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US President Donald Trump, joined by Human Services Secretary Robert F. Kennedy and Centers for Medicare & Medicaid Services Administrator Mehmet Oz, speaks at a press conference on May 12, 2025.
(Photo by Andrew Harnik/Getty Images)
Medicare Advantage, Privatized Medicaid Could Cost Americans $2 Trillion Extra Over Next Decade
"If the administration were serious about curbing waste and inefficiency, it would start by reducing the diversion of public funds to these corporate intermediaries," argues a new paper.
Nov 07, 2025
US President Donald Trump and his Republican allies in Congress took a sledgehammer to Medicaid over the summer, justifying the unprecedented cuts by falsely claiming the program that provides health coverage to tens of millions of low-income Americans is overrun with waste and abuse.
But a new paper published Friday in the journal Health Affairs argues that if the administration actually wanted to target waste, fraud, and abuse, it would have been much better off taking aim at Medicare Advantage (MA) and Medicaid privatization.
The paper's authors estimate that overpayments to MA plans—which are funded by the government and run by for-profit insurers—and private Medicaid managed care will likely cost US taxpayers a total of $1.92 trillion over the next 10 years.
"Ending that waste would inflict losses on private insurers' shareholders and executives (the CEO of the largest MA firm made $26.3 million last year). But patients, not just government coffers, might gain," wrote Adam Gaffney, Danny McCormick, Steffie Woolhandler, and David Himmelstein.
"Even Congress' trillion-dollar cuts to Medicaid and food assistance amount to little more than half of the potential savings from de-privatizing Medicaid and Medicare," they added. "Reclaiming those funds would require reversing the decades-long trend of outsourcing to profit-seeking intermediaries and restoring Medicare and Medicaid as efficiently administered public programs."
Far from aggressively taking on Medicare Advantage fraud, the Trump administration handed MA plans a major gift earlier this year by approving an average federal payment increase of roughly 5.1%—more than double the 2.2% increase proposed by the Biden administration in January.
The authors of the new paper noted that the huge raise for MA plans, which are notorious for denying necessary care in pursuit of ever-larger profits, will add $25 billion in waste to the US healthcare system next year alone.
"If the administration were serious about curbing waste and inefficiency," they wrote, "it would start by reducing the diversion of public funds to these corporate intermediaries."
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US President Donald Trump and his Republican allies in Congress took a sledgehammer to Medicaid over the summer, justifying the unprecedented cuts by falsely claiming the program that provides health coverage to tens of millions of low-income Americans is overrun with waste and abuse.
But a new paper published Friday in the journal Health Affairs argues that if the administration actually wanted to target waste, fraud, and abuse, it would have been much better off taking aim at Medicare Advantage (MA) and Medicaid privatization.
The paper's authors estimate that overpayments to MA plans—which are funded by the government and run by for-profit insurers—and private Medicaid managed care will likely cost US taxpayers a total of $1.92 trillion over the next 10 years.
"Ending that waste would inflict losses on private insurers' shareholders and executives (the CEO of the largest MA firm made $26.3 million last year). But patients, not just government coffers, might gain," wrote Adam Gaffney, Danny McCormick, Steffie Woolhandler, and David Himmelstein.
"Even Congress' trillion-dollar cuts to Medicaid and food assistance amount to little more than half of the potential savings from de-privatizing Medicaid and Medicare," they added. "Reclaiming those funds would require reversing the decades-long trend of outsourcing to profit-seeking intermediaries and restoring Medicare and Medicaid as efficiently administered public programs."
Far from aggressively taking on Medicare Advantage fraud, the Trump administration handed MA plans a major gift earlier this year by approving an average federal payment increase of roughly 5.1%—more than double the 2.2% increase proposed by the Biden administration in January.
The authors of the new paper noted that the huge raise for MA plans, which are notorious for denying necessary care in pursuit of ever-larger profits, will add $25 billion in waste to the US healthcare system next year alone.
"If the administration were serious about curbing waste and inefficiency," they wrote, "it would start by reducing the diversion of public funds to these corporate intermediaries."
US President Donald Trump and his Republican allies in Congress took a sledgehammer to Medicaid over the summer, justifying the unprecedented cuts by falsely claiming the program that provides health coverage to tens of millions of low-income Americans is overrun with waste and abuse.
But a new paper published Friday in the journal Health Affairs argues that if the administration actually wanted to target waste, fraud, and abuse, it would have been much better off taking aim at Medicare Advantage (MA) and Medicaid privatization.
The paper's authors estimate that overpayments to MA plans—which are funded by the government and run by for-profit insurers—and private Medicaid managed care will likely cost US taxpayers a total of $1.92 trillion over the next 10 years.
"Ending that waste would inflict losses on private insurers' shareholders and executives (the CEO of the largest MA firm made $26.3 million last year). But patients, not just government coffers, might gain," wrote Adam Gaffney, Danny McCormick, Steffie Woolhandler, and David Himmelstein.
"Even Congress' trillion-dollar cuts to Medicaid and food assistance amount to little more than half of the potential savings from de-privatizing Medicaid and Medicare," they added. "Reclaiming those funds would require reversing the decades-long trend of outsourcing to profit-seeking intermediaries and restoring Medicare and Medicaid as efficiently administered public programs."
Far from aggressively taking on Medicare Advantage fraud, the Trump administration handed MA plans a major gift earlier this year by approving an average federal payment increase of roughly 5.1%—more than double the 2.2% increase proposed by the Biden administration in January.
The authors of the new paper noted that the huge raise for MA plans, which are notorious for denying necessary care in pursuit of ever-larger profits, will add $25 billion in waste to the US healthcare system next year alone.
"If the administration were serious about curbing waste and inefficiency," they wrote, "it would start by reducing the diversion of public funds to these corporate intermediaries."
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