Dr. Mehmet Oz, the head of the U.S. Centers for Medicare & Medicaid Services (CMS), has suggested that he supports a reduction in federal funding for those using Medicaid as part of the Affordable Care Act (ACA).
Newsweek has contacted the press office of the CMS via email for comment.
Why It Matters
Oz’s remarks suggest that the ACA could be impacted by the looming cuts to the budget that allowed states to extend Medicaid coverage to adults earning up to 138 percent of the federal poverty level.
As of mid-2024, more than 20 million people have obtained coverage through this expansion, according to figures from the nonpartisan health policy organization KFF (Kaiser Family Foundation).
House Energy and Commerce Committee Republicans have been tasked with finding $880 billion in savings. Without alternatives, Medicaid is a prime target, and Republican and Democratic lawmakers have warned of the impact on constituents if the service’s funding is cut.
What To Know
Speaking at the Milken Institute Global Conference in Los Angeles on Monday, Oz suggested that the federal government is over-subsidizing care for relatively healthy people who gained access to Medicaid through expansion provisions, compared to the traditional Medicaid population, which includes low-income children, seniors and people with disabilities.
“Because we pay 90 percent of the money for the able-bodied person and only, let’s say, 65 percent for a traditionally Medicaid poor, young, old or disabled person, it actually moves money to the able-bodied population,” Oz said, according to Bloomberg.
In an interview with Fox News at the conference, he said: “Governors are really becoming desperate about the cost of Medicaid. It’s stripping away their ability to provide resources for education, other social services, to take care of their people and we’re becoming one massive health care with a government attached, a country attached, and we don’t want that.”
He also commented on the prevalence of waste in the system, saying: “We have billions and billions of dollars a year providing Medicaid insurance to people who have lived in one state, then moved to a different state.”
He said that when this happens, the federal government then pays for a person’s coverage in both states, adding that not only funds but also services go to waste.
Ten states have opted not to expand Medicaid under the ACA, citing cost concerns and ideological opposition.
In states that have expanded, the prospect of reduced federal support raises the risk of coverage losses, particularly for those relying on Medicaid for routine medical care and preventive services.
Some states have laws that would automatically cancel Medicaid expansion if federal funding falls below a specified threshold. In such cases, the impact could be swift and widespread, potentially leaving millions uninsured and straining health care systems.
What People Are Saying
Dr. Benjamin Sommers, a professor of medicine at Harvard T.H. Chan School of Public Health, New York, told Newsweek: “The ACA generously funded the Medicaid expansion because legislators knew that states would not be able to afford the large increase in state spending that would be necessary at the original Medicaid rates to cover the new enrollees. While the federal rate is higher for the expansion population, I have seen no research evidence that Medicaid expansion ‘siphons’ money away from other Medicaid beneficiaries. Studies have no shown negative spillover effects, and have actually help keep hospitals from closing that benefits everyone. In fact, the Medicaid expansion includes millions of parents and people with chronic medical problems, including disabilities, but whose incomes were above the pre-ACA eligibility cutoff.”
He said that cutting the expansion match rate would see “that 15 million people would lose Medicaid, and more than 10 million of them would become uninsured if this policy is enacted,” based on research by the Urban Institute. “To be clear, these cuts would not ‘protect’ Medicaid for vulnerable beneficiaries, or in any way redirect money from the expansion to other groups. It would leave states in an enormous financial hole, worsen safety net hospital finances, and would cut millions of people—including parents and people with disabilities—from Medicaid.”
Jamila Michener, a professor of government and public policy at Cornell University, New York, told Newsweek: “Dr. Oz’s logic concerning the federal government’s differential coverage of distinct Medicaid populations is severely flawed. The views he expresses reflect inadequate knowledge of the Medicaid program and its overall purpose. The idea that the ACA Medicaid expansion ‘moves more money to the able-bodied population’ is misguided, for several reasons.
“First, the ACA expansion population is a much less expensive group to cover. Since they cost the government less, providing them with insurance is the efficient and humane choice because it means giving people access to healthcare at a relatively low price. Second, the resources we are spending on Medicaid expansion enrollees benefit everyone. While those looking for excuses to cut Medicaid may opportunistically seek to divide ‘deserving’ Medicaid enrollees from ‘underserving’ enrollees, this false dichotomy does not hold up in the light of evidence. Third, reducing the ACA expansion match rate [90 percent] would lead to significant declines in Medicaid enrollment. And this loss of Medicaid coverage would ultimately cost a lot: an increase in expensive ER visits, illnesses like cancer caught at later stages when they are more expensive to treat, a loss of life and more.
“There is very little fraud in the Medicaid program, and the fraud that does exist is largely among healthcare providers and others seeking to profit from healthcare, not among people relying on Medicaid insurance for their survival and well-being.”
What Happens Next
Any move to reduce federal funding for Medicaid expansion would likely require congressional action and face legal and political obstacles. Oz’s comments suggest broader administrative interest in reshaping how Medicaid dollars are allocated.
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