Dec 20, 2017

Tax cuts could make it harder to change Medicare and Medicaid

After their victory with the tax bill, Republican leaders in the House have said they will go after entitlement and "welfare" spending, with both Medicare and Medicaid potentially on the table.

What to watch: Republicans aren't making any connection to the $1.4 trillion the tax cuts will add to the deficit, but Democrats are sure to make the connection for them — that any reductions in Medicare and Medicaid spending would be used to pay for the tax cuts.

Expand chart
Reproduced from the Kaiser Family Foundation Health Tracking Poll

The impact: Generally, Republicans are for a smaller federal role in health and less federal spending. But our recent polling suggests that if the new push to rein in federal health spending is viewed as a way to pay for tax cuts, it won't just be Democrats and independents who oppose it. Republicans will, too.

The details: As the chart shows, more than 70 percent of Republicans and independents oppose reducing federal spending on Medicare to pay for tax cuts, and 72 percent of independents and 61 percent of Republicans oppose reducing federal spending on Medicaid to pay for the tax cuts.

And that's before specific proposals are put on the table to reduce spending which are sure to be dissected by the media and targeted by critics, such as premium support plans for Medicare or a per capita cap or block grant for Medicaid.

The big picture: Republican advocates of what they call entitlement reform have long been concerned about the growing share of the federal budget consumed by Medicare and Medicaid, and may believe they can capitalize on the momentum from passing tax reform and take on entitlements and federal health programs next. But cutting Medicaid and Medicare spending growth has always been a high hill to climb, and it's not like the GOP's past efforts have gone over well outside the Republican base.

The bottom line: The polling suggests that if the public comes to view the next round of entitlement "reform" as a way to pay for the tax cuts, that hill will get steeper and even the Republican base may not support the effort.

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