Trump's Medicare Trap

Dr. Mehmet Oz speaks with former U.S. President Donald…[+] Trump at an Arnold Palmer Regional Airport rally held by Win McNamee/Getty Images on November 5, 2022 in La Trobe, Pennsylvania. (Photo by Win McNamee/Getty Images).
The Trump Administration has sent mixed signals about Medicare’s future; but, if its advisers and GOP lawmakers are serious about cutting government spending, then surely Medicare cannot go untouched; last year it cost $850 billion and represented one out of every six dollars spent by federal authorities.

Trump faces two key difficulties with Medicare spending cuts: recipients and providers may take issue. Any effort to expedite Medicare Advantage’s transition would lead to additional federal spending while decreasing government health coverage, creating tension within his administration as well as within congressional Republicans.

Trump pledged “no cuts” to Medicare throughout his presidential campaign but hinted at program reductions due to “bad management”.

What Will Trump Cut? But What Will That Mean? Medicare payments support providers such as doctors, hospitals, home health care companies, skilled nursing facilities and drugmakers as well as private insurers like Trump may face challenges to reducing health spending without impairing patient care – an immense and unpopular undertaking despite Trump’s best intentions to address overspending without restricting patient access to health services.

Vivek Ramaswamy and Elon Musk, who together head President Trump’s Department of Government Efficiency (DOGE), appear to be targeting Medicare spending along with Social Security and Medicaid costs – without creating formal government initiatives per se, but still having significant potential influence.

Ramaswamy recently noted, “Right now, billions are flowing out the doors from programs into accounts belonging to individuals or groups who should not receive them under statute.

Cuts to Provider Payments Reducing Medicare payments could garner some support from Robert F. Kennedy Jr., Donald Trump’s nominee to run the Department of Health and Human Services; however, such actions would create intense resistance from doctors’ groups as well as from the medical lobby.

Cutting compensation to primary care doctors and geriatricians won’t alleviate the growing shortage of physicians in those practices, though trying to do this might. Trump could attempt boosting these doctors’ pay while trimming payments elsewhere – something difficult that might draw strong public outrage should he attempt cutting payments to cancer specialists!
Medicare Advantage Instead, much of the discussion next year could center around managed care plans run by private insurance providers called Medicare Advantage managed care plans (MA). More than 33 million Medicare recipients (or about half) currently enroll in MA plans.
MA can serve to save both money and improve health outcomes by fully integrating healthcare delivery, with occasional personal care options provided through managed account (MA).
But in practice, Medicare Advantage (MA) plans can often be more costly than original Medicare while their benefits to patients remain unclear. According to estimates by the nonpartisan Medicare Payment Advisory Commission that advises Congress, MA plans are reimbursed at 122% of what original Medicare spends per similar patient.
Still, influential Trump advisors seek to hasten the transition away from original Medicare to MA plans. For instance, Project 2025, the conservative manifesto for another term under Trump, proposes enrolling all senior citizens automatically into MA plans until they opt out voluntarily or deregulation occurs; giving these plans more freedom and potentially increasing profits in turn.
While Trump disavowed Project 2025 during his presidential campaign, many of its authors served him well throughout his first term and will play key roles during his second.
Russell Vought, co-author of Project 2025 and director of the Office of Management and Budget during Trump’s first term, advocated strongly to reduce Medicare spending through cutting payments to doctors and hospitals. In Trump’s second term he will resume this task again as Director.
Mehmet Oz, Donald Trump’s nominee to run the Centers for Medicare and Medicaid Services (CMS), which oversees both programs, has long advocated in favor of Medicare Advantage (MA) plans – often touting them on his TV programs and in 2020 Forbes column proposals for universal coverage with such plans funded through an increased payroll tax of 20%.
Backlash
While both costs and benefits of MA are uncertain, prior authorization requirements and limited provider access restrictions have led to considerable public discontent against private health insurance of any sort, especially managed care plans. Although social media should not be taken as an accurate reflection of public sentiment, its response following the assassination of an important United Healthcare executive might provide some clues as to political risk involved with expanding MA further.
At the same time, this decision also has significant budgetary ramifications. If Republicans want to provide incentives for more people to enroll in MA, they’d likely need to increase per capita Medicare spending on MA plans – an action likely favored by Republicans who favor privatizing government coverage over public – although doing so will increase federal spending and add further to our debt load.
Trump and congressional Republicans could fall victim to an unexpected Medicare Advantage trap if they attempt to cut Medicare costs through any means necessary.