What the Future of Medicaid and Medicare Could Look Like

Newsweek

4 days ago

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
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On this day 60 years ago, the Medicaid and Medicare programs were signed into law by former President Lyndon B. Johnson. It was July 30, 1965, and both programs were established within the Social Security Act.
Designed as federal programs to assist the elderly, disabled individuals and those with low income, both have grown into the largest sources of health care coverage in the country.
Tens of millions of Americans rely on the programs, and they have protected the country's most vulnerable populations for over six decades now.
Before the programs were established, around half of all Americans over 65 had no means of medical insurance, forcing them to pay hefty prices or forgo care entirely. Nowadays, that figure has dropped significantly.
"Medicare and Medicaid have been enormous policy successes that have increased Americans' health and longevity while improving financial protections for older Americans," Lauren Nicholas, a health economist at University of Colorado, Denver, told Newsweek.
"These programs also support our medical workforce through stable funding and by underwriting graduate medical education," she added.
Inevitably, the programs have been shaped by different governmental administrations over the years, and as the programs turn 60, many more political changes are set to alter the course of Medicaid and Medicare's future.
In light of the programs' landmark anniversary, Newsweek has spoken to experts about what is in store for the programs in the coming years during the term of President Donald Trump.
Photo-illustration by Newsweek/Getty/Canva
Cutting Down on "Waste, Fraud and Abuse"
Starting with the appointment of the Department of Government Efficiency (DOGE), a key focus of the Trump administration has been removing "waste, fraud and abuse" from the federal health care programs.
A Government Accountability Office (GAO) report from 2024 found that in 2023, $100 billion was spent in "improper payments"––payments that "should not have been made or were made in the incorrect amount"––across the Medicare and Medicaid programs.
GAO said this represented 43 percent of the governmentwide total of estimated "improper payments" that agencies reported for that year.
In order to reduce the incidence of these "improper payments," the Subcommittee on Delivering on Government Efficiency proposed measures such as an initial validation of applicants' identities, eliminating self-certification, and monitoring the programs through improved technology.
Analysis of 2024 enrollment data also revealed there were 2.8 million Americans either enrolled in Medicaid or the Children's Health Insurance Program (CHIP) in multiple states, or simultaneously enrolled in both Medicaid or CHIP and a subsidized Affordable Care Act (ACA) Exchange plan, according to the Centers for Medicare and Medicaid Services (CMS).
As a result, CMS said it would take action to ensure individuals are only enrolled in one program, vowing to "continue to crush fraud, waste, and abuse in America's health care programs."
Although, while in principle boosting efficiency and transparency while reducing costs, these changes may also have less desirable impacts on beneficiaries in the future, experts have warned.
"Research suggests that the people who will lose coverage from this policy will mostly be working or have serious health problems and should still be in the program," Dr. Benjamin Sommers, a professor of health care economics at Harvard T.H. Chan School of Public Health, told Newsweek.
"The 'savings' here are not from reducing fraud, but from kicking people off of Medicaid to become uninsured and struggle to afford medical care," he added.
"It's a perennial political motto and goal," Tim Westmoreland, a retired professor of health law and policy from Georgetown Law, told Newsweek.
"Politicians often say that they are making eligibility requirements more stringent in order to prevent waste, fraud, and abuse, but research has shown repeatedly that this mostly disqualifies people who would be eligible if they could find their way through complex mazes of paperwork," he added.
He went on to say it saves "comparatively little money"—the real savings come from "investigating and prosecuting providers, for example, doctors who overcharge, or pharmaceutical companies that game their prices, or medical equipment suppliers who don't deliver, or managed care companies that underserve."
Newsweek has contacted CMS via email for comment.
"Big Beautiful Bill" Cuts and Requirements
Medicare and Medicaid's 60th birthday comes only a few weeks after the passing of Trump's major budget legislation—the "One Big Beautiful Bill."
The bill includes the largest funding cuts to the two federal programs in U.S. history, and Medicaid will bear the brunt of this with $1 trillion in cuts over the next decade.
The White House has said the bill "protects and strengthens Medicaid for those who rely on it—pregnant women, children, seniors, people with disabilities, and low-income families—while eliminating waste, fraud, and abuse."
The Trump administration said that by "eliminating waste, fraud, and abuse" in the Medicaid program, resources can then be refocused on "providing better care for those whom the program was designed to serve: pregnant women, children, people with disabilities, low-income seniors, and other vulnerable low-income families."
Overall, the bill "protects Medicaid for the truly vulnerable," the White House added, and said that those with disabilities receiving Medicaid "will receive no loss or change in coverage."
On the subject of Medicare, the White House said the federal program "had not been touched in this bill—absolutely nothing in the bill reduces spending on Medicare benefits."
"This legislation does not make a single cut to welfare programs—it safeguards and protects these programs for all eligible Americans," the White House added.
In regard to Medicaid, the bill will see the introduction of work requirements, so those eligible for the program will have to work a total of 80 hours a month, unless exempt.
The bill eliminates enhanced federal matching funds for Medicaid services provided to undocumented immigrants—a measure that affects states offering such coverage, including California, New York, Illinois, Washington, New Jersey, Oregon, Massachusetts, Minnesota, Colorado, Connecticut, Utah, Rhode Island, Maine, and Vermont.
All 40 states that expanded the Medicaid service under the ACA will also be affected by the bill. They will face a reduced federal match rate, requiring states to shoulder a greater share of the costs.
A number of other changes to the Medicaid program include a restriction in funding for Medicaid-covered family planning services that offer abortions, like Planned Parenthood, and a requirement for eligibility to be redetermined every 6 months instead of every 12 months.
Fewer changes have been made to Medicare. These include a narrowing of eligibility to exclude undocumented immigrants and anticipated reductions in federal reimbursements to health care providers, which could affect which prescription drugs are covered by the program.
How these changes will shape the future of the programs is not overly positive, according to experts that spoke to Newsweek, and there have been frequent warnings that millions of Americans will lose their health coverage as a result.
Paul Shafer, a professor in health law, policy and management at Boston University, deemed the changes to Medicaid "potentially dramatic," telling Newsweek "millions of Americans will lose Medicaid and, with it, their access to health care."
"Millions of people will likely lose coverage due to increasing red tape from work requirements and more frequent eligibility checks," Sommers added.
"States will lose one of the ways they currently pay for their share of the Medicaid expansion, so we will likely see additional cuts from states that may lead to fewer people covered and reduced benefits."
Lower income people will be most impacted, Mark Pauly, a professor of health care management at Wharton School of the University of Pennsylvania, told Newsweek.
"They will have to jump more hoops to keep Medicaid insurance—some who are not sick may decide it is not worth the trouble," he added.
On the subject of work requirements, Dr. Susan Goold, a professor of internal medicine and health management and policy at the University of Michigan, told Newsweek evidence has shown that, under work requirement programs, "employment does not increase, people who are eligible are nonetheless dropped, and administering the program costs states money."
"Changes to the federal share of Medicaid spending will cause states to either cut enrollment, cut benefits, cut payments to providers or greatly increase their spending," she said.
While Medicaid is more directly affected by the bill than Medicare, Pauly said that "Medicare's time will come when provider reimbursements are cut so much that fewer doctors will accept it."
Goold added that Medicare will also be indirectly affected by the bill, such as via increases in income tax deductions, including for seniors on social security, which "means less revenue to both Medicare and Social Security."
"That speeds up the trajectory toward insolvency, unless future cuts are made to benefits," she said.
Also, provider payment rate changes may "make it more difficult for Medicare enrollees to find providers," Goold added.
At a time when Medicaid and Medicare popularity is at all-time high, the new tax bill was found to be somewhat unfavorable throughout the county, according to a KFF study, suggesting the federal health programs could have a rocky future as public opinion and policy decision clash.
Shafer said: "This bill has been described as 'the biggest rollback in federal support for health coverage ever,' when families are still struggling to bounce back from years of higher inflation and the economy is showing signs of slowing down."
Hospital Closures
As Medicaid cuts will reduce the number of Americans with insurance, there will be "fewer people who can pay for health care, making it harder for hospitals, nursing homes, and other practices to stay in business," Nicholas said.
"We are already starting to see facilities cut back service lines and staffing that they don't think that they can maintain," she added.
Shafer warned that "stopping the enforcement of minimum staffing levels in nursing homes means that we won't see patient safety and care improve in ways it could have, keeping seniors at risk in understaffed facilities."
Nicholas said that 25 percent of nursing homes are expected to close as a result, which could "leave frail older adults who need a lot of care with nowhere to go."
"I worry that Americans will see the first signs of these changes through their pocketbooks and their own health, having to wait longer to get doctor appointments and losing access to local hospitals and providers," she added.
Estimates from University of North Carolina at Chapel Hill has suggested that over 300 rural hospitals could close with all but four states affected.
The White House said that rural hospitals comprise 7 percent of all hospital spending on Medicaid, "illustrating that they have not benefited from the massive increase in waste, fraud, and abuse under the Biden administration."
"By strengthening Medicaid, we are making more resources available for vulnerable populations and safety net providers, like rural hospitals," the White House said. "We are expanding rural hospital protection, providing targeted funds for rural care, and giving states flexibility to support local providers."
While $50 billion has been allocated in Trump's bill over five years to all states for a variety of purposes, including payments to rural facilities, the options states have to protect rural health care are not without their complexities, experts previously told Newsweek.
The Future For Medicare and Medicaid
In light of the significant, even historic, changes being made to the programs under the Trump administration, the future of Medicaid and Medicare remains uncertain.
Aside from major government changes, CMS has also been announcing further changes to both programs in recent weeks, largely focused on reducing federal taxpayer costs and clamping down on issues that fall under the umbrella of "waste, fraud and abuse."
This includes an end to expanded continuous eligibility for Medicaid, which allowed some people to remain enrolled for a period of time, even if they were no longer qualified, as CMS vowed to "restore accountability and safeguard the long-term integrity of Medicaid and CHIP."
CMS also said in May it would "close a Medicaid tax loophole exploited by states to inflate federal payments to states, and free up state funds for non-Medicaid purposes," as well as launching a "significant expansion of its auditing efforts for Medicare Advantage (MA) plans."
The impact of all of these changes remains to be seen, but one thing that appears to be quite clear is that, while less Americans may have access to the programs in the years to come, Medicaid and Medicare will continue to remain critical to many.