the PAYGO rule triggers such cuts. Failing to do so on this occasion would hurt seniors and other Americans who rely on those programs.
Democrats should have structured their nearly $2 trillion spending package in a way that avoided triggering over $100 billion in cuts to Medicare and other mandatory programs. Spending cuts triggered by the PAYGO rule are designed to protect taxpayers and future generations of Americans from an overwhelming national debt and should take effect.
Medicare, Social Security, and other mandatory spending programs; beneficiaries and providers who utilize those programs; and the budget deficit and national debt.
Cost of House Bill H.R. 1868
A CBO cost estimate of this legislation is unavailable. However, the CBO has projected that the American Rescue Plan’s enactment will trigger $36 billion in cuts to Medicare plus an additional $80-90 billion in cuts to other mandatory programs in fiscal year 2022.
In-Depth: House Budget Committee Chairman John Yarmuth (D-KY) offered the following statement on the introduction of this bill to prevent automatic budget cuts to Medicare and other mandatory programs triggered by the enactment of Democrats’ $1.9 trillion American Rescue Plan:
“The legislation I introduced today is largely technical fixes and sequestration adjustments that have historically been bipartisan and noncontroversial. When Republicans used reconciliation to pass tax cuts for the rich, Democrats voted with them to avoid sequestration and protect Medicare and other programs despite our strong opposition to the Tax Cuts and Jobs Act. This legislation should have the same outcome, but if Republicans play political games and don’t do their jobs, Medicare and the seniors that depend on it will pay the price.”
House Rules Committee Ranking Member Tom Cole (R-OK) offered the following comments about this legislation while it was prepped for floor consideration in the Rules Committee:
“The bulk of this bill is intended to address a consequence of last week’s passage into law of the majority’s partisan reconciliation spending package. As a result of the increased spending, statutory PAYGO sequestration cuts will automatically take effect unless Congress acts. While Republicans and Democrats alike agree that it is important to ensure cuts to mandatory spending like Medicare do not take place, it is disappointing that Democrats have chosen not to work with Republicans in putting together a bipartisan bill. There was an opportunity to do so here, but once again the majority has missed the mark. And let’s not get carried away with arguments that somehow Republicans got a lot of help from Democrats in dealing with this problem after the Tax Cuts and Jobs Act in 2017. The reality is, only 14 Democrats bothered to “help” on that. With all due respect, to all it may concern, none of those Democrats are either on this panel or appearing as witnesses today. So pleas for help on that front rang a bit hollow.”
The American Medical Association wrote a letter to congressional leaders in support of this bill, which read in part:
“On behalf of our physician and medical student members, the American Medical Association (AMA) is writing to express our strong support for the provisions of H.R. 1868, which would prevent across-the-board direct spending cuts that threaten the financial viability of physician practices, especially during the COVID-19 public health emergency (PHE) and beyond. This bill is vital to protect physician practices by extending the current moratorium on the two percent Medicare sequester cuts beyond the March 31, 2021 deadline. Importantly, this bill also protects physician practices by avoiding an additional Medicare statutory PAYGO cut of up to four percent that would have been triggered by the budgetary impact projected under the American Rescue Plan Act of 2021 recently signed into law.”
The National Taxpayers Union (NTU) wrote an article that encouraged lawmakers to oppose this legislation, which read in part:
“NTU urges all Representatives to vote “NO” on H.R. 1868, legislation that would waive across-the-board spending cuts required by law after passage of the American Rescue Plan Act (ARP). Congress included few spending offsets in their $1.9-trillion ARP bill, and the Statutory Pay-As-You-Go (PAYGO) Act was created to address the very kind of budget discipline utterly lacking in the recently passed COVID relief bill. Though across-the-board spending cuts are often not the best way to achieve durable spending reforms in the government, taxpayers deserve some meaningful offsets to a multitrillion-dollar federal spending binge. While some of this spending has no doubt been necessary, much of it has been wasteful.”
Of Note: The pay-as-you-go (PAYGO) rule requires that legislation affecting direct spending or revenues not increase the budget deficit beyond either a 6-year or 11-year period. Deficits that aren't offset by provisions in such legislation trigger automatic sequestration cuts to Medicare and other mandatory spending programs, including student loan origination, the Commodity Credit Corporation, and more.
The Congressional Research Service notes that across-the-board spending cuts have never been triggered despite the Statutory PAYGO Act because Congress subsequently votes to exempt specific legislation from counting against the PAYGO scorecard.
- House Budget Committee Chairman John Yarmuth (D-KY) Press Release
- House Budget Committee Chairman John Yarmuth (D-KY) Remarks (In Favor)
- House Budget Committee Democrats Section-by-Section
- Congressional Budget Office (PAYGO Effects of ARP)
- Congressional Research Service (PAYGO)
- Rep. Tom Cole (R-OK) Remarks (Opposed)
- American Medical Association (In Favor)
- National Taxpayers Union (Opposed)
- Office of Management & Budget (FY2021 PAYGO)
Summary by Eric Revell
(Photo Credit: iStock.com / mj0007)
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