Medicare Privatization Under New CMS Leadership: What's Really at Stake
After writing about Dr Oz's potential impact on Medicare drug negotiations last week, I found myself diving deeper into an aspect of his nomination that deserves closer attention: his vision for Medicare's future. A letter from Senate Democrats, led by Elizabeth Warren and Ron Wyden, raises critical questions about Dr Oz's previous calls for Medicare privatization and his substantial financial ties to the insurance industry.
The heart of the matter isn't just about one nominee's stockholdings or past statements. It's about the fundamental nature of Medicare itself. Having followed Senator Wyden's work on Medicare policy for several years, I've seen how the program serves as an "ironclad promise" to seniors. That promise now faces a potential reshaping under new leadership.
A Shift in Leadership Philosophy
This transition marks a notable shift in the Centers for Medicare & Medicaid Services (CMS) leadership approach. Current Administrator Chiquita Brooks-LaSure has emphasized maintaining both traditional Medicare and Medicare Advantage as viable options, focusing on the parity between the programs. In her vision, beneficiaries should have equal access to benefits regardless of which program they choose, recognizing that individual preferences and needs vary when selecting coverage.1
Dr Oz’s vision, by contrast, suggests a more decisive shift toward privatization. His 2020 proposal for "Medicare Advantage for All" represents more than a policy preference—it signals a dramatic shift in how CMS might approach its statutory obligations. While the CMS Administrator has significant discretion over program implementation, they must still operate within congressional intent. I won’t let you forget that the boundaries of administrative authority in health care are increasingly under scrutiny.
The $550 000 question (literally, given Dr Oz's UnitedHealth stock holdings) is how these financial interests would influence Medicare Advantage oversight.2 Federal ethics laws provide a framework, but the real-world implications for program administration remain concerning.
Who Wins and Who Loses?
From my perspective, there are several potential outcomes that could affect stakeholders. While this list is not exhaustive, it highlights the implications most likely to materialize based on news coverage and reports.
For Patients: The 30 million beneficiaries in traditional Medicare didn't sign up for a privatization experiment. While Medicare Advantage plans tout extra benefits, they also restrict provider networks and often require prior authorization—trade-offs that many seniors specifically chose to avoid by selecting traditional Medicare.
For Payers: Insurance companies stand to gain the most from privatization. When MedPAC reports that Medicare Advantage plans will cost taxpayers $83 billion more than traditional Medicare in 2024 alone…well, you can connect the dots.3
For Pharmaceutical Companies: The intersection with drug price negotiations adds another layer of complexity (at this point, what isn’t complex?). The pharmaceutical industry already faces significant changes under the Inflation Reduction Act (IRA). Medicare privatization could either strengthen or undermine these reforms, depending on implementation.
Looking Forward
Senator Wyden's involvement in this oversight effort matters. His decades of experience fighting for seniors' health care rights, combined with his role as ranking member on Senate Finance, suggests we'll see thorough scrutiny of how Dr Oz's vision aligns with Medicare's core mission.
The confirmation hearings will need to address fundamental questions about the future of Medicare. Can we maintain the program's original promise while shifting toward privatization? How do we balance innovation with protection of traditional Medicare? These aren't just policy questions—they’re about the very nature of our commitment to senior health care. (And, selfishly, I would like to see the program preserved for the sake of my own loved ones who are nearing eligibility age).
The past decade has seen numerous attempts to reform Medicare, with mixed results. The IRA’s Part D reforms stand out as a notable success, particularly the $2000 cap on out-of-pocket costs for beneficiaries. While earlier efforts like the Prescription Drug Pricing Act of 2019 and 2020 didn't advance independently, many of their core principles ultimately found their way into the IRA's provisions. These reform efforts demonstrate both the complexity and importance of thoughtful Medicare policy changes.
Yet this moment feels different. Unlike previous reform efforts, we're seeing an unprecedented convergence of administrative authority, private sector interests, and ideological vision in ways that could fundamentally reshape the program. This isn't just another policy debate or legislative proposal—it's a potential transformation of Medicare's fundamental structure through administrative action.
The stakes couldn't be higher. As we head into 2025, the future of Medicare—and the millions who depend on it—hangs in the balance.
Stay tuned for my last Behind the Bill of 2024 on December 18th!
References
1. Benis D. AARP interview: new Medicare chief outlines her vision. AARP. October 5, 2021. Accessed December 11, 2024. https://www.aarp.org/health/medicare-insurance/info-2021/chiquita-brooks-lasure-interview.html#:~:text=Where%20I%20can%20see%20Medicare,current%20beneficiaries%20and%20future%20ones.
2. Weizel N. Warren, democrats demand answers from Dr Oz about Medicare privatization. The Hill. December 10, 2024. Accessed December 10, 2024. https://thehill.com/policy/healthcare/5032680-warren-democrats-oz-medicare-privatization/
3. The Medicare Advantage program: status report. Report to the Congress: Medicare payment policy. MedPAC. March 2024. Accessed December 10, 2024. https://www.medpac.gov/wp-content/uploads/2024/03/Mar24_Ch12_MedPAC_Report_To_Congress_SEC.pdf
