March 25th, 2025

DOGE & How it Affects Medicare & Medicaid

In early 2025, the Department of Government Efficiency (DOGE), spearheaded by Elon Musk under the Trump administration, has emerged as a significant force in reshaping federal spending. With a mission to streamline government operations and reduce costs, DOGE has turned its attention to two of the largest healthcare programs in the United States: Medicare and Medicaid. These programs, which collectively serve over 160 million Americans, are now under scrutiny as DOGE seeks to identify inefficiencies and curb what it perceives as wasteful spending. As of March 26, 2025, the implications of DOGE’s involvement are unfolding, raising both opportunities and concerns for the future of these critical healthcare systems.

What Are Medicare and Medicaid?
Before delving into DOGE’s influence, it’s essential to understand the programs at stake. Medicare is a federal health insurance program primarily for individuals aged 65 and older, as well as some younger people with disabilities or specific conditions. Administered by the Centers for Medicare & Medicaid Services (CMS), it provides standardized coverage nationwide, funded largely through payroll taxes, premiums, and general federal revenues. In 2021, Medicare spending reached $689 billion (net of premiums), accounting for roughly 10% of the federal budget.

Medicaid, by contrast, is a joint federal-state program that offers health coverage to low-income individuals, including children, pregnant women, seniors, and people with disabilities. Unlike Medicare, Medicaid’s eligibility and benefits vary by state, with the federal government providing matching funds—ranging from 50% to over 70% depending on a state’s per capita income—to support state expenditures. In fiscal year 2023, Medicaid spending totaled $880 billion, with the federal share covering 69% of the costs.

Together, these programs are lifelines for millions, covering everything from hospital stays and prescription drugs to long-term care services not typically included under Medicare. However, their size and complexity make them prime targets for efficiency-focused reforms.

DOGE’s Entry into CMS
DOGE, originally a rebranded version of the Obama-era United States Digital Service, was established to overhaul federal technology and spending practices. Under Musk’s leadership, it reports directly to the White House chief of staff and has quickly expanded its reach. In February 2025, DOGE gained access to CMS systems, focusing on payment and contracting mechanisms for Medicare and Medicaid. This move, first reported by The Wall Street Journal, was accompanied by Musk’s public assertion on X that “big money fraud is happening” within these programs.

CMS, which oversees both Medicare and Medicaid, has responded cautiously but cooperatively. The agency assigned two senior staffers—one focused on policy, the other on operations—to collaborate with DOGE. In a statement, CMS emphasized a “thoughtful approach” to identifying “opportunities for more effective and efficient use of resources” aligned with President Trump’s goals. This partnership signals a willingness to explore cost-saving measures, but it also hints at the potential for significant disruption.

Potential Impacts on Medicare
For Medicare, DOGE’s involvement could mean a reevaluation of payment structures and program administration. The program’s spending has been on an upward trajectory—projected to reach $1.8 trillion by 2031—driven by an aging population and rising healthcare costs. DOGE’s focus on fraud and waste aligns with longstanding concerns about improper payments, which CMS reported at nearly 8% ($31.7 billion) for Medicare fee-for-service in fiscal year 2024.

One possible outcome is a crackdown on overpayments or fraudulent claims, potentially tightening oversight of providers and Medicare Advantage plans, which account for a growing share of spending. However, critics worry that aggressive cost-cutting could reduce provider reimbursements or limit beneficiary access to services, especially if DOGE pushes for broad reductions without nuanced consideration of patient needs. Medicare’s politically sensitive nature—serving a vocal elderly population—may temper the extent of changes, but early signs suggest DOGE is undeterred by such challenges.

Potential Impacts on Medicaid
Medicaid, with its decentralized structure and reliance on federal-state collaboration, faces a more complex reckoning. DOGE’s scrutiny comes amid broader Republican-led efforts to trim federal spending, including a House budget resolution passed in February 2025 that directs the Energy and Commerce Committee to find $880 billion in Medicaid savings. This figure, experts argue, is unattainable without slashing eligibility, benefits, or provider payments—moves that DOGE’s efficiency mandate could accelerate.

Musk’s team has reportedly begun examining Medicaid’s payment systems, which include capitated payments to managed care organizations (MCOs) that made up 52% of the program’s $880 billion spending in 2023. If DOGE identifies inefficiencies here, states could face pressure to renegotiate contracts or reduce reliance on MCOs, potentially disrupting care coordination for enrollees. Alternatively, DOGE might advocate for capping federal matching funds, shifting more financial burden onto states. Such a shift could force states to raise taxes, cut benefits, or limit enrollment—options that disproportionately affect low-income families, children, and people with disabilities who depend on Medicaid.

Opportunities and Risks
DOGE’s involvement offers potential benefits. Streamlining administrative processes or rooting out genuine fraud could free up resources for patient care, addressing long-standing critiques of government waste. For instance, modernizing CMS’s outdated technology—a goal inherited from the Digital Service—could improve efficiency without harming beneficiaries.

Yet the risks are substantial. Medicare and Medicaid are not merely budget line items; they are intricate systems supporting vulnerable populations. Overzealous cuts could erode access to care, particularly in rural areas or for services like nursing home care, which Medicaid heavily funds. Moreover, the political fallout from disrupting these programs could be significant, as evidenced by past pushback against Medicaid expansion rollbacks.

The Bigger Picture
As of March 26, 2025, DOGE’s full impact remains unclear. Its actions at CMS are part of a broader Trump administration push to freeze and reallocate federal funds, evidenced by temporary disruptions to Medicaid payment portals in January 2025. While the White House later clarified that Medicaid was not intended to be affected, the incident underscores the potential for chaos in DOGE’s pursuit of efficiency.

For now, stakeholders—patients, providers, and state governments—are watching closely. The promise of a leaner, more effective government is appealing, but the reality of implementing such changes in programs as vital and complex as Medicare and Medicaid is fraught with challenges. Whether DOGE can balance cost savings with care quality will determine its legacy in America’s healthcare landscape.