Donald Trump campaigned on a promise to leave Medicare alone. But in choosing Rep. Mick Mulvaney of South Carolina to head the Office of Management and Budget, he is signaling a huge fight lies ahead over the future of the program.
Mulvaney, first elected in the Tea Party wave of 2010, helped found the House Freedom Caucus. The conservative Republican Study Committee wants to cut 17% from the federal budget. The Freedom Caucus complains that's not enough to lower future government deficits.
He'll be writing the president's first budget. At his confirmation hearing last week, when pressed about Trump's promise, Mulvaney replied, “I have to imagine the president knew what he was getting when he asked me to fill this role.”
Getting anywhere near that level of cuts without cutting defense spending—the president wants to increase it—will require huge cuts in Medicare and Medicaid. The new OMB chief could zero-out every discretionary federal program—The National Institutes of Health, Homeland Security, the Energy Department, the Environmental Protection Agency—and it wouldn't come close to 17%.
Last week's annual Congressional Budget Office projections for federal spending laid out the dimensions of the deficit problem. Healthcare costs remain the single largest driver of increasing government spending over the next decade.
For all the hostilities directed against the Affordable Care Act, its subsidies are close to a rounding error in the projections. They will consume less than 5% of the $2.2 trillion the U.S. will spend in 2027 on Medicare, Medicaid, the Children's Health Insurance Program and the individual exchanges under current law.
Medicaid isn't the problem, either. Its spending growth is projected to remain relatively tame. It will grow about 1.5 percentage points faster than the rest of the economy as the number of enrollees from the ACA expansion levels off at 17 million in 2027, up from 12 million now.