How the DOGE agenda could impact Medicaid, veterans' healthcare

Axes and chainsaws, not butter knives and chisels.

That’s how Department of Government Efficiency (DOGE) commission co-chair Vivek Ramaswamy describes the approach he and world’s richest man Elon Musk will take to reducing the size of the federal government.

Musk has said he wants $2 trillion slashed from the budget, a figure that borders on ambition and an impossibility depending on who you ask. Benefits to Medicaid could be on the chopping block.

The duo outlined their goals in a Wall Street Journal op-ed. DOGE will work with the Office of Management and Budget (OMB) to rescind regulations and cut costs, they say, on the belief that recent court cases give them authority to reverse prior executive overreach under other administrations.

They also want to reduce the head count of federal employees at agencies by skirting civil service protection norms, mandate in-person work (with support from some senators and despite union pushback) and move agencies out of Washington, D.C.

Lastly, Musk and Ramaswamy intends to “take aim” at unauthorized spending from Congress to eliminate funds to Planned Parenthood. If possible, Trump and co. are looking to sidestep the 1974 Impoundment Control Act, which ensures a president cannot refuse to release congressionally appropriated funds to programs. The strategy to fight impoundment law in the court system is endorsed by former House Speaker Newt Gingrich.

Lawmakers fluctuate on how they hope to accomplish the DOGE’s plans. Some say entitlement programs like Medicare and Medicaid won’t be touched, while others make no such promises. Outgoing Rep. Michael Burgess, R-Texas, suggested the DOGE eliminate redundant departments (PDF) within the the Centers for Medicare & Medicaid Services.

Fierce Healthcare took a closer look at the healthcare implications of the DOGE and recent comments made by Ramaswamy and other Republicans on Medicaid and veterans’ care.


Healthcare for veterans
 

On Nov. 13, just over one week after the presidential election, Ramaswamy denounced expired government programs that account for $516 billion each year.

“There are 1,200+ programs that are no longer authorized but still receive appropriations,” he said on X. “This is totally nuts. We can & should save hundreds of billions each year by defunding government programs that Congress no longer authorizes. We’ll challenge any politician who disagrees to defend the other side.”

Top of the list of these programs is the Veterans’ Health Care Eligibility Reform Act of 1996, costing the government $119 billion a year. This law continues to self-authorize and receive discretionary funding each year through spending bills. The law expired in 1998 but continues to provide medical benefits to veterans today.

Does Ramaswamy actually want to de-fund this program, which has the potential to be politically devastating to his party?

Brian Riedl
Brian Riedl (LinkedIn)

“My guess is he did not even bother to check which programs this included before he called on these programs to be eliminated, because I can't imagine that he would knowingly call for eliminating veterans’ healthcare,” said Brian Riedl, a senior fellow at conservative think tank Manhattan Institute, in an interview with Fierce Healthcare in late November. “So my takeaway is that the directors of DOGE are in over their heads and talking about budget rules and programs without taking the time to understand what they're talking about first.”

As for impoundment, Riedl and legal experts are skeptical the courts will play ball, despite the conservative majority on the Supreme Court and the opinions of Mark Paoletta, Trump’s selection for general counsel for the OMB.

Recent Supreme Court decisions won’t make it easier for the DOGE to rescind regulations, argues Nicholas Bagley, a law professor at the University of Michigan and the former chief legal counsel to Gov. Gretchen Whitmer, D-Michigan. And the likelihood the Supreme Court will overturn overwhelming current precedent on impoundment is equally unlikely, he says. That line of thought is shared by other law professors and a senior fellow at libertarian think tank Competitive Enterprise Institute.

“If Congress allows impoundment, it would essentially destroy the separation of powers on budget matters,” said Riedl. “I can't imagine the Supreme Court essentially nuking Congress's existence. If the president can eliminate for any expenditure at any time, for any reason, that would include the court system. The president would be able to defund the courts. I can’t imagine the courts would be willing to give up their power.”’

A large contingent of Trump-aligned allies hope the new administration will root out waste, fraud and abuse, including Paul Mango, former deputy chief of staff for policy for the Department of Health and Human Services during Trump’s first term. Riedl urged Musk and Ramaswamy to view cutting costs through that lens.


Medicaid
 

If the DOGE and the Trump administration are looking for cuts wherever they can find them in the $6.75 trillion federal budget, and all of discretionary funding accounts for $1.7 trillion, they will have to look toward Social Security, Medicare or Medicaid for further action.

Ramaswamy is leaving the door open to reform Medicare and Medicaid by eliminating waste and fraud through program integrity measures, reported multiple news publications. He has also called on reducing duplicative payments for individuals enrolled in Medicare Advantage and veterans’ healthcare.

Republicans could be shy to cut benefits to Medicare and Medicaid, but lawmakers seem to be keeping an open mind. Rep. Ralph Norman, R-South Carolina, said “nothing is sacrosanct” following a closed doors DOGE meeting with Musk and Ramaswamy in early December. Other lawmakers—like Reps. Brett Guthrie of Kentucky and Mark Alford of Missouri, as well as Sens. Rand Paul of Kentucky, John Cornyn of Texas and Chuck Grassley of Iowa—say various options of federal program reforms are possible.

Cuts to Medicaid could be pushed in one or two big reconciliation packages where only a simple majority is needed, said Kristin Wikelius, chief program officer at United States of Care, a think tank advancing expanded health access. Medicaid policies will likely mirror Trump’s first term. 

Kristin Wikelius
Kristin Wikelius (United States of Care)

There is likely to be return to work requirements for state Medicaid programs, said Eric Levine, associate principal at Avalere. Those requirements normally look different on a state-by-state basis

“You can see redder states implementing them as a way to reduce enrollment for a populations who would be deemed able to work and to not divert resources from the traditional Medicaid population,” he explained.

There could also be a return to models like the Healthy Adult Opportunity Initiative. This model allowed states to convert Medicaid funding into block grants for adults under the age of 65 and not eligible for Medicaid due to disability. Trump’s plan was criticized by the American Society for Clinical Oncology, the American Medical Association and the Federation of American Hospitals.

A paper from the Manhattan Institute suggests Medicaid continue funding the program’s core responsibilities but limit the growth of matching funds for other expenditures, effectively curtailing the funds wealthier states receive. The paper disagrees with per capita caps on funding per enrollee as well as block grants.

“Voters tend to punish politicians who cut existing public entitlement programs, despite often being supportive of those who resist expanding these programs,” said Chris Pope, a Manhattan Institute senior fellow, in the paper. “Unlike cuts to matching rates, which threaten to take away existing benefits, caps can be designed to focus spending reductions on the highest-spending states with the most bloated optional benefits.”

Paragon Health Institute, one of the right wing’s leading think tanks on healthcare policy, calls for reducing Medicaid reimbursement levels and lowering the federal medical assistance percentage, changes that would result in hundreds of billions of dollars in savings.

“They are all different ways of attaining the same policy aim, which is taking money out of the Medicaid program and ultimately reducing Medicaid enrollment,” said Wikelius.

These issues could be exacerbated if Congress chooses to not extend the Affordable Care Act enhanced premium tax credits. If the credits expire at the end of the year, an estimated 4 million Americans will lose their health coverage, seeing them go without insurance or find insurance elsewhere.

Sen. Lisa Murkowski, R-Alaska, supports extending the subsidies, she told the Alaska Beacon. Murkowski is a one of Congress’ most centrist Republicans.

If Medicare and Medicaid are cut and the enhanced tax credits expire, premiums and out-of-pocket costs will rise, though long-term sustainability of the programs and an increase in innovative market solutions are more likely, said James Wallace, a strategic adviser for healthcare services company DecisionRx, in an email to Fierce Healthcare.