While the potential for significant Medicaid cuts resulting from passage of the FY 2025 federal budget reconciliation bill – the so-called One Big Beautiful Bill – has received a great detail of attention, the possibility of Medicare cuts as well has flown mostly under the radar.

Until now.

In a letter to Democratic congressional committee leaders, the Congressional Budget Office has put a price tag on prospective Medicare cuts.

According to the CBO, the FY 2025 budget reconciliation bill could lead to more than $500 billion in federal Medicare payment cuts between next year and 2034.

The federal “PAYGO” law requires spending cuts to offset any new spending included in newly passed legislation.  With the FY reconciliation law estimated to increase the federal budget deficit $3.4 trillion through 2034 and many federal programs exempt from PAYGO cuts, the CBO estimates that Medicare sequestration cuts – reduced Medicare payments to providers, limited to four percent a year under PAYGO – could be:

  • $45 billion in FY 2026
  • $48 billion in FY 2027
  • $54 billion in FY 2028
  • $52 billion in FY 2029
  • $58 billion in FY 2030
  • $62 billion in FY 2031
  • $66 billion in FY 2032
  • $75 billion in FY 2033
  • $76 billion in FY 2034

That amounts to more than $500 billion in Medicare payment cuts to providers through FY 2034.

Providers have already suffered Medicare sequestration cuts since 2013, as mandated by the Budget Control Act of 2011.  Those cuts, originally scheduled to end after FY 2021, have already been extended several times and continue today.

Learn more from the Fierce Healthcare article “CBO:  Reconciliation package could lead to $500B in Medicare cuts over next decade” and find the CBO letter here.