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CBO estimates automatic Medicare cuts would save $123 billion

September 14, 2011
by root
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Cutting Medicare annually for the next decade by 2 percent each year would save the federal government $123 billion, according to a Congressional Budget Office report released this week.

As part of the Budget Control Act enacted last month to avert a potential government default, a 12-member congressional “super committee” is tasked with finding $1.5 trillion to cut from the federal deficit over the next 10 years. It has until November 23 to present its recommendations to Congress, which must vote on the committee’s proposal by December 23.

If the recommendations do not pass, automatic across-the-board cuts to government programs will be triggered, including a cut to Medicare not to exceed more than 2 percent of the program’s annual cost.

The CBO estimates that Medicare reductions of 2 percent each year between 2013 and 2021 would produce savings of around $123 billion. If the 2 percent cap on Medicare were not present, the program would have accounted for $256 billion in total savings, according to the CBO.

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