Medicaid & Medicare

March 24th, 2025

D.O.G.E. what's true and what's not

In recent political discourse, the proposed establishment of a Department of Government Efficiency (DOGE) has sparked significant debate, particularly regarding its potential effects on critical healthcare programs like Medicaid and Medicare. Championed by figures such as Elon Musk and Vivek Ramaswamy during the 2024 presidential campaign, DOGE is pitched as a solution to streamline government operations and eliminate waste. However, critics argue that the rhetoric surrounding this initiative relies on exaggerated or false claims about inefficiency and fraud in programs like Medicaid and Medicare, which could lead to policies that undermine these vital safety nets. This article explores the nature of these claims and the potential consequences for millions of Americans who depend on these programs.

The False Claims: Misrepresenting Fraud and Waste
Proponents of DOGE often point to Medicaid and Medicare as prime examples of government inefficiency, citing "fraud, waste, and abuse" as rampant issues that drain taxpayer dollars. For instance, claims have surfaced that these programs lose "hundreds of billions" annually to improper payments, with some suggesting that simply rooting out this waste could offset massive budget cuts. However, these assertions frequently mischaracterize the data and oversimplify the complexities of healthcare administration.

Improper payments—often cited as evidence of fraud—are not synonymous with intentional deceit. According to the Centers for Medicare & Medicaid Services (CMS), the 2024 Medicaid improper payment rate was 5.09%, translating to $31.1 billion in federal funds. Of this, 74% ($23.4 billion) stemmed from insufficient documentation, not necessarily fraudulent activity. Similarly, Medicare’s improper payment estimates, which exceeded $100 billion in 2023 alongside Medicaid, include errors like missing paperwork or administrative oversights rather than widespread criminal schemes. The Government Accountability Office (GAO) has explicitly stated that improper payments are not designed to measure fraud, yet this nuance is often ignored in DOGE-related narratives.

The exaggeration of fraud serves a political purpose: it justifies aggressive cost-cutting measures under the guise of efficiency. By framing Medicaid and Medicare as riddled with "enormous waste," proponents create a pretext for slashing funding without addressing the real drivers of healthcare costs—such as rising provider fees, an aging population, or chronic disease prevalence. This misrepresentation risks overshadowing the programs’ successes: Medicare serves 66 million elderly and disabled individuals, while Medicaid covers 90 million low-income Americans, including 41% of U.S. births and nearly half of children with special needs.

The Proposed Department of Government EfficiencyThe DOGE concept, while lacking a detailed blueprint as of March 26, 2025, is broadly envisioned as a task force or agency tasked with auditing federal spending and recommending cuts. Musk and Ramaswamy have suggested it could save trillions over a decade, with Medicaid and Medicare often highlighted as targets due to their significant share of federal expenditures—26% in fiscal year 2023. The appeal lies in its promise of fiscal responsibility, but the lack of specificity raises concerns about how such savings would be achieved without harming beneficiaries.

Critics fear that DOGE’s mandate could translate into blanket reductions in federal matching funds for Medicaid or tighter Medicare reimbursement rates. House Republicans, for example, have discussed cutting federal Medicaid spending by $2.3 trillion over ten years—a 27% reduction—partly justified by claims of inefficiency. Such cuts dwarf the estimated $31.1 billion in Medicaid improper payments, suggesting that savings would come not from eliminating waste but from reducing services, eligibility, or provider payments.

Negative Impacts on Medicaid
Medicaid, a joint federal-state program, relies heavily on federal matching dollars, with rates varying by state based on per capita income. A DOGE-driven push to "charge states the full fare" for improper payments, as some have proposed, could strain state budgets already stretched thin. States like Florida, with a 7% improper payment rate in 2023, would face significant penalties, potentially forcing cuts to benefits like nursing home care or mental health services—areas where Medicaid fills gaps Medicare does not.

Moreover, reducing federal support could exacerbate disparities. States with lower fiscal capacity might scale back optional services or tighten eligibility, disproportionately affecting vulnerable populations—children, pregnant women, and the disabled—who rely on Medicaid for comprehensive care. Research shows Medicaid expansion under the Affordable Care Act has improved health outcomes, reduced medical debt, and lowered mortality rates for conditions like cancer. Undermining this progress risks reversing these gains, particularly in states unable to offset federal cuts.

Negative Impacts on Medicare
For Medicare, DOGE-inspired policies could mean stricter provider screening, reduced telehealth funding, or lower payments to Medicare Advantage plans, which now cover over half of beneficiaries. While curbing overpayments to these plans—estimated at $16 billion in 2025—is a valid goal, broad cuts could disrupt care delivery. Providers, facing lower reimbursements, might limit Medicare patients, exacerbating access issues for the 66 million enrollees, many of whom are elderly or disabled.

The COVID-19 pandemic highlighted Medicare’s adaptability, with telehealth usage surging to meet patient needs. GAO has recommended assessing telehealth quality to ensure necessity, but slashing funding without such analysis could eliminate a lifeline for rural or homebound beneficiaries. Additionally, aggressive prepayment claim reviews, while cost-effective in theory, could delay care if not balanced with provider input—a risk if DOGE prioritizes savings over service.

The Broader Implications
The false narrative of rampant fraud not only misleads the public but also diverts attention from systemic healthcare challenges—like the high cost of prescription drugs or hospital consolidation—that drive spending far more than administrative errors. Medicaid and Medicare, despite their complexities, are not broken systems; they are lifelines that require refinement, not dismantlement. A 2023 DOJ report recovered $1.8 billion in healthcare fraud settlements, showing enforcement is active—yet this is a fraction of the programs’ trillion-dollar scale.

If DOGE proceeds without grounding its policies in accurate data, it risks turning efficiency into austerity. Beneficiaries could face reduced access, higher out-of-pocket costs, or lost coverage, while providers might exit these programs, shrinking the healthcare safety net. The irony is that such cuts could increase long-term costs—uninsured patients often turn to emergency care, which Medicaid and Medicare help prevent.

The Department of Government Efficiency holds potential as a concept, but its foundation on exaggerated claims about Medicaid and Medicare threatens more harm than good. Efficiency should not come at the expense of the millions who depend on these programs for survival. Policymakers must reject the false premise of pervasive fraud and focus on targeted reforms—strengthening oversight, improving documentation, and addressing root costs—rather than wielding a blunt axe. As of March 26, 2025, the stakes are clear: missteps here could unravel decades of progress in American healthcare.

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