Health and Science

AARP opposes Senate tax bill, calls Medicare cuts and Obamacare mandate repeal 'troubling'

Key Points
  • AARP, the large lobbying group for older Americans, opposes the Republican-sponsored Senate tax bill.
  • AARP warns the bill could lead to sharp cuts to Medicare, the federal health insurance program for seniors.
  • The group also is concerned the bill will lead to tax increases on many older Americans, and higher Obamacare insurance premiums.
Senate Majority Leader Mitch McConnell, a Republican from Kentucky, center, speaks as Senator Orrin Hatch, a Republican from Utah, left, and Senate Majority Whip John Cornyn, a Republican from Texas, listen during a news conference after a weekly GOP luncheon meeting at the U.S.
Aaron P. Bernstein | Reuters

AARP, the lobbying group for almost 38 million older Americans, on Thursday blasted the Senate's proposed tax bill for threatening cuts to Medicare, repealing a key Obamacare rule and hiking taxes on many seniors.

"We urge the Senate to vote NO on the proposed tax legislation that will cut billions of dollars from Medicare and increase taxes for millions of older Americans," AARP said in a tweet pinned to the top of its Twitter page.

AARP's position, laid out in a letter to senators, came as the Senate prepared for a series of preliminary votes on the controversial Republican-sponsored legislation, which could end with a final vote on the bill by late Thursday or Friday.

No Democrats are expected to vote for the bill.

The group's CEO, Jo Ann Jenkins, wrote that AARP is "prepared to support tax legislation that makes the tax code more equitable and efficient, promotes growth, and produces sufficient revenue to pay for critical national programs, including Medicare and Medicaid."

"However, the Senate Tax Cuts and Jobs Act, in its current form, does not meet these criteria," Jenkins wrote.

Her letter said the "most troubling" aspect of the GOP's tax bill was the fact that it would add $1.5 trillion to the federal deficit over the next decade," hampering the nation's "ability to fund critical priorities."

That big boost in the deficit will "inevitably lead to calls for greater spending cuts, which are likely to include dramatic cuts to Medicare, Medicaid and other important programs serving older Americans," the letter warned.

AARP cited the Congressional Budget Office's finding that the bill would trigger automatic funding cuts of $136 billion next year, $25 billion of which would be from Medicare, unless Congress separately took action to prevent that.

Medicare is the massive federally run health coverage program that covers 59 million Americans, most of them age 65 and older.

Medicare and other programs would risk automatic funding reductions under the PAYGO law, which require offsets from increases in projected budget deficits resulting from new legislation.

"Such sweeping cuts would be detrimental to an already vulnerable population," the letter said.


AARP also said the Senate bill "may not deliver tax cuts that older Americans anticipate."

The group noted that the Joint Committee on Taxation has projected that starting in 2021, people who earn between $10,000 and $30,000 annually will see their taxes rise under the Senate bill. And by 2027, filers with incomes below $75,000 will see taxes rise by $27.4 billion if the bill becomes law.

AARP's own estimates found the bill would hike taxes on 1.2 million people age 65 and older in 2019, and that the number of people in that age group seeing higher taxes would be 5.2 million by 2027.

"In addition, this bill will provide no tax relief for 5.1 million older taxpayers in 2019 and 5.6 million taxpayers by 2027," the letter said.

AARP said it also opposes the bill's repeal of Obamacare's individual mandate, which requires most people to have health insurance of some kind or pay a tax penalty.

CBO has estimated repeal would lead to 13 million more Americans lacking health insurance by 2027, and that individual health plan premiums would be 10 percent higher each year than they otherwise would have been.

AARP said that translates into 64-year-old Obamacare customers facing premiums almost $1,500 higher annually.

Sen. Susan Collins, R-Maine, told reporters on Thursday that Senate Majority Leader Mitch McConnell, R-Ky., gave her "a personal commitment" that Congress would act to prevent the automatic big cuts to Medicare and other programs triggered by the tax bill.

"I met with Senator McConnell just yesterday, and he has assured me that that will not be allowed to happen," Collins said, according to Talking Points Memo.

"If it were going to occur, I would not even be considering voting for this [tax] bill."

However, McConnell does not have the power to guarantee that promise. While passing the tax bill will require just 50 Republicans to vote for it, passing a waiver of PAYGO restrictions would require at least eight Democrats to join the 52 GOP senators in voting for the measure.

And it is far from clear that any Democrats in the Senate will choose to do so.