By choosing Dr. Mehmet Oz for a key healthcare post this week, President-elect Donald Trump didn’t just add another TV star to his team — he picked a vocal champion for expanding the private sector’s role in Medicare.
On Tuesday, Trump announced that he would tap the daytime talk show host to run the Centers for Medicare and Medicaid Services, the critical agency that oversees health programs covering about 160 million Americans.
It was an unconventional choice for a role that typically goes to an experienced bureaucrat or policy expert familiar with CMS’s sprawling portfolio, which along with Medicare and Medicaid also encompasses the Children’s Health Insurance Program and the Affordable Care Act market. During his prior administration, Trump handed the job to Seema Verma, a conservative Obamacare critic who had helped shape several state Medicaid programs as a policy consultant.
Oz is better known for his dubious medical advice, such as claims that nutritional supplements can help prevent cancer, than his views on insurance. However, he has long been an eager advocate of Medicare Advantage, the popular but controversial federal program that lets seniors buy private coverage as an alternative to traditional, fee-for-service Medicare.
”Given his past track record, I assume this will be a fairly favorable environment for Medicare Advantage,” said Matthew Fiedler, a senior fellow at the Brookings Institution’s Center on Health Policy.
On his hit show, Oz has often hosted segments sponsored by Medicareadvantage.com, a commercial website that helps customers shop for the coverage. In one spot posted to his YouTube channel this August, he told viewers they could be eligible for plans with $0 premiums and benefits like free hearing aids, before bringing out one of the company’s insurance agents to walk through more details.
“Everyone around you is signing up!” he informed the audience, before eventually urging them to call a toll-free number.
As the COVID pandemic raged in 2020, Oz co-authored a Forbes article outlining a universal health insurance proposal they dubbed “Medicare Advantage for All.” It would have essentially moved all Americans who weren’t on Medicaid into private Medicare plans, funded with a 20% payroll tax.
Oz was less specific about his policy vision during his failed 2022 Pennsylvania Senate run. But he did again promise to expand Medicare Advantage. The “plans are popular among seniors, consistently provide quality care, and have a needed incentive to keep costs low,” he told AARP.
Currently, 54% of all Medicare enrollees are signed up for private Advantage plans. The coverage is appealing to many seniors because it often offers lower premiums and benefits like dental and hearing coverage that traditional Medicare legally can’t, as well as perks like free gym memberships.
But the plans come with downsides, as well: They provide more limited doctors’ networks, which can pose a challenge to aging patients, and require prior authorization for some treatments which can lead to denied coverage.
Republicans have long sought to expand Medicare Advantage, arguing that it offers customers more choice and operates more efficiently than the traditional program, in part by limiting unnecessary health spending. But critics argue that insurers earn their profits by cherry-picking healthier seniors and rejecting many legitimate treatment requests, likely “preventing or delaying medically necessary care,” as a 2022 inspector’s general report put it.
Some conservatives have proposed sweeping changes that would give Medicare Advantage a leg up. In its Project 2025 report, for instance, the Heritage Foundation advocated making the program the default insurance option for seniors. Such a change would likely require new legislation, said Brookings’ Fiedler, though the Trump administration could potentially try to use its regulatory powers to run a small pilot version of the idea.
For his part, Oz could potentially use his role at CMS to help expand Medicare Advantage at the margins and potentially boost insurers’ bottom lines.
One lever he could pull would be rules around the advertising that floods seniors’ mailboxes and TV screens each open enrollment period. CMS effectively has veto power over what spots can run, and the Biden administration led an aggressive crackdown against deceptive marketing practices that saw it reject around one-third of proposed ads last year while putting in place stricter regulations. Oz, a pitchman himself, could in theory take a looser approach.
“CMS currently has a lot of oversight over how Medicare Advantage plans conduct their marketing activities, and that has important implications for the continued growth of the program,” Joe Albanese, a senior policy analyst at Paragon Health, told Yahoo Finance.
At CMS, Oz will also oversee the annual rate-setting process that decides how much Advantage plans are paid for each customer they sign up, which he could use to “sweeten the pot” for companies, said Tricia Neuman, executive director for the program on Medicare Policy at the Kaiser Family Foundation.
There are growing concerns in Washington about Medicare Advantage’s cost, thanks to studies that have found the government now spends more per enrollee than it does for similar customers in traditional Medicare, partly due to how insurers game the payment system. The Committee for a Responsible Federal Budget estimated in 2023 that the government could end up overpaying insurers in the program by $810 billion to $1.6 trillion over the next 10 years, which will put more drain on Medicare’s trust fund and likely lead to higher premiums on the traditional side of the program.
The Biden administration has taken some modest regulatory steps to try and deal with the cost issue. This year it cut the base pay rate for Medicare Advantage plans by 0.16% — a move that caused an uproar within the industry and led congressional Republicans to accuse the president of trying to “destroy” the program. (The administration noted that insurers would still get a pay increase after adjustments for their customers’ health.)
In his post on Truth Social announcing Oz’s selection, Trump said Oz would cut “waste and fraud in our most expensive government agency.” But healthcare experts said they were skeptical those efforts would touch Medicare Advantage, given Oz’s desire to expand the program and the GOP’s reactions to Biden’s cuts.
“I don’t think there will be a big appetite for Republicans in Congress or the administration to address these overpayments,” said Kaiser’s Neuman. “But that comes at a cost to Medicare.”
While expanding Medicare Advantage might put a stress on Medicare’s long-term finances, that approach could keep many seniors happier in the short term since it could mean more perks in their plans.
“When plans are paid more, that does seem to result in more generous benefits for Medicare Advantage enrollees,” said Brookings’ Fiedler.
Jordan Weissmann is a senior reporter at Yahoo Finance.
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Source: finance.yahoo.com