H.R.1 Could Require Nearly $500B in Medicare Cuts, CBO Says

August 19, 2025

Medicare could see nearly $500 billion in cuts stemming from the budget reconciliation bill over the next decade, per analysis from the Congressional Budget Office (CBO).

Representative Brendan Boyle (D-PA-2) and three Democratic Senators asked the CBO to analyze potential Medicare cuts that could be required following the passage of the bill last month.

The letter from CBO Director Phillip L. Swagel, published Friday, highlights another challenge on the horizon for hospitals and patients.

Here’s what you need to know:

• Background:  The Statutory Pay-As-You-Go (PAYGO) Act of 2010 requires Congress to ensure new legislation is budget neutral. If a bill increases the deficit, PAYGO requires corresponding cuts to offset those costs—a process known as sequestration.
  • The CBO estimates that the budget reconciliation bill will increase the deficit by $2.1 trillion from 2025–2029 and by $3.4 trillion from 2025–2034.
• By the numbers:  An ordered sequestration would require Medicare cuts up to $76 billion by 2034, totaling $491 billion from 2027–2034.
• Large gap:  Even after Medicare cuts, there would still be a considerable gap between funding available for cuts ($120 billion) and the necessary reductions needed to reach budget-neutral status ($370 billion).
• Why it matters:  Hospitals are already facing severe Medicaid cuts following the passage of federal budget reconciliation legislation.
  • HAP is advocating for policies that will help to keep hospitals and services open, protect Pennsylvanians’ access to care, and ensure our communities—and commonwealth—are economically competitive.

HAP thanks Representative Boyle for his leadership on this issue. HAP is advocating Congress to ensure this Medicare sequestration cut does not take effect and is urging state and federal leaders to prioritize investments and policies that support hospitals and the patients they serve.

The CBO letter is available to review online.