American Bridge Educational Foundation

Project 2025 on Medicare/Medicaid

Table of Contents

  1. Introduction
  2. Keeping People Off Medicaid
  3. Ending Coverage of Transgender Health Care
  4. Repealing the Inflation Reduction Act
  5. Reducing Medicaid Funding
  6. Encouraging State-Level Abuses of Medicaid
  7. Deregulating the Insurance Industry

Introduction

Project 2025 makes only the barest of attempts to hide its hostility to Medicare and Medicaid. The first time Medicare and Medicaid are mentioned in the document they are referred to as “the principle drivers of our $31 trillion national debt.”

The authors support their claim by pointing out that from 1967, the first time Medicare expenditures were made public, through 2020, “Medicare and Medicaid combined cost $17.8 trillion, while our combined federal deficits over that same span were $17.9 trillion. In essence, our deficit problem is a Medicare and Medicaid problem.”

Medicare and Medicaid are talked about as problems to be solved, rather than benefits to be supported. This framing also suggests that the only solution would be to eliminate Medicare and Medicaid, even if the authors never make that argument explicitly.

Ultimately, the stated goal of Project 2025 is to make Medicare and Medicaid recipients “contribute to their health care costs at a level that is appropriate to protect the taxpayer.” 

It’s important to note that the focus here is on “the taxpayer” – not the financial ability of the person on Medicare or Medicaid. Saying this right after claiming “our deficit problem is a Medicare and Medicaid problem,” further suggests that the long-term goal is to end Medicare and Medicaid as we know them, even if Project 2025 can’t come out and say so quite yet.

After that initial framing, Project 2025’s authors attempt to present their recommendations as neutral, commonsense reforms to Medicare and Medicaid that would provide benefits to the federal government, states, and Medicare and Medicaid recipients. This posture falls apart under even passing scrutiny.

Their proposals serve to roll back nearly every protection or benefit provided to Medicare and Medicaid beneficiaries over the last few decades. If implemented, Project 2025 would repeal the Inflation Reduction Act and its negotiated drug prices, repeal the Medicare Shared Savings Program, make it harder to get on – and stay on – Medicare and Medicaid, reduce funding for Medicare and Medicaid, and deregulate much of the health insurance market, a move that would likely raise insurance costs for high-risk populations like the elderly and those with pre-existing conditions.

Keeping People Off Medicaid

Overview

  • Project 2025 calls on CMS to allow or add both work requirements and asset testing to Medicaid eligibility determinations.
  • Project 2025 also promotes time-limited or lifetime caps on Medicaid benefits, which would automatically remove individuals from Medicaid if their benefit payouts exceeded a set amount.
  • Removing people from Medicaid does not save as much money as the authors suggest because federal, state, and local governments cover roughly 80 percent of the uncompensated medical bills hospitals accrue by treating uninsured patients.

One overarching goal in Project 2025’s plans for Medicare and Medicaid is to make it harder to get coverage under the program, which they would accomplish by adding work requirements and asset testing. 

Even if people manage to receive coverage, some of the author’s proposals would add lifetime coverage limits for Medicaid recipients, making it impossible to maintain health insurance coverage through the program. The most extreme versions would kick people off of Medicaid after three years, regardless of their income or disability status.

1. Add work requirements

Project 2025 instructs CMS to allow states to add work requirements in their Medicaid eligibility determinations.

While Roger Severino, author of the chapter on the Department of Health and Human Services, does not offer any specific policies for work requirements, the Trump administration previously approved plans to add work requirements in 13 states. While many of them were ultimately delayed by the courts, then canceled by the Biden administration, states that did implement work requirements did not see the promised benefits.

Work requirements for Medicaid do not increase employment. Studies have shown that a majority of Medicaid recipients are already working, are in school, are primary caregivers to adults or children, or have a disability that prevents them from working. The people who can work already are.

Work requirements do take health insurance away from eligible Medicaid recipients. Arkansas was the only state to begin removing people from Medicaid under their plan approved by the Trump administration. Before their plan was stopped by court injunction, about 25 percent of Medicaid recipients subject to the work requirements lost coverage as a result of the rule, but there was no increase in employment.

A subsequent study showed that 95 percent of the people who lost Medicaid coverage under the rule actually met the requirements, either because they were already working or because they qualified for an exemption. Most of the people who lost coverage either were not aware of the new rules, were not aware of the exemptions if they qualified, or could not figure out how to report their work hours.

The same study found that Michigan’s policy was set to remove nearly 40 percent of Medicaid recipients subject to the plan when it was stopped by the courts. New Hampshire was going to remove 67 percent of recipients subject to their plan when it was stopped by the courts.

In both of these cases, as with Arkansas, most of the people being removed were either already working or qualified for an exemption, but did not file the correct documents because they were unaware of the new requirements, did not know about the exemptions, or couldn’t figure out how to report their work hours.

2. Add mandatory asset testing and make the tests harsher

Project 2025 also calls on CMS to allow or add asset tests for Medicaid eligibility determinations. Asset tests deny Medicaid eligibility to individuals who have more than a set amount of assets in bank accounts, stocks, and other forms of equity. They typically exempt things like a primary residence or the first car, though car exemptions frequently have a maximum value that can be exempted.

The federal government currently does not require asset testing for Medicaid applications under MAGI (Modified Adjusted Gross Income) standards, though it does require an asset test for non-MAGI Medicaid applications. (Learn more about MAGI and non-MAGI Medicaid here.) Some states, like Illinois, set their own asset tests for MAGI Medicaid applicants.

Decades of research shows that asset testing hurts families, increases dependence on government assistance, increases government administrative costs, and excludes a small number of applicants from accessing Medicaid and other government assistance programs while simultaneously preventing qualified applicants from receiving Medicaid.

To the extent that asset tests are retained, the Urban Institute advocates for dramatically increasing the limits – from $2,000 for individuals seeking Social Security Insurance to $10,000 – for those reasons.

Most importantly, asset tests force low-income households to choose between benefits and personal savings accounts. In some cases, an extra $100 in the bank can mean losing over $5,000 in benefits.

Project 2025 pays lip service to that problem, known as the “welfare cliff,” calling it “contrary to the fundamental purpose of empowering individuals to achieve economic independence.” In spite of this, the authors consistently propose policies that would make the welfare cliff worse, not better.

3. Add time-limited or lifetime caps on benefits

Among the most devastating Medicaid proposals in Project 2025 is the suggestion to “Add targeted time limits or lifetime caps on benefits to disincentivize permanent dependence.” These proposals will not generate the kind of savings that the authors promise.

While Project 2025 does not give specific policies, several states submitted proposals for lifetime caps on Medicaid eligibility during the Trump administration. Those policies proposed limits ranging from three to five years for adults on Medicaid, according to reporting from McClatchy.

That would threaten health insurance coverage for 18.5 million Americans, or 20 percent of all Medicaid recipients. Studies have shown that people without insurance present a lose-lose-lose scenario: 

Removing people from Medicaid just moves the cost around. Taxpayers will still have to cover much of the cost of medical care for low-income households – and for longer, since medical debt can trap people in poverty. It also increases financial pressure on hospitals, even as hospitals, and rural hospitals in particular, struggle to financially recover from the COVID-19 pandemic.

Ending Coverage of Transgender Health Care

Overview

  • Project 2025 recommends CMS reissue its 2016 decision not to cover gender-affirming care for Medicare beneficiaries.
  • Project 2025 directs CMS to ensure medical practitioners can participate in federal health care programs even if they refuse to provide gender-affirming care.
  • Project 2025 recommends CMS lie about the scientific evidence supporting gender-affirming care.

As is typical of Project 2025, the authors don’t miss their chance to target transgender rights and health care.

Project 2025 recommends that CMS reissue its 2016 decision that “National Coverage Determination (NCD) regarding ‘gender reassignment surgery’ for Medicare beneficiaries” and ensure that medical practitioners can participate in federal health care programs even if they will refuse to provide gender-affirming care.

They also recommend that CMS lie about the research on gender-affirming care, saying that CMS should “acknowledge the growing body of evidence that such interventions are dangerous and acknowledge that there is insufficient scientific evidence to support such coverage in state plans.” 
This is untrue. Decades of research proves that gender-affirming care is effective and safe, which is why the scientific consensus supports providing gender-affirming care.

Repealing the Inflation Reduction Act

Overview

  • Project 2025 calls on Congress to repeal the Medicare Shared Savings Program and the Inflation Reduction Act, both of which enacted cost-savings programs for Medicare and Medicaid.
  • Repealing the IRA would harm millions of seniors who benefit from the Medicare reforms implemented by the law.
  • If the IRA cannot be repealed, Project 2025 calls on Congress to repeal the drug price negotiation program in particular.

Project 2025 calls on Congress to “Repeal harmful health policies enacted under the Obama and Biden Administrations such as the Medicare Shared Savings Program and Inflation Reduction Act.” Repealing these cost-saving laws is contradictory to Project 2025’s stated goal of reducing Medicare and Medicaid expenses.

The Medicare Shared Savings Program (MSSP) was enacted by the ACA, and is associated with billions of dollars in savings for CMS. HHS reported $1.6 billion in savings through the MSSP in 2021 alone. 

The IRA implemented wide-ranging Medicare reforms that the Congressional Budget Office (CBO) estimates will reduce the Medicare and Medicaid budget deficit by $31 billion by 2031. It expanded insurance coverage for seniors, capped out-of-pocket costs, lowered premiums and drove down prescription drug prices for all Americans by:

  • Expanding the full Medicare Part D subsidy to an additional 400,000 seniors who previously only had the partial subsidy.
  • Capping out-of-pocket expenses for prescription drugs at $3,300 in 2024, decreasing to $2,000 in 2025. This also eliminated the 5% cost share for Medicare recipients in the “catastrophic tier.” KFF estimates this will save 1.4 million seniors an average of $1,355 per year. Seniors with severe illness or disability like cancer or multiple sclerosis could save between $2,000-5,000 per year.
  • Making all recommended vaccines free for seniors on Medicare. In the first year after the IRA was passed, “uptake of the shingles vaccine increased 42% while Tdap increased 114%.”
  • Capping the price of insulin for Medicare recipients. Beginning in 2023, insulin costs were capped at $35 a month for Medicare Part D recipients, and $35 a month for insulin used in insulin pumps for Medicare Part B recipients. This protects diabetic seniors from the extravagantly high cost of insulin in the United States, which forces 1 in 6 diabetics to ration their insulin. Rationing insulin can lead to blindness, hospitalization, or death.
  • Requiring the federal government to negotiate with manufacturers to lower prescription drug prices for Medicare recipients. The CBO also predicts that the negotiated drug prices will lower prescription drug costs for all Americans, not just Medicare recipients, beginning in 2025.
  • Requiring drug manufacturers to pay Medicare a rebate if they increase drug prices faster than inflation. Policies like this one gained popularity in the last few years after multiple high-profile cases where drug manufacturers increased the prices of decades-old medications by as much as 5,000 percent without making any improvements to the drugs.

Reducing Medicaid Funding

Overview

  • Project 2025 calls on CMS to change Medicaid funding to block grants, aggregate caps, or per capita caps.
  • All of these options would radically change Medicaid funding in ways that harm both states and Medicaid recipients.
  • State proposals submitted to the Trump Administration could have cut Medicaid coverage dramatically.

Project 2025 suggests transforming Medicaid financing into a system of “block grants, aggregate caps, or per capita caps.” 

Right now, federal funding for Medicaid automatically adjusts to state needs. That means federal funding increases during difficult times – like recessions or pandemics – when Medicaid enrollment typically increases, and decreases when Medicaid enrollment drops.

Under this proposal, states would receive a limited amount of funding. 

This could be through a block grant, which provides a set amount of money each year; an aggregate cap, which sets a maximum amount the state can spend on all of its Medicaid recipients that year; or by per capita caps, which set a maximum amount the state can spend on any one individual every year. 

Any Medicaid costs above those thresholds would be paid entirely by the state, creating a new form of uncertainty in state budgets. If a pandemic or recession drives up Medicaid costs, the state may find itself responsible for dramatically higher Medicaid costs than it budgeted for, while simultaneously losing tax revenue due to the economic effects of the crisis.

Once again, Project 2025 leaves out any specifics regarding the proposed funding changes, but the Trump administration invited state proposals for such changes in January 2020.

A scathing report from the Center on Budget and Policy Priorities (CBPP) called them “a lose-lose proposition for people with Medicaid and for states.”

For Medicaid recipients, the program would “worsen people’s health by taking away coverage and reducing access to care,” while states would take on “greater financial risk.” The full list of problems CBPP identified is too long to include here, but the Trump-era guidance could have have had disastrous results for Medicaid recipients, including:

  • Denial of coverage for expensive drugs, including those that treat cardiovascular disease, diabetes, or cancer.
  • Ending retroactive coverage, “a longstanding Medicaid policy that requires Medicaid to cover enrollees’ medical costs for three months prior to enrollment.”
  • Creating enrollment caps, meaning otherwise qualified Medicaid applicants would be automatically denied once a certain number of people were enrolled in the state.

Encouraging State-Level Abuses of Medicaid

Overview

  • Project 2025 would create incentives for states to cut Medicaid coverage at the expense of their residents’ health.
  • Project 2025 directs CMS to end federal oversight of many changes to state Medicaid plans.
  • Taken together, these changes effectively invite state-level abuses of Medicaid plans.

Project 2025 would encourage state-level abuses of Medicaid while also removing federal oversight over state management of the programs.

The funding changes discussed above include a proposed “shared savings” plan that would encourage states to cut Medicaid coverage.

The shared savings plan allows states to use some of the federal funding they saved through Medicaid cuts for unrelated projects. In 2020, the Trump administration would have allowed states to use 25 to 50 percent of the money they saved for unrelated projects like infrastructure.

This creates a perverse incentive for state governments: making their residents less healthy by restricting access to Medicaid coverage could bolster other areas of their budget.

At the same time, the 2020 guidance would have allowed states to waive federal standards and oversight of managed care plans in Medicaid. Project 2025 goes even further, directing CMS to “allow providers to make payment reforms without cumbersome waivers or state plan amendment processes where possible” and allow “benefit redesign without waivers,” including the ability to eliminate “obsolete” mandatory or optional benefits. 

Creating incentives to mismanage Medicaid plans while removing federal oversight over care standards and the changes states make to their Medicaid plans is, at the very least, giving permission for states to violate their obligations to care for residents under federal law. 

Deregulating the Insurance Industry

Overview

  • Project 2025 calls on CMS to separate the subsidized and non-subsidized insurance markets so that non-subsidized insurance plans do not have to comply with ACA regulations.
  • This split would effectively repeal the ACA for anyone who does not have Medicare or a Medicaid subsidy.
  • The split would also lead to segmentation of the insurance ecosystem, driving up costs for sick, pregnant people or the elderly.
  • Project 2025 also promotes policies to privatize both Medicare and Medicaid.
  • The privatization of Medicare would open seniors up to the fraud and abuse that has typified Medicare Advantage, the private insurance market in Medicare.
  • The privatization of Medicaid, in combination with reducing regulations on private insurance, could result in Medicaid recipients getting worse insurance coverage.

Project 2025 includes proposals to functionally repeal the Affordable Care Act for many Americans, and has plans to weaken ACA protections even if Congress won’t help. The authors suggest a series of federal policies that would push more people into the private insurance market and reduce or eliminate many ACA regulations on private insurance.

1. Deregulating the insurance industry

Project 2025 directs CMS to “develop a plan to separate the non-subsidized insurance market from the subsidized market, giving the non-subsidized market regulatory relief from the costly ACA regulatory mandates.”

This would functionally repeal the ACA for anyone who doesn’t receive insurance subsidies. The regulations that Project 2025 is referring to include mandatory coverage of previously existing conditions, requiring insurance companies to cover pregnant women and banning lifetime or annual limits on insurance benefits.

Research shows that a majority of Americans would want those rules to stay in effect even if the ACA was repealed or ruled unconstitutional.

Additionally, Project 2025 encourages Congress to build on Trump-era guidances “by codifying an expansion of association health plans, short-term health plans, and health reimbursement arrangements.” The authors also say that CMS should remove barriers to Direct Primary Care (DPC) plans and work with the Treasury to expand access to health savings accounts.

These types of plans, referred to as “alternative health plans,” are exempt from ACA regulations, and pose a significant risk to Medicare and Medicaid. Experts recommend increasing regulations on alternative health plans, not decreasing them.

Any insurance plan not subject to ACA regulations can offer lower premiums to healthy people. The ACA works by setting a base level of health insurance coverage, then requiring insurance companies to charge the one premium for healthy and sick people. Insurance companies set their premium based on the average risk of their entire pool of covered patients.

Expanding access to non-ACA compliant health plans, either by splitting the ACA marketplace or by promoting alternative health plans, would segment the insured population. Healthy people would leave the more expensive ACA compliant plans for cheaper, less comprehensive plans. Those plans would either deny coverage to sick people, or charge them significantly more, forcing sick people to stay on the ACA plans.

As the patient pool in ACA compliant plans lost healthy patients, the average risk would increase. Ultimately, this would drive insurance premiums in the ACA up. 

Eventually, sick people, pregnant women, and the elderly would find that their insurance premiums had returned to, or exceeded, pre-ACA costs. And lets not forget – before the ACA, a sick person meant a lot of things. A 2008 report from CMS found that up to half of non-elderly Americans suffered from a pre-existing condition, ranging from mental illness to asthma to pregnancy.

2. Privatizing Medicare

Project 2025 argues that “Medicare regulations restrict choice of coverage and care,” and directs CMS to “reintroduce and restore regulations and demonstrations from the Trump Administration” that were changed or ended by the Biden administration.

The authors also ask Congress to pass legislation that would make Medicare Advantage the default enrollment option for Medicare beneficiaries and “remove burdensome policies that micromanage MA plans.”

Medicare Advantage has been plagued with issues since the beginning, with 8 out of 10 Medicare Advantage plans submitting inflated expense reports, Medicare Advantage plans repeatedly denying claims for necessary health care, and a Senate Finance Committee report finding that companies regularly used illegal false, misleading and aggressive advertising to pressure or trick seniors into signing up for Medicare Advantage plans that were worse for them.

Medicare Advantage needs more regulation, not less. Efforts like this put seniors at increased risk of insurance fraud and abuse, especially in the context of deregulating private insurance. 

3. Privatizing Medicaid

Project 2025 suggests several ways to privatize Medicaid as well.

First, the authors ask Congress to pass legislation to “allow private health insurance” by allowing states to contribute to “a private insurance benefit.”

Even if Congress doesn’t act, Project 2025 tells CMS to create a “robust ‘personal option’  to allow families to use Medicaid dollars to secure coverage outside of the Medicaid program.” They don’t offer a specific policy, but it is likely that this would follow the format of school voucher programs, which Project 2025 heavily promotes in its sections on education.

Once again, the push to privatize Medicaid must be understood in the context of effectively repealing the ACA and its regulations.

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