Bloomberg Law
Feb. 11, 2020, 10:36 AM

Trump Projects Saving Billions From Medicare, Medicaid Policies

Tony Pugh
Tony Pugh

President Donald Trump’s proposed fiscal year 2021 budget projects that taxpayers would save $920 billion for Medicaid and $756 billion for Medicare over 10 years.

But there’s a catch: All the policies it proposes need to be implemented to achieve those savings. Many of those policies, however, are either tied up in court or facing other opposition.

For Medicaid, the Health and Human Services Department’s annual budget proposal presumes that expanded work requirements, tighter beneficiary eligibility screening, and capped or “block grant” state funding will all go into effect.

Similarly, the HHS budget says taxpayers could save $756 billion in Medicare through 2030 by reducing fraud and waste and relying on lower payments to hospitals through “site-neutral” payment policies.

These approaches to slowing runaway costs in the nation’s two largest public health programs reflect the indirect ways the White House wants to tweak popular entitlement programs in an election year.

Medicaid is the leading budget item for most states outside of education and a favorite target of scorn for Trump and conservative Republicans. They’re eager to trim the state- and federally financed health program for low-income Americans, which has added 15 million enrollees since 2014 when the Affordable Care Act expanded eligibility.

The administration wants able-bodied adults who enroll in Medicaid to be subjected to some sort of work requirement. If such programs were to be implemented, they would likely shrink the population of recipients, and more of those receiving benefits would be physically unable to work.

“As part of the President’s Health Reform Vision, Medicaid spending will grow at a more sustainable rate by ending the financial bias that currently favors able-bodied working adults over the truly vulnerable,“ the HHS budget document said.

To date, the Centers for Medicare & Medicaid Services has approved 11 state work requirement programs and is reviewing nine others. Although the programs are mired in legal challenges, the administration still projects they’ll save Medicaid $8 billion in 2021 and more than $152 million through 2030.

Medicare Woes

Medicare’s finances are arguably in worse shape than Medicaid as the program prepares to enroll millions of aging baby boomers in the coming years that could double outlays to nearly $1.5 trillion in 2028.

The administration has treaded lightly around benefit cuts in Medicare, fully cognizant that a backlash from the program’s potent senior voting bloc could severely damage Trump’s re-election bid.

Trump got a taste of that power after he suggested in a January interview that cuts to entitlement programs like Social Security and Medicare would be under consideration if he wins a second term in office. After prompt criticism from Democrats and seniors advocacy groups, the president has since downplayed any notion of cutting Medicare.

In a Twitter post on Feb. 8, Trump declared: “We will not be touching your Social Security or Medicare in Fiscal 2021 Budget.”

But some advocates remain unconvinced.

“One would hope that in an election year, when politicians like to put forward their most popular ideas, the president would understand the benefits of protecting our most cherished income and health security programs,” said a Feb. 10 statement from Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare.

Implementing Medicare’s “site-neutral” payment policy, which would pay the same lower rate for services whether provided at a doctor’s office or in a hospital outpatient setting, is a top goal for the CMS. A federal judge scrapped the policy last year, saying it was a programmatic overreach, but the Trump administration again implemented it this year and is facing another round of litigation from the hospital industry.

The White House estimates that site-neutral Medicare payments would save more than $164 billion over 10 years.

The administration also calls for cuts in Medicare payments for doctors’ residency training programs and hospitals’ uncompensated care. Those proposals would save an estimated $52 billion and $88 billion, respectively, over 10 years, the budget document said.

The administration also projects that revamping Medicare payments for care after a patient leaves the hospital would likewise save more than $101 billion over the next decade.

In a statement, Rick Pollack, president and CEO of the American Hospital Association, reiterated the group’s opposition to any reimbursement cuts for hospital outpatient departments and for post-acute care providers.

“These cuts fail to recognize the crucial role hospitals serve for their communities, such as providing 24/7 emergency services,” Pollack said. “Post-acute cuts threaten care for patients with the most medically complex conditions.”

To contact the reporter on this story: Tony Pugh in Washington at

To contact the editor responsible for this story: Fawn Johnson at