Senate passes bill heading off Medicare cuts

The Senate on Thursday passed a bill postponing automatic spending cuts to Medicare providers, pushing back an April deadline to December, while also punting on a decision about additional cutbacks at year’s end.

The legislation passed in a 90-2 vote, with only Sens. Rand Paul (R-Ky.) and Pat Toomey (R-Pa.) voting against the measure.

The bill was largely prompted by the 2011 Budget Control Act, which instituted annual 2 percent reductions in Medicare payments as part of an effort to rein in spending and push both parties to compromise. Congress has voted to avert planned cuts to the popular program every year, in addition to raising spending caps.

The Medicare spending cut provision had been set to expire, but an emergency COVID-19 relief bill last year extended it for a decade to cover some of the costs in the $2.2 trillion bill known as the CARES Act.

The legislation passed by the Senate on Thursday, however, removed a fix for a separate $36 billion in cuts to Medicare scheduled for year’s end — about double the amount that’s slated for cuts on April 1. That’s because the $1.9 trillion American Rescue Plan Act passed earlier this month is set to trigger a separate pay-as-you-go requirement that forces Congress to cover the cost of new spending.

A bill passed by the House last week stripped out that pay-as-you-go requirement, effectively preventing the automatic cuts to Medicare and other mandatory spending programs, but the Senate’s removal of that workaround means $36 billion in cuts must now be dealt with before the end of the year.

If those cuts loom over the rest of the year, Republicans could tie President Biden’s popular relief bill to potential Medicare cuts, though Congress is unlikely to allow the cuts to happen.

Because the Senate changed the House legislation, the House must now vote on the Senate version before sending it to President Biden’s desk. The House, however, is out on recess until after April 1.

“While we are disappointed that the Senate has amended this sequestration legislation to remove language that would preclude cuts to Medicare, the House will move swiftly to pass this measure when Members return,” a senior Democratic House aide said.

“We are working to ensure these cuts don’t go into effect before we have time to act.”

The Biden administration may be able to internally delay the automatic planned cuts until after the House returns.

Updated at 9:58 p.m.