Hospitals and health systems across the country are telling some Medicare and Medicaid patients that they can’t schedule telehealth appointments due to the federal government’s shutdown, now heading into its second week. That’s because Medicare reimbursement for telehealth expired on September 30, leaving health systems with the choice of pausing such visits or keeping them going in hopes of retroactive reimbursement after the shutdown ends.
Reimbursement for the Hospital at Home program, which allows patients to receive care without being admitted to a hospital, also lapsed with the shutdown. That led to providers scrambling to discharge patients under the program or admit them to a hospital. Mayo Clinic, for example, had to move around 30 patients from their homes in Arizona, Florida and Wisconsin to its facilities.
At issue in the government shutdown is healthcare, specifically tax credits for middle- and lower-income Americans that enable them to afford health insurance on the federal exchanges set up by the Affordable Care Act. Democrats want to extend those tax credits, which are set to expire at the end of the year, while Republicans want to reopen the government first and then negotiate about the tax credits in a final budget.
The impasse has prevented the Senate from overcoming a filibuster, despite a Republican majority. Around 24 million Americans get their health insurance through the ACA, and the loss of tax credits will cause their premiums to rise an average of 75%–and as high as 90% in rural areas–and likely cause at least 4 million people to lose coverage entirely.
The government’s closure has reverberated through its operations in healthcare. The Department of Health and Human Services has furloughed some 41% of its staff, making it harder to run oversight operations. CDC’s lack of staff will hinder surveillance of public health threats. And FDA won’t accept any new drug applications until funding is restored.
When the government might reopen remains unclear. Most shutdowns are relatively brief, but the longest one, which lasted 35 days, came during Donald Trump’s first term. Senate majority leader John Thune, R-S.D., and Speaker of the House Mike Johnson, R-La., have both said they won’t negotiate with Democrats, and the House won’t meet again until October 14.Bettors on Polymarket currently expect it to last until at least October 15. Pressure on Congress will increase after that date because there won’t be funds available to pay active military members.
As the Senate eyes alternative or additional cost-saving provisions to those included in the House-passed reconciliation bill, some Republicans are considering reforms to Medicare. That is a promising development because overhauling Medicare Advantage could lower federal costs in ways that even many Democrats have advocated (although it is certain the overall bill will receive no Democratic support due to myriad other provisions).
Medicare Advantage, or MA, is Medicare’s private insurance option.
Beneficiaries can get their coverage through these plans in lieu of the traditional, government-managed program. Medicare pays MA sponsors a per-person monthly fee, which they use in turn to pay providers for the services their enrollees need. Enrollment in MA surged after Congress amended the payment formula in 2003. According to the 2024 Medicare trustees report, in the last decade alone, MA enrollment increased from 16 million people in 2014, or 30 percent of total enrollment, to 34 million people in 2024, or one out of every two program beneficiaries.
MA is growing because the plans usually offer more generous coverage than the traditional program without charging substantially higher premiums. In fact, many MA enrollees get free prescription drug coverage and much lower cost-sharing for hospital and physician services. They also sometimes get limited dental and vision care protection. MA enrollees usually do not pay for Medigap insurance, which can be expensive.
MA reforms should incentivize efficiency and high-quality care without needlessly overpaying the plans. The Senate should pull together a reform plan that gradually restructures the MA market so that it operates more efficiently and with lower costs for taxpayers. The following general principles should guide what is developed.
Competitive Bidding.
MA plans submit bids under the current formula, but Medicare’s payment is a combination of those bids and benchmarks that are set administratively. The Senate should amend the formula to rely strictly on bidding, with a transition to prevent abrupt changes in what is offered to enrollees. The payment could be based on the average bid weighted by enrollment. The new system could be phased in over five years by gradually increasing its influence on the formula (20 percent in year one, going up to 100 percent in year five, for instance).
Standardized Benefits.
Competitive bidding should be combined with standardization of the coverage MA plans are offering. Without such rules, it is difficult for individual beneficiaries to compare their options on an apples-to-apples basis. The Senate should require CMS to develop a standard MA offering that is comparable in value to the traditional benefit (it may be necessary to add catastrophic protection to the traditional program to ensure the competition is fair). MA plans would then submit their bids based on this standardized offering, and all Medicare beneficiaries would have the option of opting for such coverage. Further, the Senate should direct CMS to develop a small number of standardized supplemental benefits that could be purchased by beneficiaries with additional premium payments. These offerings could focus on the most popular add-ons in the MA market.
Risk Adjustment.
There are many criticisms of the current system of providing payment adjustments to MA plans based on the varied health risks of their enrollees. The current system has several flaws that might be addressed, but the basic problem is too much reliance on the data submitted by the plans which can lead directly to higher revenue. That design of course invites abuse. The Senate should put into law a requirement that CMA is to determine a final annual risk score for the plans based on submitted information, and any needed refinements by the government to ensure the fairest possible comparisons across plans.
ACOs as MA Plans.
The Medicare program would benefit from robust provider-driven MA plans that can effectively compete with the insurer-led MA offerings now dominating the market. CMS should work with interested Accountable Care Organizations (ACOs) on building out functions they would need to become viable alternatives in the MA insurance market.
The Congressional Budget Office (CBO) estimates the House bill will increase deficits by $3.0 trillion over ten years when net interest is in the calculation. Medicare reforms could help the Senate produce a more fiscally responsible bill. If an MA bidding system led to a reduction in payments comparable to a 10 percent cut (which is realistic based on MedPAC’s research), the savings over a decade would be close to $500 billion.
Bipartisan voices are calling for reforms to end waste and gaming in MA. Solutions are on the table — if policymakers choose to act.
In the first half of 2025, we have heard many leaders share their concerns with the current results of the Medicare Advantage (MA) program and the need for changes. Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, spoke multiple times about issues with upcoding in MA during his confirmation hearing. Lawmakers on both sides of the aisle have also been vocal about the need for reform in MA, including the co-chairs of the GOP Doctors Caucus, Reps. Greg Murphy and John Joyce, and Democratic Rep. Alexandria Ocasio-Cortez. Most recently, CMS Deputy Administrator Stephanie Carlton spoke about these issues at the recent annual conference of the Association of Health Care Journalists in Los Angeles.
Carlton noted that the original intent of MA was “better outcomes for patients” and “better value for taxpayers,” but that the current program is not achieving those goals.
She specifically mentioned research from the Medicare Payment Advisory Commission and other groups showing that “MA is more expensive than fee-for-service”. Fee-for-service, in which health care providers are paid for each service provided to patients, is used in traditional Medicare. Carlton went on to describe the need to “course correct” the program. We wholeheartedly agree.
Luckily, there are solutions to these issues within MA that both the executive branch and Congress can address. CMS has the authority to address upcoding, where insurers add more codes to a patient’s record to increase their reimbursement from the government, in multiple ways.
First, CMS should continue the changes to the risk-scoring system initiated under the Biden Administration, which removes codes that CMS determines are abused within the Hierarchical Condition Category system. Researchers have found that this method could largely eliminate current overpayments going to insurers, which total tens of billions of dollars a year. CMS also has the authority to increase the coding intensity adjustment, which is the factor by which risk scores are adjusted by the agency to account for greater coding intensity by MA insurers.
Carlton also shared her commitment to plans recently announced by CMS to substantially increase both the pace and the scale of Risk Adjustment Data Validation (“RADV”) audits of MA plans. CMS implemented changes in 2023 to increase the scope of audits and recoupment of overpayments from insurers beginning with 2018 audits, but progress has been painstakingly slow, with CMS originally slated to begin issuing 2018 audit findings in 2026. The intensified efforts will require needed investments in technology and people.
Another issue diluting the value of MA to taxpayers is the excessive use of supplemental benefits of questionable utility, including things like gym memberships, which serve mainly as marketing tools for insurers. The money spent on such benefits has more than doubled over the past five years.
Congress can also take action to reform MA in meaningful ways. First, Congress should work with the HHS Secretary and CMS Administrator and provide oversight and accountability to ensure necessary changes to the risk-adjustment methods and processes, including audits and recovery of overpayments. It is also important to ensure that insurers and their downstream vendors are compliant with applicable CMS rules and regulations, both in terms of clinical and documentation requirements and the payments they receive for these activities.
Congress could also pass legislation to develop a new risk adjustment system that prevents gaming by insurance companies.
This system could base risk scoring on data from patient encounters with their medical providers rather than just diagnostic codes. This would ensure that patients are treated for any diagnosis used in their risk scores, to ensure that extra diagnoses are not added that patients are not being treated for. Additional scrutiny of how MA rebates are being used and a re-evaluation of permissible benefits are also needed. Further, Congress could implement a cap on out-of-pocket (OOP) expenses for traditional Medicare beneficiaries. Currently, only MA plans offer a cap on OOP expenses, which reduces competition between MA plans and traditional Medicare. Adding an OOP cap to TM would level the playing field between MA and TM, likely resulting in MA plans improving their coverage and benefits, and focusing less on upcoding and withholding care. This would improve the quality of care and competition within the Medicare and MA programs.
Insurance companies running MA plans have created a system in which taxpayers and patients are not getting the value they pay for.
It is promising that leaders in the current administration and on both sides of the political aisle in Congress are expressing a desire to change this system for the better. There are many solutions to the issues within MA that can be enacted quickly and effectively to improve care and value for seniors and people with disabilities who are enrolled in those plans.
The GOP’s reconciliation bill, the “One Big Beautiful Bill Act” (yes, it’s actually called that), is a cruel exercise in slashing benefits for the poor, the elderly, and the sick to free up fiscal space for yet more tax cuts for the rich. Compounding the harm, these benefit cuts are nowhere near enough to pay for the bill’s tax cuts for the wealthy.
Central to this effort are massive cuts to Medicaid and the Affordable Care Act (ACA) marketplaces that, as I argued in my recent paper, will exacerbate our ongoing medical debt crisis.
The GOP reconciliation package that the Senate and House recently agreed to instructed the House Energy and Commerce Committee, which oversees spending on health-care programs including Medicaid and the Children’s Health Insurance Program (CHIP), to identify up to $880 billion in savings over the next 10 years.
Under the rules of the budget reconciliation process, Republicans need to offset any tax cuts they wish to make permanent with an equal dollar value in cuts to spending so as to remain deficit neutral. Trillions of dollars in tax cuts for the wealthier therefore necessitate trillions of dollars in cuts to spending that fall mostly on the social safety net.
Although they did not quite reach that target, the committee still returned a proposed package of deep cuts and changes to Medicaid and to the ACA marketplaces that would reduce federal medical spending by at least $715 billion over 10 years, with about $625 billion in reduced Medicaid spending.1
After public backlash, Republicans seem to have backed off some of their most radical plans for Medicaid (at least for now—one of the challenges of taking health care from people is that it’s terrible politics, so the precise details of the cuts are likely to remain a moving target until the bill passes).
But all options they are close to settling on would still do horrific damage to the well-being of working-class families.
This includes requiring all Medicaid recipients above the federal poverty line to “cost share” by paying (larger) premiums and copayments,2 cutting federal matching to states that provide public health insurance coverage to undocumented and perhaps documented immigrants (on their own dime), and imposing harsh work requirements on “able-bodied adults without dependent children.” This latter provision will cut federal Medicaid spending by roughly $300 billion over 10 years even though the vast majority (92 percent) of nondisabled, non-elderly adult Medicaid recipients are already working, studying full time, or serving as caregivers. This is because work requirements create burdensome reporting requirements to demonstrate compliance that will cause Medicaid recipients who are already employed to lose their insurance as well—blaming the victim for losing their health care, in essence.
The Congressional Budget Office estimates that the reconciliation bill would decrease Medicaid enrollment by 10.3 million in 2034(the end of the reconciliation bill budget window).
According to this same analysis, most of these individuals would not obtain other insurance (e.g., through an employer) and would thus become uninsured.
When combined with the bill’s changes to the ACA marketplace and the expiration of the enhanced premium tax credits—a wildly successful policy that was introduced as part of the American Rescue Plan Act (ARPA) and one that Republicans have shown no inclination to extend—this would result in an additional 13.7 million uninsured individuals in 2034, a 30 percent increase, according to KFF estimates.
Republicans seem hell-bent on undoing the remarkable progress made in the 15 years since the passage of the ACA in reducing the non-elderly uninsured rate from 17.8 percent in 2010 to roughly 9.5 percent today (plus ça change).
But we’ve seen less focus on how this will affect the problem of underinsurance.
Republicans’ Medicaid cost-sharing requirements, the changes they have proposed to the ACA marketplaces, and their determination to let the ARPA premium tax credit enhancements expire will also worsen the problem of underinsurance, an area where we have made considerably less progress.
Taken together, this will worsen the ongoing medical crisis because medical debt is driven by uninsurance and underinsurance.
Medical debt is, unlike in most other countries, and despite the successes of the ACA, a major problem in the United States. KFF found that 20 million adults (almost 1 in 12) owed “significant” medical debt to a health-care provider.3 This number rises when we consider a more expansive definition of medical debt including credit card balances and bank loans used to pay medical providers. Under that definition, an estimated 41 percent of American adults (~107 million people) carried some form of medical debt and 24 percent of American adults (~62 million people) had medical debt that was past due or that they were unable to pay. Among those with medical debt using this more expansive definition, nearly half (44 percent) reported owing at least $2,500, and about one in eight (12 percent) said they owe $10,000 or more. The poor, the sick, the middle-aged, and Black and Hispanic individuals disproportionately bear the brunt of this problem.
The crisis of medical debt and underinsurance is so widely recognized by Americans that a state attorney general candidate can go viral just by talking about the reality of a GoFundMe health-care system millions of Americans face.
The consequences of all this debt are dire—and reflect a health-care system that heals people physically but leaves many permanently scared financially. In 2022, medical debt (using the narrow definition) made up an estimated 58 percent of all debts that had gone to collections, and 62 percent of bankruptcies were attributed in part to medical debt. Medical debt also damages credit scores, leading to a wide variety of negative impacts on financial well-being that can follow families for years.
A poor credit score means that families may be unable to obtain a mortgage or a car loan or may end up paying much higher interest rates.
Credit scores are commonly used by landlords to screen tenants and by employers as part of a background check during the hiring process. Even for those who manage to maintain their credit after taking on medical debt, there are real costs. For those with limited income and assets, debt service may displace spending on food, clothing, and other essentials, leading to material hardship. It can make savings impossible and limit economic mobility.
Medical debt is a problem largely generated by poor policy decisions including, as I argue in my paper, prioritizing and incentivizing health insurance coverage through the private market rather than through Medicaid and Medicare, which offer comprehensive coverage more cheaply. The problem would rapidly disappear if we could extend comprehensive health insurance coverage to the millions of uninsured and underinsured people who live with the constant risk that a sudden medical event could ruin their finances and constrain their futures.
But rather than fix the problem, the GOP plans to throw millions off Medicaid and saddle those who remain with higher costs and more limited coverage. The results of these poor policy decisions will be more sickness, more debt, and higher costs for everyone in exchange for on-paper “savings.” And all this in service of tax cuts for the wealthy they haven’t even bothered to justify.
If you ask Eleanor
“If the old people cannot afford their medical care under their own Social Security allowances, then the burden is going to fall on their children who are in their earning years. This will mean that just at the time when these children who may be having young children of their own and needing medical care, a young couple will also have to consider shouldering the burden for parents as well. This is not fair, and leads to both the children and the older people not getting full coverage, since both will try to shave a little off their needs in order not to make the burden impossible to carry.”
Most Americans believe their healthcare is private, and the majority prefers it that way. Gallup polling shows more Americans favor a system based on private insurance rather than government-run healthcare.
But here’s a surprising reality: 91% of Americans receive government-subsidized healthcare.
Unless you’re among the uninsured or the few who receive no subsidies, government dollars are helping pay your medical bills — whether your insurance comes from an employer, a privately managed care organization or the online marketplace.
Now, as lawmakers face mounting budget pressures, those subsidies (and your coverage) could be at risk. If the government scales back its healthcare spending, your medical costs could skyrocket.
Here’s a closer look at the five ways the U.S. government funds healthcare. If you have health insurance, you’re almost certainly benefiting from one of them:
Medicare, the government-run healthcare program for those 65 and older, covers 67 million Americans at a cost of more than $1 trillion annually. Approximately half of enrollees are covered through the traditional fee-for-service plan and the other half in privately managed Medicare Advantage plans.
Medicaid and CHIP provide health coverage for around 80 million low-income and disabled Americans, including tens of millions of children. Even though 41 states have turned over their Medicaid programs over to privately managed care organizations, the cost remains public. Total Medicaid spending is $900 billion annually — the federal government pays 70% with states footing the rest.
The online healthcare marketplace is for Americans whose employer doesn’t provide medical coverage or who are self-employed. This Affordable Care Act program offers federal subsidies to 92% of its 23 million enrollees, which help lower the cost of premiums and, for many, subsidize their out-of-pocket expenses. The Congressional Budget Office projects that a permanent extension of these subsidies, which are scheduled to end this year, would cost $383 billion over the next 10 years.
Veterans and military families also benefit from government healthcare through TRICARE and VA Care, programs covering roughly 16 million individuals at a combined cost of $148 billion for the federal government annually.
Employer-sponsored health insurance comes with a significant, yet often overlooked, government subsidy. For nearly 165 million American workers and their families, U.S. companies pay the majority of their health insurance premiums. However, those dollars are excluded from employees’ taxable income. This tax break, which originated during World War II and was formally codified in the 1950s, subsidizes workers at an annual government cost of approximately $300 billion. For a typical family of four, this translates into approximately $8,000 per year of added take-home pay.
With 91% of Americans receiving some form of government healthcare assistance, the idea that U.S. healthcare is predominantly “private” is an illusion.
Now, as the new administration searches for ways to rein in the growing federal deficit, all five of these programs (collectively funding healthcare for 9 in 10 Americans) will be in the crosshairs.
Twelve percent of the federal budget already goes toward debt interest payments, and this share is expected to rise sharply. Many of the bonds used to finance existing debt were issued back when interest rates were much lower. As those bonds mature and are refinanced at today’s higher rates, federal interest payments are projected to double within the next decade, according to the Congressional Budget Office.
With deficits mounting and borrowing costs soaring, most economists agree this trajectory is unsustainable. Lawmakers will eventually need to rein in spending, and healthcare subsidies will almost certainly be among the first targets. Policy experts predict Medicaid, which the House has already proposed cutting by $880 billion over the next decade, and ACA subsidies for out-of-pocket costs will likely be the first on the chopping block. But given the CBO’s projections, these cuts won’t be the last.
A Better Way: Three Solutions To Lower Healthcare Costs Without Cuts
Cutting some or all of these healthcare subsidies may seem like the simplest way to reduce the deficit. In reality, it merely shifts costs elsewhere, making medical care more expensive for everyone and increasing future government spending. Here’s why:
Eliminating subsidies doesn’t eliminate the need for care. Under the Emergency Medical Treatment and Labor Act (EMTALA), hospitals must treat emergency patients regardless of their ability to pay. When millions lose insurance, more turn to ERs for medical care they can’t afford. The cost of that uncompensated care doesn’t vanish. It gets passed on to state governments, hospitals and privately insured patients through higher taxes, inflated hospital bills and rising insurance premiums.
Delaying care drives up long-term costs. People who can’t afford doctor visits skip preventive care, screenings and early treatments. Manageable conditions like high blood pressure and diabetes then spiral into costly, life-threatening complications including heart attacks, strokes and kidney failures, which ultimately increase government spending.
The solution isn’t cutting coverage. It’s fixing the root causes of high healthcare costs. Here are three ways to achieve this:
1. Address The Obesity Epidemic
Obesity is a leading driver of diabetes, heart disease, stroke and breast cancer, which kill millions of Americans and cost the U.S. healthcare system hundreds of billions annually. Congress can take two immediate steps to reverse this crisis:
Tax high-calorie, highly processed foods and use the revenue to subsidize healthier options, making nutritious food more affordable for all Americans.
2. Enhance Chronic Disease Management With Technology
In every other industry, broad adoption of generative AI technology is already increasing quality while reducing costs. Healthcare could do the same by applying generative AI to more effectively manage chronic disease. According to the Centers for Disease Control and Prevention, improved control of these lifelong conditions could cut the frequency of heart attacks, strokes, kidney failures and cancers by up to 50%.
With swift and reasonable Food and Drug Administration approval, generative AI and wearable monitors would revolutionize how these conditions are managed, providing real-time updates on patient health and identifying when medications need adjustment. Instead of waiting months for their next in-office visit, patients with chronic diseases would receive continuous monitoring, preventing costly and life-threatening complications. Rather than restricting AI’s role in healthcare, Congress can streamline the FDA’s approval process and allocate National Institutes of Health funding to accelerate these advancements.
3. Reform Healthcare Payment Models
Under today’s fee-for-service system, doctors and hospitals are paid based on the how often they see patients for the same problem and the number of procedures performed. This approach rewards the volume of care, not the best and most effective treatments. A better alternative is a pay-for-value model like capitation, in which providers do best financially when they help keep patients healthy. To encourage participation, Congress should fund pilot programs and create financial incentives for insurers, doctors and hospitals willing to transition to this system. By aligning financial incentives with long-term health, this model would encourage doctors to prioritize prevention and effective chronic disease control, ultimately lowering medical costs by improving overall health.
The Time For Change Is Now
If Congress slashes healthcare subsidies this year, restoring them will be nearly impossible. Once the cuts take effect, the financial and political pressures driving them will only intensify, making reversal unlikely.
The voices shaping this debate can’t come solely from industry lobbyists. Elected officials need to hear from the 91% of Americans who rely on government healthcare assistance for some or all of their medical coverage. Now is the time to speak up.
The House of Representatives’ reconciliation bill, passed by the powerful Energy and Commerce Committee today, cuts just about everything when it comes to health care – except the actual waste, fraud and abuse. Now the bill heads to the floor for a vote of the full House of Representatives before it must also be passed by the Senate to become law.
I know what you’re thinking: not another story about Medicaid. With the flood of articles detailing the devastating Medicaid cuts proposed by House Republicans —cuts that could strip 8.7 million people of their health coverage — there’s an important fact being overlooked: Members of Congress chose to sidestep policies aimed at reining in Big Insurance abuses and, instead, opted to cut Medicaid.
And the real irony of it all is they could have saved a ton of money if they would just address the elephant in the room.
Abuses by Big Insurance companies have been going on for decades but have only recently come under scrutiny. Insurance companies figured out how to take advantage of the structure of the Medicare Advantage program to receive higher payments from the government.
They do this in two ways:
They make their enrollees seem sicker than they are through a strategy called “upcoding” and;
They use care obstacles such as prior authorization and inadequate provider networks that eventually drive sicker people to drop their plans and leave them with healthier enrollees, referred to as “favorable selection.”
According to the Medicare Payment Advisory Commission (MedPAC) these tactics lead the government to overpay insurance corporations running MA plans by $84 billion a year. This number is expected to grow, and estimates show that overpayments will cost the government more than a $1 trillion from 2025-2034. That is $1 trillion dollars in potential savings Republicans could have included in their bill instead of cutting Medicaid spending that provides care for vulnerable communities.
These overpayments do not lead to better care in MA plans; in fact, research has shown that care quality and outcomes are often worse in MA compared to traditional Medicare. Even worse, these overpayments are tax dollars meant for health care that end up in the pockets of shareholders of big insurance corporations, which spend billions of taxpayer dollars on things like stock buybacks and executive bonuses.
One of the most frustrating parts of the lawmaker’s choice to target Medicaid rather than Big Insurance abuses is that there are multiple policies supported by both Republicans and Democrats to stop these abuses. Sen. Bill Cassidy (R-Louisiana), along with Sen. Jeff Merkley (D-Oregon), have introduced the NO UPCODE Act, which would cut down on the practice of upcoding explained above. President Trump’s Administrator of the Centers for Medicare and Medicaid Services, Dr. Mehmet Oz, said during his confirmation hearing that he supports efforts to crack down on practices used by insurers to upcode. And Rep. Mark Green (R-Tennessee) introduced a bipartisan bill to decrease improper prior authorization denials in MA.
In a somewhat cruel twist, the only mention of Medicare fraud in the Republican reconciliation bill proposals is a section claiming to crack down on improper payments in Medicare Parts A and B (which make up traditional Medicare) by using artificial intelligence.
The total improper payments in TM represent just over one-third of the overpayments going to MA plans each year, and many of the payments flagged as improper in TM are flagged due to missing documentation rather than questionable tactics that MA insurers use.
In reflecting on why Republicans in Congress ignored potential savings from Big Insurance reforms and instead pursued cuts to care for people depending on Medicaid, which do not save as much, my biggest question was, why?
Why would lawmakers swerve around a populist policy right in front of them to stop Big Insurance from profiting off of the federal government to instead propose a regressive policy that targets millions of working Americans and leaves health insurance corporations that make billions in profits each year untouched?
Unfortunately, the answer likely lies in money. Although people enrolled in Medicaid and the Children’s Health Insurance Program (CHIP) make up roughly one-third of the U.S. population, they account for just 0.5% of all political campaign contributions — about $60 million annually. This disparity is likely driven by financial constraints: Many of these individuals are rightly focused on covering basic needs such as housing, food, and childcare, especially as wages have not kept pace with the rising cost of living.
In contrast, the health care sector — which includes major players like big insurance, pharmaceutical and hospital companies—contributed $357 million during the 2020 election cycle, including $97 million to outside groups such as Super PACs. These outside spending groups are largely funded by corporations and wealthy individuals, who represent less than 1% of the population but wield significant political influence.
Super PACs spent more than $2 billion during the 2020 election cycle, amplifying the voices of industry-aligned donors. This stark imbalance in political spending may help explain why congressional proposals targeted Medicaid recipients while leaving the powerful health insurance industry largely untouched.
It is not only Republicans who have failed to stop Big Insurance from taking advantage of federal health programs, Democrats declined to take action when negotiating their health care legislation during President Biden’s term. Rather, it seems to be a failure of policymakers of both parties to pass legislation that makes it clear to Big Insurance that our health care is not an investment opportunity for Wall Street, and the dollars we pay in taxes to support Medicare are not pocket change for executives to use for stock buybacks.
The failure to include MA reform represents a missed opportunity to prioritize patient care over corporate profits. However, the growing strength and voices of patients across the nation will ultimately make it impossible for lawmakers to ignore this issue much longer. With continued momentum, the fight to put patients over Big Insurance profits will succeed.
This week, the House Energy and Commerce and Ways and Means Committees begins work on the reconciliation bill they hope to complete by Memorial Day. Healthcare cuts are expected to figure prominently in the committee’s work.
And in San Diego, America’s Physician Groups (APG) will host its spring meeting “Kickstarting Accountable Care: Innovations for an Urgent Future” featuring Presidential historian Dorris Kearns Goodwin and new CMS Innovation Center Director Abe Sutton. Its focus will be the immediate future of value-based programs in Trump Healthcare 2.0, especially accountable care organizations (ACOs) and alternative payment models (APMs).
Central to both efforts is the administration’s mandate to reduce federal spending which it deems achievable, in part, by replacing fee for services with value-based payments to providers from the government’s Medicare and Medicaid programs. The CMS Center for Medicare and Medicaid Innovation (CMMI) is the government’s primary vehicle to test and implement alternative payment programs that reduce federal spending and improve the quality and effectiveness of services simultaneously.
Pledges to replace fee-for-service payments with value-based incentives are not new to Medicare. Twenty-five years ago, they were called “pay for performance” programs and, in 2010, included in the Affordable Care as alternative payment models overseen by CMMI. But the effectiveness of APMs has been modest at best: of 50+ models attempted, only 6 proved effective in reducing Medicare spending while spending $5.4 billion on the programs. Few were adopted in Medicaid and only a handful by commercial payers and large self-insured employers. Critics argue the APMs were poorly structured, more costly to implement than potential shared savings payments and sometimes more focused on equity and DEI aims than actual savings.
The question is how the Mehmet Oz-Abe Sutten version of CMMI will approach its version of value-based care, given modest APM results historically and the administration’s focus on cost-cutting.
Context is key:
Recent efforts by the Trump Healthcare 2.0 team and its leadership appointments in CMS and CMMI point to a value-agenda will change significantly. Alternative payment models will be fewer and participation by provider groups will be mandated for several. Measures of quality and savings will be fewer, more easily measured and and standardized across more episodes of care. Financial risks and shared savings will be higher and regulatory compliance will be simplified in tandem with restructuring in HHS, CMS and CMMI to improve responsiveness and consistency across federal agencies and programs.
Sutton’s experience as the point for CMMI is significant. Like Adam Boehler, Brad Smith and other top Trump Healthcare 2.0 leaders, he brings prior experience in federal health agencies and operating insight from private equity-backed ventures (Honest Health, Privia, Evergreen Nephrology funded through Nashville-based Rubicon Founders). Sutton’s deals have focused on physician-driven risk-bearing arrangements with Medicare with funding from private investors.
The Trump Healthcare 2.0 team share a view that the healthcare system is unnecessarily expensive and wasteful, overly-regulated and under-performing. They see big hospitals and drug companies as complicit—more concerned about self-protection than consumer engagement and affordability. They see flawed incentives as a root cause, and believe previous efforts by CMS and CMMI veered inappropriately toward DEI and equity rather than reducing health costs. And they think physicians organized into risk bearing structures with shared incentives, point of care technologies and dependable data will reduce unnecessary utilization (spending) and improve care for patients (including access and affordability).
There’s will be a more aggressive approach to spending reduction and value-creation with Medicare as the focus: stronger alternative payment models and expansion of Medicare Advantage will book-end their collective efforts as Trump Healthcare 2.0 seeks cost-reduction in Medicare.
What’s ahead?
Trump Healthcare 2.0 value-based care is a take-no prisoners strategy in which private insurers in Medicare Advantage have a seat at their table alongside hospitals that sponsor ACOs and distribute the majority of shared savings to the practicing physicians. But the agenda will be set, and re-set by the administration and link-minded physician organizations like America’s Physician Groups and others that welcome financial risk-sharing with Medicare and beyond.
The results of the Trump Healthcare 2.0 value agenda will be unknown to voters in the November 2026 mid-term but apparent by the Presidential campaign in 2028. In the interim, surrogate measures for performance—like physician participation and projected savings–will be used to show progress and the administration will claim success. It will also spark criticism especially from providers who believe access to needed specialty care will be restricted, public and rural health advocates whose funding is threatened, teaching and clinical research organizations who facing DOGE cuts and regulatory uncertainty, patient’s right advocacy groups fearing lack of attention and private payers lacking scalable experience in Medicare Advantage and risk-based relationships with physicians.
Last week, the American Medical Association named Dr. John Whyte its next President replacing widely-respected 12-year CEO/EVP Jim Madara. When he assumes this office in July, he’ll inherit an association that has historically steered clear of major policy issues but the administration’s value-based care agenda will quickly require his attention.
Physicians including AMA members are restless: at last fall’s House of Delegates (HOD), members passed a resolution calling for constraints on not-for-profit hospital’ tax exemptions due to misleading community benefits reporting and more consistency in charity care reporting by all hospitals. The majority of practicing physicians are burned-out due to loss of clinical autonomy and income pressures—especially the 75% who are employees of hospitals and private-equity backed groups. And last week, the American College of Physicians went on record favoring “collective action” to remedy physician grievances. All impact the execution of the administration’s value-based agenda.
Arguably, the most important key to success for the Trump Healthcare 2.0 is its value agenda and physician support—especially the primary care physicians on whom the consumer engagement and appropriate utilization is based. It’s a tall order.
The Trump Healthcare 2.0 value agenda is focused on near-term spending reductions in Medicare. Savings in federal spending for Medicaid will come thru reconciliation efforts in Congress that will likely include work-requirements for enrollees, elimination of subsidies for low-income adults and drug formulary restrictions among others. And, at least for the time being, attention to those with private insurance will be on the back burner, though the administration favors insurance reforms adding flexible options for individuals and small groups.
The Trump Healthcare 2.0 value-agenda is disruptive, aggressive and opportunistic for physician organizations and their partners who embrace performance risk as a permanent replacement for fee for service healthcare. It’s a threat to those that don’t.
The Trump administration is moving into its second 100 days facing conditions more problematic than its first 100. For healthcare, this period will define the industry’s near-term future as changes in three domains unfold:
The Economy: The economy is volatile and consumer confidence is waning. The impact of tariffs on U.S. prices remains an unknown and escalating tension between the Ukraine and Russia, Israel and Palestine, Pakistan and India are worrisome. Household debt is mounting as student loans, medical debt and housing costs imperil financial security for more than half of U.S. households. The 3 major stock indices remain in the red YTD, prospects for a recession are high and investors are increasingly cautious. Net impact on healthcare organizations and public programs: negative, especially those without strong balance sheets and access to affordable private capital.
The Courts: Recent opinions by the Supreme Court and District Courts suggest a willingness to challenge the administration’s Executive Orders on immigrant deportation and due process, threats and funding cuts aimed at law firms and universities considered “woke” and layoffs initiated by DOGE and more. Court challenges will slow the administration’s agenda and create uncertainty in workplaces. Net impact: negative. Uncertainty paralyses planning and operations in every public and private healthcare organization.
The Public Mood: The afterglow of the election has dissipated and the public’s mood has shifted from guarded optimism to anxiety and despair. The public’s uncertain about tariffs and worried about household expenses. Net impact: negative. Healthcare affordability and prices are major concerns to consumers: the majority (76%) think the system is more concerned about profitability than patient care (Jarrard).
Current events in these areas portend headwinds for most public and private healthcare organizations where attention in the next 100 days will be focused in these areas:
Oversight: New rules, programmatic priorities, key personnel appointments and re-organization in HHS, CMS, the FDA and VA: RFKJ’s MAHA plans and Commission appointees, Oz’ affinity for Medicare Advantage predisposition toward value-based care and Makary’s overhaul of the FDA’s drug oversight process will be “on the table” in the next 100 days.
Funding: Healthcare funding in the FY 2026 federal budget. The GOP-controlled House and Senate can pass a budget with minimal support from Dem’s that reflects a serious effort to reduce the federal debt ($37 trillion/123% of GDP– up from $20 trillion in 2017). Healthcare cuts expected to be significant though rumored massive cuts to Medicaid unlikely.
States: State healthcare referenda and executive actions: states are evaluating price controls on drugs and hospitals, reparations from insurers for delays and prior-authorizations, scope of practice restrictions and more. Topping the watchlist in most states is Medicaid funding and potential fallout from discontinued ACA marketplace subsidies factored into the FY 2026 budget being finalized by the GOP-led Congress in DC.
SCOTUS: Supreme Court decisions will be handed down or before June 30 when SCOTUS’ 2024 term ends including Braidwood Management v. Becerra which will determine whether the Affordable Care Act’s requirement that private insurers cover preventive services without cost-sharing will continue. The court will also opine to the authority of the HHS secretary to appoint members of the U.S. Preventive Services Task Force. The potential impact of these decisions on coverage, insurance premiums and access to preventive health services is pervasive.
Financial markets: Capital markets are in a watchful waiting mode as US trade policy unfolds, inflation fluctuates, the fed’s interest rate determination is disclosed and consumer spending reacts. Private investing in healthcare remains opportunistic though deal flow is shifting and risk thresholds tightening.
Polls: Polls draw the attention of media and elected officials. They influence how organizations prioritize advocacy strategies, address consumer complaints and concerns and manage reputations. As reflected in numerous national polls, trust in the system and its key players—insurers, hospitals, drug companies—is at a historic low.
Each sector in U.S. healthcare will be impacted differently: Three face the strongest headwinds:
Hospitals: Hospitals face enormous financial challenges, especially not-for-profits, safety net, rural and veteran’s hospitals. Last week’s unfavorable SCOTUS decision against hospitals alleging DSH under-payments will cost $1 billion per year. Congressional adoption of site neutral payment policy could cost $15 billion/year. Drug prices, labor costs, insurer payment cuts and red-tape will negate operating margins and lower investment income knee-capping growth and innovation plans. Complicating matters, employed physicians will demand higher pay and more control. And Congressional budget-creators believe the sector’s 31% share of total healthcare spending makes it ripe for cuts attributable to “waste, fraud and abuse”.
Insurers: Medicare Advantage (which enjoys support by key administrators including CMS’ Mehmet Oz) has become a lightening rod of insurer criticism alongside prior authorization policies that restrict care. Coverage remains key to household financial security but insurers are seen as barriers to rather than facilitators of evidence-based cost-effective care. And the concentration of power in corporate titans (United, Humana, Cigna, CVS, Centene and others) is viewed with skepticism.
Public Health: Public health is not a priority in the U.S. health system despite recognition that social determinants account for 70% of the system’s $5 trillion spending. Most programs are funded by state and local governments with federal support limited. Public health is not seen as an investment and, in some settings treated with disdain as welfare or waste. As Mayors and Governors develop plans for the rest of 2025 and through 2026, public health cuts will be likely as federal co-funding becomes scarce.
The next 100 days will define the national agenda for the mid-term election in November 2026, reflect the solidarity of the MAGA movement and show the impact of tariffs on inflation, consumer prices and the public’s mood.
Healthcare leaders will be watching closely. All will be impacted.
Wall Street is speaking loudly to Medicare Advantage insurers: If you want us to stick with you, keep dumping seniors who are pinching your profit margins.
Investors continue to punish UnitedHealth Group since the company downgraded its 2025 profit expectations on April 17. On Friday, UnitedHealth’s stock price hit not only a 52-week low—$393.11—but its lowest point in years. The last time UnitedHealth’s stock price went below $400 a share was on October 14, 2021.
The company’s shares lost nearly 4.5% of their value during the past week, contributing to a decline that started soon after the company set an all-time high of $630.73 last November. UnitedHealth’s shares have lost more than 33% of their value since then.
Wall Street Sends a Message
Meanwhile, investors have once again embraced UnitedHealth’s top two rivals in the Medicare Advantage business–Humana and CVS/Aetna. Those companies told investors last year, when both were in the Wall Street dog house for spending more than investors expected on patients’ medical care, that they would dump hundreds of thousands of their costliest Medicare Advantage enrollees to improve their profits. They made good on that promise, shedding almost 650,000 seniors and people with disabilities by the end of the year.
Many of those people enrolled in a UnitedHealth Medicare Advantage plan. The company reported 400,000 more Medicare Advantage enrollees in the first quarter of 2025 than in the fourth quarter of 2024. That used to be a good thing, but UnitedHealth’s executives told investors on April 17 that it wouldn’t make as much money for them as the company had assured them just three months earlier because it likely will have to spend more than they expected on those new MA enrollees’ medical care. Investors responded by immediately dispatching the company’s shares to the cellar. Those shares lost about 23% of their value in a single day.
The Street had also punished Humana and CVS last year when they said they were paying more for seniors’ medical care than they’d expected. Shares of both companies cratered, losing around half their value. So, executives at both Humana and CVS started identifying Medicare markets to get out of entirely. The culling was ruthless. CVS shed 227,000 MA enrollees. Humana got rid of 419,000.
Locked Out of Traditional Medicare
Those seniors and disabled people had to scramble to find a new Medicare Advantage insurer because it is difficult for most people to go back to traditional Medicare and find an affordable Medicare supplement policy. Medicare supplement insurers must waive underwriting during the first six months of applicants’ eligibility for Medicare, but people who enroll in a Medicare Advantage plan and want or need to make a change months later find out that insurers will charge them more unless their health is nearly perfect.
Of the seven big for-profit health insurers, four (Cigna, CVS/Aetna, Humana and Centene) collectively cut 1.3 million of their Medicare Advantage enrollees adrift at the end of 2024 in an effort to stay in Wall Street’s good graces. Cigna dumped all 600,000 of its MA enrollees, selling them to the Blue Cross corporation HCSC. For-profit Blue Cross insurer Elevance picked up 227,000; Molina added 18,000, and, as noted, UnitedHealth signed up 400,000 new MA enrollees.
While UnitedHealth’s shares have lost a third of their value, CVS’s shares have increased more than 50% since the first of this year. They even set a 52-week high of $72.51 on Thursday. Humana’s shares closed Friday at $258.48, up 1.88% since January 1. They are out of the Wall Street dog house – for now, anyway.
Profits, Lobbying Soar
I trust you are not feeling sorry for UnitedHealth because of its misfortune on Wall Street. It is still a hugely profitable company–just not profitable enough lately to please investors. This huge corporation, the fourth largest in America, reported $9.1 billion in profits in just the first quarter of this year. If the company makes it more difficult for its health plan enrollees to get the care they need this year, it could make even more than the $34.4 billion in profits it made last year.
And as a group, the seven big for-profits, including those that spent more than Wall Street felt was necessary on patients’ medical care, made $70 billion in profits last year. (UnitedHealth made nearly as much as the other six combined.)
And collectively, those giant corporations took in a record $1.5 trillion in revenue from us as customers and taxpayers last year. They are doing quite well. But that won’t stop them from trying to keep lawmakers and Trump administration officials from cracking down this year on the widespread waste, fraud and abuse in the Medicare Advantage program. You can expect them to spend a record amount of our money on lobbying expenses in Washington this year to keep their Medicare Advantage cash cow well fed.
Wall Street is speaking loudly to Medicare Advantage insurers: If you want us to stick with you, keep dumping seniors who are pinching your profit margins.
Investors continue to punish UnitedHealth Group since the company downgraded its 2025 profit expectations on April 17. On Friday, UnitedHealth’s stock price hit not only a 52-week low—$393.11—but its lowest point in years. The last time UnitedHealth’s stock price went below $400 a share was on October 14, 2021.
The company’s shares lost nearly 4.5% of their value during the past week, contributing to a decline that started soon after the company set an all-time high of $630.73 last November. UnitedHealth’s shares have lost more than 33% of their value since then.
Wall Street Sends a Message
Meanwhile, investors have once again embraced UnitedHealth’s top two rivals in the Medicare Advantage business–Humana and CVS/Aetna. Those companies told investors last year, when both were in the Wall Street dog house for spending more than investors expected on patients’ medical care, that they would dump hundreds of thousands of their costliest Medicare Advantage enrollees to improve their profits. They made good on that promise, shedding almost 650,000 seniors and people with disabilities by the end of the year.
Many of those people enrolled in a UnitedHealth Medicare Advantage plan. The company reported 400,000 more Medicare Advantage enrollees in the first quarter of 2025 than in the fourth quarter of 2024. That used to be a good thing, but UnitedHealth’s executives told investors on April 17 that it wouldn’t make as much money for them as the company had assured them just three months earlier because it likely will have to spend more than they expected on those new MA enrollees’ medical care. Investors responded by immediately dispatching the company’s shares to the cellar. Those shares lost about 23% of their value in a single day.
The Street had also punished Humana and CVS last year when they said they were paying more for seniors’ medical care than they’d expected. Shares of both companies cratered, losing around half their value. So, executives at both Humana and CVS started identifying Medicare markets to get out of entirely. The culling was ruthless. CVS shed 227,000 MA enrollees. Humana got rid of 419,000.
Locked Out of Traditional Medicare
Those seniors and disabled people had to scramble to find a new Medicare Advantage insurer because it is difficult for most people to go back to traditional Medicare and find an affordable Medicare supplement policy. Medicare supplement insurers must waive underwriting during the first six months of applicants’ eligibility for Medicare, but people who enroll in a Medicare Advantage plan and want or need to make a change months later find out that insurers will charge them more unless their health is nearly perfect.
Of the seven big for-profit health insurers, four (Cigna, CVS/Aetna, Humana and Centene) collectively cut 1.3 million of their Medicare Advantage enrollees adrift at the end of 2024 in an effort to stay in Wall Street’s good graces. Cigna dumped all 600,000 of its MA enrollees, selling them to the Blue Cross corporation HCSC. For-profit Blue Cross insurer Elevance picked up 227,000; Molina added 18,000, and, as noted, UnitedHealth signed up 400,000 new MA enrollees.
While UnitedHealth’s shares have lost a third of their value, CVS’s shares have increased more than 50% since the first of this year. They even set a 52-week high of $72.51 on Thursday. Humana’s shares closed Friday at $258.48, up 1.88% since January 1. They are out of the Wall Street dog house – for now, anyway.
Profits, Lobbying Soar
I trust you are not feeling sorry for UnitedHealth because of its misfortune on Wall Street. It is still a hugely profitable company–just not profitable enough lately to please investors. This huge corporation, the fourth largest in America, reported $9.1 billion in profits in just the first quarter of this year. If the company makes it more difficult for its health plan enrollees to get the care they need this year, it could make even more than the $34.4 billion in profits it made last year.
And as a group, the seven big for-profits, including those that spent more than Wall Street felt was necessary on patients’ medical care, made $70 billion in profits last year. (UnitedHealth made nearly as much as the other six combined.)
And collectively, those giant corporations took in a record $1.5 trillion in revenue from us as customers and taxpayers last year. They are doing quite well. But that won’t stop them from trying to keep lawmakers and Trump administration officials from cracking down this year on the widespread waste, fraud and abuse in the Medicare Advantage program. You can expect them to spend a record amount of our money on lobbying expenses in Washington this year to keep their Medicare Advantage cash cow well fed.
HENRY KOTULA 