If Medicare Cuts in Baucus Health Plan Occur, It Would Reduce Deficit Over 20 Years

October 15, 2009

A new analysis by us finds that over a 20-year period, the health care bill written by Sen. Baucus and passed Tuesday by the Senate Finance Committee includes enough spending cuts in Medicare and other current government health programs to reduce the budget deficit over the long term, even without a proposed excise tax on "Cadillac" health plans.

CBO projects that cuts in Medicare and other health programs would save $404 billion between fiscal year 2010 and 2019. Assuming the savings from Medicare cuts continue growing at the same rate beyond 2019, savings could reach a total of $1.8 trillion over the next 10-year period, 2020-2029, for a total deficit reduction of up to $988 billion over 20 years. If Congress were considering a 20-year budget window instead of ten years, Chairman Baucus's proposed excise tax on Cadillac health plans would not be necessary to pay for the plan.

Click here for the full press release. View Tax Foundation Fiscal Fact No. 195, "If Medicare Cuts Proposed in Baucus Plan Are to Be Believed, Long-Term Deficit Outlook Is Favorable."

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