Under a 2010 “pay-as-you-go” law, also known as PAYGO, the jump in the deficit would trigger automatic spending cuts in several programs, including Medicare. According to the nonpartisan Congressional Budget Office (CBO), PAYGO requires total cuts of $136 billion in 2018, including $25 billion to Medicare alone.
“Such sweeping cuts would be detrimental to an already vulnerable population,” said AARP Chief Executive Officer Jo Ann Jenkins in a letter to Congress this week. AARP is urging Congress to waive required cuts to Medicare under PAYGO, as seniors could lose access to their doctors and local hospital services.
The legislation preserves AARP-supported provisions such as the extra standard deduction for those age 65 and older and the medical expense deduction, which allows filers to deduct medical expenses exceeding 7.5 percent of their income in 2017 and 2018 (returning to its current 10 percent threshold in 2019).
Millions of older Americans would also face higher health care premium costs under the legislation. Beginning in 2019, it repeals the Affordable Care Act provision requiring most Americans to have health insurance. The CBO projects that would lead to 13 million more people without insurance by 2027. With fewer individuals in the health insurance pool, premiums in the individual marketplace would jump 10 percent in most years, according to the CBO. Those ages 50 to 64 would be especially hard hit, with premiums rising up to $1,500 in 2019 alone, according to an AARP Public Policy Institute analysis.
Another provision of the tax bill adopts a “chained” consumer price index (CPI) in the way the government gauges inflation for purposes of the tax code, which measures it at a slower rate than current methodology. While Social Security benefits aren’t addressed under the plan, the legislation could lead Congress to base future Social Security cost of living adjustments (COLAs) on the chained CPI, meaning annual increases would likely be smaller. (Such a change would require congressional legislation.)
Read the full article on the AARP website.