The cuts would likely disrupt coverage and care for millions of Americans.
Last week, House Republicans released their budget blueprint that’s calling for $880 billion in federal payment cuts. Caught in the crosshairs are Medicare and Medicaid programs, in which potential cuts would disrupt or eliminate care for millions of individuals.
The bill orders the Energy and Commerce Committee, which oversees Medicare and Medicaid, to find $880 billion in savings from fiscal years 2025 through 2034. Earlier this month, Elon Musk’s Department of Energy Efficiency (DOGE) gained access to CMS systems to allegedly examine spending data for potential fraud, waste, or abuse. The CMS payment system manages more than $1 trillion in annual payments for millions of patients and health systems. Soon after, a federal judge blocked DOGE’s access to the Treasury Department's central payment system.
Although the Trump administration has said that it will not cut Medicare, Medicaid and Affordable Care Act subsidies remain on the table. As of now, it does not seem feasible that Republicans will meet their spending target without making significant cuts to federal healthcare programs like Medicaid or the ACA.
Industry Pushback
Health spending is immense. In 2023, the federal government spent $1.6 trillion on health insurance and subsidies, according to the Congressional Budget Office (CBO). While reining in the massive expense is an important component to lowering overall healthcare spend, the federal government should examine other avenues to curb the budget, ones that don’t involve directly jeopardizing care for patients. By turning to other options such as provider incentives to address clinical waste (which accounts for between 5.4% to 15.7% of national health spending), or programs to address the underlying social determinants of health like extreme poverty, healthcare access, and food scarcity, which all have an impact on health.
Many industry experts have expressed rejection of the potential cuts, saying that it would immensely disrupt patient care.
“The proposed cuts could lead to 20 million people losing Medicaid coverage due to a $2.3 trillion reduction in spending over the next decade,” Nicole Keating, staff vice president of government business execution at Elevance Health, wrote on LinkedIn. “States may need to raise new revenues, cut coverage for certain populations or services, or reduce payments to healthcare providers.”
“We don’t need to know the mechanisms of how Medicaid would be cut to know the impact would be catastrophic,” Anthony Wright, executive director of patient advocacy group Families USA, wrote on LinkedIn. “The sheer size of the proposed cuts means millions of Americans losing coverage, hospitals and clinics plunged into budget shortfalls, and health care services we all depend on being eliminated."
“Patient access to care and practice sustainability are not partisan or geographical issues. It’s an urgent national issue that demands immediate attention from Congress,” AMA President Bruce A. Scott, M.D, said on the matter.
CFOs, grab a chair
CFOs must recognize their seat at the table in these discussions now more than ever. Now is the time for CFOs to step up and become involved in these policy making discussions that hold so much power over their health systems and the patients they serve.
As the new administration moves in with fast-acting tactics to reorganize government spending, CFOs must pay close attention to the discussions being had and how the outcomes will affect not only their organization, but the entire industry. CFOs should not hesitate to step up and advocate for policies that protect the future of healthcare for patients and their staff.
Marie DeFreitas is the CFO editor for HealthLeaders.
KEY TAKEAWAYS
House Republicans are targeting healthcare spending cuts.
This would likely mean large cuts to Medicare, Medicaid, and ACA programs.
As the industry pushes back, CFOs must get involved as well.