Will Trump’s Tax Bill Cut Medicare by $490 Billion? Not Exactly.

The Congressional Budget Office (CBO) projected that the Trump-backed 2025 budget reconciliation bill would trigger up to $490 billion in forced Medicare cuts (sequestration) from 2027 to 2034 if enacted without further congressional action12.

These cuts are not direct policy changes to Medicare, but would result from mandatory deficit reduction rules (Statutory Pay-As-You-Go Act of 2010) if increased deficits are not offset elsewhere12.

Historically, Congress has consistently chosen to waive these mandatory Medicare cuts, making it unlikely they would actually take effect, despite CBO projections1.

The bill also includes additional significant changes to Medicaid, the Affordable Care Act, and health savings accounts, alongside broader government spending cuts23.

While there was public outcry and alarm over the CBO report, budget and policy experts generally view the predicted Medicare cuts as unlikely to materialize unless Congress breaks its past pattern and allows sequestration to proceed1.

Sources:

1. https://www.fiercehealthcare.com/payers/will-trumps-tax-bill-cut-medicare-500b-not-exactly

2. https://www.kff.org/tracking-the-medicare-provisions-in-the-2025-budget-bill/

3. https://www.statnews.com/2025/05/22/trump-big-beautiful-bill-late-health-care-revisions-medicaid-eased-passage/