Proposed Medicare Cut Dies on House Floor

June 12, 2015

A proposal to take a tiny slice out of Medicare payment rates died a complicated death — at least for now — in the House of Representatives today, much to the relief of organized medicine.

The rate reduction — 0.25% from October 2024 through March 2025 — was part of the Trade Adjustment Assistance Reauthorization Act (TAA), designed to help American workers who might lose their jobs because of international trade bills passed by Congress. The TAA was one half of a bill called the Trade Act of 2015. The other half would give the Obama administration fast-track authority to negotiate international deals such as the Trans-Pacific Partnership, now under discussion.

The Trade Act of 2015 easily passed in the Republican-controlled Senate last month. However, it encountered stronger opposition in the House from Republicans unwilling to give President Barack Obama more executive authority and Democrats standing up for labor unions, which feel threatened by the legislation.

Defying both the president and GOP leadership, the House rejected the TAA portion of the bill today in a 126-to-302 vote while passing the trade authority portion 219 to 211. House Republican leaders said they would schedule another vote for the TAA to give the White House more time to rally Democratic support, according to The Hill. Democrat nays had outnumbered yeas 144 to 40.

Lawmakers included the Medicare pay cut in the TAA because it would have offset $700 million of its cost. The reduction represented a short-term extension — and shrinkage — of an across-the-board budget cut called sequestration that's in effect through fiscal 2024. The annual sequestration cut for Medicare stands at 2%.

Even if the House were to pass the TAA the second time around, the 0.25% Medicare pay cut probably would never see the light of day. In response to critics who said that Medicare funds should be left alone, the House approved yet another trade bill yesterday — this one focused on Africa — that would have nullified the rate reduction in the TAA and substituted another "pay-for." Senate Majority Leader Mitch McConnell (R-KY) indicated that his chamber will give this measure speedy consideration.

Medical societies such as the American Medical Association and the American Academy of Family Physicians had objected to the proposed Medicare cut. They said that, although it was small, it would set a precedent for raiding Medicare whenever lawmakers needed to balance the budget.

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