Republicans are taking much political heat for trying to cut $880 billion in federal spending, with Democrats saying the GOP will cut Medicaid benefits. Gary Alexander, director of the Medicaid and Health Safety Net Initiative at the Paragon Health Institute, talked to Health Care News about how Republicans can turn this challenge into a huge win from both the political and policy standpoints.
Health Care News: The Democrats claim there is no credibility to the charge that Medicaid benefits will not be cut. Are they wrong?
Alexander: Yes, there is strong credibility to the claim that Medicaid benefits can remain intact while achieving significant savings. During my tenure as Secretary of Health and Human Services in Pennsylvania, we implemented the Enterprise-wide Program Integrity Initiative, which saved nearly $2 billion by enforcing eligibility rules, conducting audits, and enhancing recoveries, etc.
This initiative not only delivered substantial savings but also allowed us to return a surplus to the general fund, proving that fiscal improvements are possible without cutting benefits or eligibility.
The House Republicans’ proposal to cut $880 billion over 10 years aligns with this approach, focusing on eliminating fraud, waste, and abuse. Given that improper payments in Medicaid could be as high as $1.1 trillion over the past decade, this target is not only credible but also essential for the program’s sustainability while preserving care for recipients.
Health Care News: In addition to “prioritizing efficiency, accountability, and smarter resource allocation” (see article on page 3), are there other ways Republicans can respond to taxpayers as well as to those who truly need Medicaid?
Alexander: Paragon commissioned a poll in early March that showed Americans support specific Medicaid reforms, like work requirements, eliminating the current financing discrimination that favors able-bodied working-age adults over low-income children, the elderly, and the disabled, and capping Medicaid payment rates at Medicare levels.
Health Care News: Should we create a “cash-based” program, similar to food stamps, where the needy can shop for the best health care service available and seek out options such as direct primary care?
Alexander: Direct primary care (DPC) is a promising model worth exploring as another care management system to deliver medical services. Costing around $100 monthly, DPC provides recipients with subscription-based access to primary care and some medications, fostering direct patient-provider relationships that often lead to better health outcomes and reduced unnecessary care.
It’s an effective and lower-cost system that could give recipients more control over their health care while keeping expenses down.
DPC could be deployed in different ways: recipients could be provided cash to select a DPC provider, or they could simply be given the choice to enroll in a DPC plan without a cash transfer. Either approach positions DPC as a structured care model that emphasizes efficiency and personal responsibility. Testing this through state pilots could demonstrate its value as a conservative, cost-saving solution within Medicaid.
Health Care News: Why are lawmakers hesitant to do something disruptive in Medicaid?
Alexander: The reluctance to pursue disruptive Medicaid reforms stems from practical and political challenges. The barrier to real Medicaid reform is powerful special interests guarding the status quo.
Hospitals, advocacy groups, and state bureaucracies benefit from a system that rewards spending over outcomes. Hospital systems, advocacy organizations, and state bureaucracies have built entire operations around maximizing federal reimbursements.
Many states, particularly wealthier ones, have developed financing schemes that divert funds toward politically favored entities while deprioritizing the most vulnerable enrollees. These stakeholders resist shifts that threaten their interests by fearmongering and threatening lost coverage, angry voters, or headlines about reduced access to care.
Proponents of the status quo intentionally ignore that projected federal Medicaid spending increased by $1.2 trillion under the last administration. Proposals to save $880 billion over ten years through tighter eligibility reviews, better oversight, and more rational financing is anything but radical. It is a technocratic, targeted response to a bloated program which saw explosive growth over the last four years.
Pennsylvania’s $2 billion savings through the Enterprise-wide Program Integrity Initiative demonstrates it’s achievable with stricter adherence to current rules, greater accountability, and more prudent management. Conservatives could embrace this as a responsible, non-radical path to strengthen Medicaid’s fiscal health.
