CBO: Trump's 2019 budget will reduce federal healthcare spending by $1.3T

A $1.3 trillion reduction in healthcare spending under President Donald Trump's 2019 budget will help shrink the federal debt and deficit over the next decade, according to a May 2018 analysis from the Congressional Budget Office and the Joint Committee on Taxation.

The CBO estimates the federal debt in 2028 will be equivalent to 86 percent of GDP under President Trump's budget — significantly lower than the CBO's baseline of 96 percent. The agency also estimates the president's budget will reduce the federal deficit by $2.9 trillion from 2019 to 2028 compared to the CBO baseline. The cumulative deficit from 2019 to 2028 is expected to reach $9.5 trillion. However, under President Trump's 2019 budget, the deficit as a percentage of GDP would peak at 4.5 percent in 2019 and decline to ultimately average 3.7 percent over the next decade, according to the analysis.

These savings come largely from a $2.1 trillion reduction in nondefense discretionary spending and a $1.3 trillion reduction in mandatory healthcare spending, according to the CBO. The healthcare spending reductions are almost entirely from modifications to the ACA. Those modifications include:

  • Repealing subsidies for health insurance bought on ACA exchanges
  • Repealing Medicaid expansion
  • Capping Medicaid spending by enrollee
  • Allotting $120 billion for state block grants in 2020

Additional changes that will affect healthcare spending include capping damages for medical liability lawsuits, a proposal to increase out-of-pocket costs for some drugs under Medicare Part D, and a proposal to reduce Medicare payments for some providers.

Baseline projections are calculated using economic projections and budget estimates from the CBO and JCT. Read more here.

 

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