Trump Administration’s Changes to Medicaid, Medicare Could Lead to Higher Costs

Certain provisions in President Donald Trump’s newly issued executive order on Medicare could lead to higher costs and surprise medical bills for seniors, according to an analysis by the Government Accountability Office (GAO). The report also found that the administration’s approval of state plans that impose work requirements on Medicaid recipients could increase federal spending by millions due to implementation costs.

The executive order calls for allowing patients and doctors to negotiate their own deals outside of Medicare, which might “open the door to surprise medical billing if people sign a contract with a doctor without realizing what they’re doing,” Timothy Jost, JD, emeritus professor at Washington and Lee University School of Law in Virginia, told NPR.

Additionally, the order seeks to ease the rules for beneficiaries who wish to opt out of the hospital portion of Medicare (Part A), which Dr. Jost said has been a long-term goal of “people who don’t want or don’t like the idea of social insurance.”

The Centers for Medicare and Medicaid Services (CMS) also approved state plans to impose work requirements on low-income and disabled Americans who receive Medicaid – without requiring estimates on the associated administrative costs.

“Without requiring states to submit projections of administrative costs in their demonstration applications, and by not considering the implications of these costs for federal spending, CMS puts its goals of transparency and budget neutrality at risk,” GAO said in its analysis, which Democrats in opposition of Medicaid work requirements requested. “This is inconsistent with federal internal control standards that call for agencies to identify, analyze, and respond to risks related to achieving program objectives.”

In its report, GAO revealed that the administrative costs to impose these requirements range from approximately $6 million in New Hampshire to $271 million in Kentucky. Generally, the federal government is covering most of these costs (87% in Kentucky).

CMS has no plans to revise its approval process for state requests to add work requirements on Medicaid recipients.

Sources: NPR, October 8, 2019; The Wall Street Journal, October 10, 2019.