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The Stealth Assault on Medicare

Democrats are making a budget stand over Trump’s cuts to Medicaid and the Affordable Care Act. But Trump is also coming for the much larger Medicare program.

Democrats in Congress have resolved to refuse President Trump’s demand to keep the government open past September 30, unless Republicans alter the Trump budget to restore deep cuts to Medicaid and the Affordable Care Act, and add guarantees that Trump won’t rely on impoundments to withhold congressionally appropriated funds, including for medical research services like the National Institutes of Health. There is increasing evidence that the proposed cuts in Medicaid and the ACA will raise premium costs for other consumers, since those programs indirectly subsidize the whole health care system.

The headlines suggest that Medicare will largely be untouched. But that turns out to be untrue. First of all, as my colleague David Dayen has reported, the budget deficits from the reconciliation bill trigger mandatory spending cuts that will hit Medicare to the tune of around half a trillion dollars over a decade. But Trump’s HHS is also rolling out a program that will use private vendors armed with AI tools to require preapproval of procedures before Medicare will pay for them. The program will initially be launched as a pilot in six states: New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington.

Until now, traditional Medicare has been an oasis of doctor-driven medicine in a desert of managed-care policies dictated by private insurers. Under traditional Medicare, you have free choice of doctor and hospital, and Medicare pays for all procedures that the doctor finds to be medically necessary. There are just a handful of exceptions that require preapproval, such as unproven spinal procedures.

You might think that failing to require preapprovals would make Medicare more expensive than commercial insurance. In fact, commercial insurance has so many middlemen taking a cut that it is less cost-effective than Medicare. The commercial, heavily managed version of Medicare, the so-called Medicare Advantage program, is 20 percent less efficient than traditional public Medicare.

For years, some of the technocrats at HHS have argued that some form of preapproval should be grafted onto Medicare. Trump’s appointees, led by Mehmet Oz (yes, that Dr. Oz) at the Centers for Medicare & Medicaid Services (CMS), have taken this idea in a new and sinister direction to make it a profit center for vendors using artificial intelligence.

Today, 17 senators led by Sen. Ron Wyden of Oregon, ranking Democrat on the Senate Finance Committee, sent an urgent letter to Dr. Oz and his deputy, Abe Sutton, demanding more information on the six-state pilot program for Medicare preapprovals and requesting CMS “to halt implementation of this demonstration until a full analysis of the program’s impact on patient access is conducted that includes input from beneficiaries and their families, consumer and patient advocates, health care providers, and suppliers.”

The letter, shared exclusively with the Prospect, noted that CMS deceptively classified the pilot program as “voluntary,” allowing it to bypass the usual notice and comment process required in rulemaking. In truth, the letter pointed out, the preapproval process will be mandatory for clinicians in the six pilot states, or they risk not getting paid.

This pilot program is a stalking horse for further privatization of Medicare. The so-called Medicare Advantage program, which is heavily managed commercial insurance financed by Medicare premiums, is already used by more than half the Americans eligible for Medicare. Project 2025 proposed making Medicare Advantage the default option for newly eligible seniors, and Dr. Oz has been a big booster of the idea.

A lot of the Trump program is complex and obscure, and its direct impact on consumers opaque. That helps Republicans in Congress to blindly rubber-stamp Trump and get away with it politically. Not so with increased health care costs and reduced choices.

~ ROBERT KUTTNER

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