Washington D.C.’s Congressional Budget Office (CBO) recently reported that under President Donald Trump’s One Big Beautiful Bill Act—or Public Law 119-21—several organizations, including Medicare, could see major financial cuts over the next 10 years due to the 2010 Statutory Pay-As-You-Go Act. The report, which was requested by several different Democratic leaders, also claims that because of these cuts $370 billion is expected “to be sequestered [or separated] from the federal budget’s remaining direct spending accounts” during the 2026 federal year. We have more on the report, including what exactly the Statutory Pay‑As‑You‑Go Act is and how it could affect you, below.
What the Congress report says about Medicare cuts
On Friday, August 15, Phillip L. Swagel, the director of the CBO, released a letter detailing how President Trump’s recently imposed One Big Beautiful Bill could restrict the amount of money Medicare receives if Congress doesn’t try to lessen the effects of Former President Barack Obama’s Statutory Pay-As-You-Go Act (S-PAYGO).
“Under S-PAYGO, reductions in Medicare spending are limited to 4 percent—or an estimated $45 billion for fiscal year 2026,” Swagel reported. “That would leave $370 billion to be sequestered from the federal budget’s remaining direct spending accounts in that year.”
He also shared that after the 2026 fiscal year ends, “The 4 percent maximum reduction in Medicare spending would continue to apply to sequestration orders for years. If OMB [Office of Management and Budget] ordered a sequestration of $415 billion for each year through 2029 and $339 billion each year from 2030 through 2034, the ordered reductions in Medicare spending would increase to $76 billion in 2034 and would total $491 billion over the 2027–2034 period.”
This news does come after Trump promised Americans that he wouldn’t cut Medicaid, but because of the $3.4 trillion expected to be added to the federal deficit, as detailed by the One Big Beautiful Bill, that has since changed due to the Statutory Pay-As-You-Go Act.
Understanding the Statutory Pay-As-You-Go Act (S-PAYGO)
The Statutory Pay-As-You-Go Act was signed into law by Obama back in 2010 with the hopes of achieving “budget neutrality” by making it so “new legislation changing taxes, fees or mandatory expenditures, taken together, must not increase projected deficits.”
For Medicare and the One Big Beautiful Bill specifically, this act means that the United States health insurance organization could see budget cuts because other government-funded groups are seeing them as well.
“Republicans knew their tax breaks for billionaires would force over half a trillion dollars in Medicare cuts — and they did it anyway,” Congressman Brendan Boyle of Pennsylvania, who was one of the lawmakers who requested the CBO report, said in a statement per the L.A. Times. “American families simply cannot afford Donald Trump’s attacks on Medicare, Medicaid and Obamacare.”
It’s important to note that in the past, Congress has voted to lessen the effects of the S-PAYGO Act when it comes to Medicaid; however, if it plans to do it again, it will take a lot of bipartisan cooperation from both the House of Representatives and the Senate.
What it means for families and caregivers
If Congress decides not to protect Medicare, its users could see the effects on the number of medical services they have access to and the associated bills for services. It could also put rural hospitals and community centers at risk, since they are frequently visited by people on Medicare.
“It’ll force states to make decisions about its Medicaid program and what to fund because of reduced funding. Usually, historically, what is first on the chopping block are those home and community-based services. So it’ll be harder to access those essential home and community-based services,” Jason Resendez, the president and CEO of the National Alliance for Caregiving told PBS of the cuts earlier this year.
“[There] will [also] be a loss of health care coverage,” he continued. ‘The Congressional Budget Office estimates that 14 million folks will lose health care coverage. We know that over four million Americans are family caregivers who rely on Medicaid for their own health care coverage. So that’s at stake.”
