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Trump Administration Could Violate Law by Not Cutting Medicare

Jan. 22, 2019, 10:30 AM

The Trump administration could technically violate the law if it fails to make required funding cuts to Medicare this week, two former budget officials said.

But, they added, there may not be standing for anyone to sue over it.

A senior Office of Management and Budget official told Bloomberg Law that the writing of the reports that trigger the cuts is on hold during the partial lapse in appropriations that began Dec. 22.

The pay-as-you-go law, part of a law (Public Law 111-139) to raise the federal debt ceiling in 2010, requires the administration to track increases in the projected deficit due to newly enacted laws on a running scorecard with five- and 10-year time horizons. If there’s a balance on either of those timelines at the end of a congressional session, the administration is forced to issue a “sequestration order,” which forces across-the-board cuts to federal programs not specifically exempted.

For the last session of the 115th Congress that just ended, the scorecard showed a balance that would need to be offset with sequestration.

Typically, Congress wipes out the scorecard at the end of each year, but no measure to do so has yet passed through both chambers. That means sequestration is technically in effect. It defines how much is cut from various programs and departments and is supposed to happen not later than 14 days after Congress adjourns, excluding weekends and holidays.

That date, according to former budget staffers from both Congress and the administration, is Jan. 24.

Medicare would bear the brunt of the cuts because of the large size of the program. An OMB estimate from December found that $482 million would be cut. That’s a small fraction of the roughly $700 billion Medicare program, but it would be targeted at administrative tasks, which could slow payments or cause inefficiency.


Without the report, though, there may be flexibility for the OMB in enacting the cuts, a former House Budget Committee staffer said. The agency can justify its failure to abide by the law by saying there isn’t a sequestration report, the mechanism that formally triggers the cuts.

The OMB could also have some limited discretion in not making the cuts because Congress tried to take action to stop them but didn’t follow through, the former staffer added. A measure was tacked onto the stopgap funding bill in
December that Congress considered, but didn’t pass. That provision would have delayed the sequestration order until 15 days after the stopgap measure expired.

Funding legislation that the House passed in January also included a provision that would have eliminated those cuts, but it’s stalled in the Senate. Senate Majority Leader Mitch McConnell (R-Ky.) has refused to bring those bills to the floor until he gets assurances from President Donald Trump that he’ll sign it.

Reasonable to Wait

Another former budget staffer who worked both in Congress and the administration said that if the OMB staffers who would write the scorecard aren’t there because of the shutdown, it’s reasonable to say the Medicare cuts can’t happen until the shutdown ends.

It would be expensive and cumbersome for agencies and the OMB to administer these cuts for a short period of time, that person said. If the OMB knows with reasonable certainty that the cuts will be turned off by language included in later funding bills, then it isn’t practical to start them now.

Doctors and hospitals that receive Medicare payments aren’t being harmed by delaying the cuts, and neither are patients. That makes it hard to establish a cause of action to sue the OMB, the same person said.

Biggest Cuts to Medicare

Medicare is one of the few mandatory government programs that would be cut under the law. Any cuts are intended only for administering the program—paying doctors or processing claims. But a cut could lead to an unintentional, small reduction in payments to doctors and hospitals, the first budget staffer said.

The Affordable Care Act’s “risk adjustment program payments” account is also subject to cuts. It redistributes funds from ACA plans with lower-risk enrollees to plans with higher-risk and costlier patients.

Subsidies from the recently enacted farm bill, which the CBO estimated would cost $867 billion over the next decade, would also add to the amount that would need to be cut.

Senate Finance Committee Chairman Chuck Grassley (R-Iowa) told reporters he expects the Department of Health and Human Services will figure out a way to prevent Medicare from being affected by the sequestration, although he did not provide more specifics.

Rep. Tom Cole (R-Okla.), the ranking Republican on the House Appropriations Subcommittee for Health and Human Services, said in an interview there hasn’t been any talk about the impending sequestration deadline. Cole added that he hopes Congress will do something about it: “I don’t think the sequester’s a good idea at all.”

—With assistance from Jack Fitzpatrick and Alex Ruoff

To contact the reporter on this story: Shira Stein in Washington at

To contact the editors responsible for this story: Fawn Johnson at; Brent Bierman at