EXCLUSIVE — Centers for Medicare and Medicaid Services Administrator Mehmet Oz is implementing some of the largest changes to the Medicaid program since it became law 60 years ago this July.
Medicaid, the health insurance program for disabled and low-income Americans, and Medicare, health insurance for seniors, were signed into law by President Lyndon Johnson on July 30, 1965, as the foundation of the modern American social safety net. Sixty years later, congressional Republicans and President Donald Trump have made some of the largest structural changes to Medicaid since its initial passage and have billed the changes as bringing the program back to its original purpose of providing healthcare to the most vulnerable members of society.
Oz told the Washington Examiner in an exclusive interview ahead of the anniversary that his team is working furiously behind the scenes to work with states and healthcare stakeholders to get them prepared for Medicaid work requirements, provider tax revenue reductions, and clearing ineligible individuals from state rosters.
Medicaid, which is funded by a combination of federal and state dollars, is one of the fastest-growing line items in state budgets. CMS data indicate that Medicaid spending grew by nearly 8% in 2023, costing more than $871 billion, or 18% of total national health expenditures.
The GOP’s One Big Beautiful Bill Act reduces the growth of Medicaid spending over the next 10 years by $1 trillion. Democrats decried the changes as massive cuts that could destabilize the program, undertaken to offset the fiscal cost of tax cuts for the rich.
But Oz said that, behind closed doors, stakeholders who strongly opposed the bill before Trump signed it into law on July 4 have admitted the Medicaid program needed significant reform.
“Now that it’s done, what I keep hearing over and over again is, ‘That needed to happen,’” Oz said. “That cleared the fraud, waste, and abuse to systemic dysfunction, that took this beautiful program that was the backbone of the social safety net system that, either by drift or design, it had actually moved so far outside of what it was supposed to do that it was not viable financially.”
From an afterthought to a centerpiece
In 1965, Medicare was considered the crowning achievement of the Johnson administration. Medicaid, by contrast, was an afterthought.
Nina Schaefer, Medicaid policy researcher for the Heritage Foundation, told the Washington Examiner that Medicaid was “kind of the sidecar” to the Medicare program, which had been the primary health goal of Democrats since the late 1940s under President Harry Truman.
“The efforts were mainly focused at the time on Medicare, and so that was the big selling point when you look at all the press coverage of what was happening at the time,” Schaefer said.
Because of the broad latitude afforded states in the creation of Medicaid, Congress eventually had to tweak the program throughout the late 1960s to prevent states’ use of the program as a substitute for single-payer health insurance.
But besides that brief interlude, Schaefer said Medicaid “has been on autopilot for 60 years,” eventually evolving toward a broader insurance for lower-income Americans instead of a program narrowly tailored for children, the elderly, and the disabled.
Medicaid’s growth accelerated in 2010 with the extension of coverage to able-bodied adults without dependents under Obamacare, now referred to as “Medicaid expansion.”
Niklas Kleinworth, policy analyst for the right-leaning Paragon Health Institute, told the Washington Examiner that 2010 was the tipping point in a trajectory of the Medicaid program toward a more generalized health insurance program for the working poor.
Kleinworth said Democrats, after struggling for years to advance legislation for a single-payer health system, wrote Obamacare to use Medicaid expansion to give coverage to able-bodied people within 133% of the federal poverty line as a compromise.
Medicaid enrollment also ballooned following policies enacted by the Biden administration during COVID-19 that prevented states from kicking ineligible people off the Medicaid rolls.
Schaefer said most of the technical policy changes in the One Big Beautiful Bill Act were, in essence, “just the guardrails that were already intended to be on the Medicaid program,” unwinding ineligible people from the program and shrinking the Medicaid expansion population through work requirements.
Caprice Knapp, director of the Medicaid program under Oz, told the Washington Examiner that the future of Medicaid is getting states “to the point where we’re pivoting back and making sure that we have accountability, we have sustainability from a fiscal standpoint, and then focusing on that original population in Medicaid.”
Dual eligibles as the most vulnerable
Health policy experts have said reductions in Medicaid funding will likely affect seniors and disabled Americans covered by both Medicare and Medicaid, a population known as dual eligibles.
According to the Commonwealth Fund, there were approximately 12.8 million dual eligibles in 2024, about 11 million of whom are seniors over 65. As of 2023, dual eligibles account for roughly a third of all Medicaid spending, but that’s likely to increase as more baby boomers retire over the next decade.
Although Medicare was intended to cover the hospitalization and outpatient care costs for seniors, Medicaid has historically been used to cover long-term care. Medicaid remains the largest U.S. payer for long-term care, covering services such as nursing homes and at-home care for seniors and disabled people.
Robin Rudowitz, director of the program on Medicaid and the uninsured at the left-leaning health think tank KFF, told the Washington Examiner that she worries long-term care for dual eligibles could be the first thing states eliminate with overall funding reductions.
“There are not very many direct cuts or provisions that directly affect things like long-term care, but because many of these technical provisions, like provider taxes and state directed payments, as well as just the limited financing overall for the Medicaid program – that could leave states with decisions to make in terms of what they do with less federal dollars.”
When asked about the future of dual eligibles by the Washington Examiner, Director of Medicare at CMS Chris Klomp said that the population demands an expansion of resources to provide more specialized care, and that the new GOP law would help fulfill that need.
“As I think about the most vulnerable patients in the country, it is the duals population, those who are struggling with low income and are growing older,” said Klomp. “I don’t think the One Big Beautiful Bill does anything other than strengthen our commitment and promise to that population.”
