CMS Administrator Mehmet Oz, MD, is pushing for major reforms to the Medicaid program, according to comments he made May 6 at the 2025 Milken Institute Global Conference, per Fox Business.
Dr. Oz told the news outlet that there is a “generational opportunity” to reform Medicaid and save the U.S. hundreds of billions of dollars.
“I believe we’re going to increase expenditures on Medicaid,” he said. “It may not increase as much as it would have normally increased, but I think we have a unique opportunity… because what the president wants to do is get everyone aligned.”
According to Dr. Oz, Medicaid is misallocating funds by directing resources to “able-bodied individuals,” rather than the program’s original focus on low-income children, older adults and people with disabilities.
“In Medicaid, we’ve got a problem. We’re not funding the program as it was originally envisioned, because we’re shifting so much of it to able-bodied individuals,” he said.
Currently, more than 20 million people receive health benefits through Medicaid expansion, which covers adults earning up to 138% of the federal poverty level. Dr. Oz suggested that CMS has taken on too much financial burden by covering “able-bodied” adults at the current federal reimbursement rate.
“Because we pay 90% of the money for the able-bodied person and only, let’s say, 65% for a traditionally Medicaid poor, young, old or disabled person, it actually moves money to the able-bodied population,” he said.
Dr. Oz also noted systemic inefficiencies within the Medicaid system, including the problem of people receiving benefits in multiple states. He estimated that Medicaid is losing between $1 billion and $10 billion annually due to individuals being enrolled in Medicaid in more than one state at the same time. Medicaid managed care insurers received at least $4.3 billion in duplicate payments for beneficiaries enrolled in multiple states between 2019 and 2021, The Wall Street Journal reported in March.
“If you’re a Medicaid patient in California and you move to Nevada, who does the federal government compensate? It turns out… Both. Why? Because it’s incentivized for both governors not to tell us,” he told Fox Business.
In April, House Republicans approved the Senate’s fiscal 2025 budget blueprint, directing the House Energy and Commerce Committee to identify at least $880 billion in federal healthcare spending cuts, a figure many industry leaders expect will fall disproportionately on Medicaid.
After meeting with moderate Republicans on May 6, House Speaker Mike Johnson said plans to reduce the Federal Medical Assistance Percentage for Medicaid expansion states and implement per capita caps on Medicaid funding are no longer under consideration. One provision still under consideration is the implementation of new work requirements for healthy adults in states receiving the 90% federal Medicaid match. House Republicans aim to finalize the package by Memorial Day.
President Donald Trump unveiled his fiscal 2026 budget proposal on May 2, cutting non-defense federal spending by $160 billion. The budget would not cut funding for Medicare or Medicaid, though the president is reportedly open to Medicaid work requirements.
At least 11 states are also considering work requirements for their Medicaid programs.
