President Trump has been in office for over 150 days. Confusion over possible changes to Medicare and Medicaid continues to weigh heavily on millions of people, especially those over the age of 65, who depend on these programs.
Medicare is the primary health insurance for adults aged 65 and older. It also covers those with certain disabilities or illnesses, such as end-stage renal disease or Lou Gehrig’s disease. According to the most current data from the Centers for Medicare and Medicaid Services (CMS), just over 68 million people were enrolled in Medicare, including both Original Medicare and Medicare Advantage plans, for $1.03 trillion, or about 14% of total federal spending in 2024, according to KFF.
Although it's still early into his second term, Trump has made several notable changes to Medicare, which could impact the financial stability of millions of Americans. (A separate story looks at what Trump has done with Social Security so far).
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Changes to Medicare in "Trump's Big Beautiful Bill," if enacted
Four key changes could occur if the Big Beautiful Bill is passed into law.
After enrollment in Medicare Part A, contributions to HSAs will be allowed: If enacted (the deadline is July 4), there are changes to Health Savings Accounts (HSAs) found in "Trump's Big Beautiful Bill".
Medicare Part A-eligible working seniors enrolled in an HDHP can still contribute to an HSA. Existing HSA contribution rules and penalties for non-qualified medical expenses that apply to those under 65 will also apply to this group. Another provision allows bigger contribution limits. Individuals who make less than $75,000 annually can contribute an additional $4,300, and families can contribute $8,550 each year to their HSA if they earn less than $150,000.
As HSA accounts can be used to reimburse you for Medicare premiums and co-pays, the opportunity to save more could help cover more of your medical expenses in retirement.
Reducing and recovering improper payments: The new law would allocate $25 million for the Secretary of Health and Human Services to use AI data scientists to investigate and recover improper Medicare payments.
Limit eligibility for Medicare: The law would eliminate Medicare eligibility for illegal immigrants, only allowing eligibility for individuals living in the United States through Compacts of Free Association, Lawful Permanent Residents and certain Cuban immigrants.
The law would allow more hospitals to register as a Rural Emergency Hospital (REH), a designation that would provide financial support to struggling hospitals that might otherwise have to be closed.
For more information, read: Four Changes to Medicare in the One Big Beautiful Bill Act
But the legislation also includes provisions that would dramatically reduce federal spending on Medicare and Medicaid over the next decade. Analysts estimate that we may see over $3 trillion in tax cuts and roughly $2 trillion in spending reductions to Medicare and Medicaid. We may also see funding rollbacks to Medicare Advantage plans, potentially leading to higher premiums or reduced coverage, the reversal of Medicaid expansion under the Affordable Care Act, and an increase in cost-sharing requirements, especially for prescription drugs and long-term care services.
The Administration blocks Medicare from covering obesity drugs
The Trump administration opted not to move forward with a proposal for Medicare and Medicaid to cover obesity treatments under the 2026 Medicare Advantage and Part D policies.
One day after the Senate confirmed Dr. Mehmet Oz as head of the Centers for Medicare and Medicaid Services, the CMS said in a filing that it would not start covering anti-obesity drugs for its beneficiaries. (Legislation passed in 2003 prohibits Medicare, the federal health program for adults 65 and older, from covering medication solely for weight loss).
Under President Biden, CMS had proposed reinterpreting the law to allow for the coverage of weight loss drugs for obese, rather than overweight patients. CMS has now decided not to move forward with that coverage.
Read: Trump Administration Blocks Medicare From Covering Obesity Drugs — Why It Matters
Five changes to Medicare in 2026
As Dr. Mehmet Oz, the Administrator of the Centers for Medicare & Medicaid Services (CMS), prepares for the next Medicare open enrollment, there will undoubtedly be changes to Medicare benefit periods and the management of the program in 2026.
What we know so far:
1. Prescription payment plan updates. Beginning in 2026, if you participate in the Medicare Prescription Payment Plan (MPPP), you will be automatically re-enrolled the following year unless you opt out.
2. A cap on Part D prescription drug expenses indexed for inflation. Beginning in 2026, the cap on out-of-pocket prescription drug costs will go up to $2,100. That's a $100 increase over the 2025 limit of $2,000.
3. Limit on special supplemental benefits for the chronically ill (on Medicare Advantage. The CMS finalized and codified a non-exhaustive list of non-allowable supplemental benefits that are on offer under the Special Supplemental Benefits for the Chronically Ill (SSBCI) category.
4. Insulin costs capped. In 2023, insulin costs for Medicare beneficiaries were capped at $35 per month or less, depending on negotiated or maximum fair prices. This cap will now apply annually, beginning in 2026.
5. Zero cost-sharing for adult vaccines. Since 2023, Medicare beneficiaries have had access to a limited number of free vaccines. However, free vaccines are now a permanent feature of Medicare Part D plans.
For more details, read: Five Medicare Changes Coming in 2026
Medicare and Medicaid job cuts
Earlier this year, the U.S. Department of Health and Human Services (HHS) announced a dramatic restructuring under President Trump's Executive Order. The restructuring will serve multiple goals without impacting critical services, per a press release by the HHS.
Reducing the workforce by 10,000 full-time employees is expected to save taxpayers $1.8 billion per year, while keeping essential services intact, according to the Trump administration.
“We aren't just reducing bureaucratic sprawl. We are realigning the organization with its core mission and our new priorities in reversing the chronic disease epidemic,” HHS Secretary Robert F. Kennedy, Jr. said. “This Department will do more — a lot more — at a lower cost to the taxpayer.”
Cuts to Medicaid?
Although not directly related to Medicare, it's worth mentioning that Medicaid, the state and federal program that provides health coverage for millions of low-income Americans (about 25% of the U.S. population), is at the center stage in Congress’s bid to pass President Donald Trump’s sweeping agenda.
In simplest terms, Republicans want to reduce the cost of the $816 billion program as part of a long-term plan to cut federal spending and implement Trump’s tax cuts and his border and energy measures. Democrats adamantly oppose cuts to the program.
The total cost of Medicaid and CHIP in 2023 was $896 billion. About 70% of that amount, $616 billion, was paid by federal taxpayers. The rest was paid with state taxes. Trump has consistently said he will reduce Medicaid spending by eliminating fraud and abuse, but will not cut benefits.
Democrats say the program does not contain enough fraud and waste to produce the savings Republicans want, and they have urged Republicans to reconsider cutting the program.
Read: RFK Jr. Confused Medicare and Medicaid: Here's the Difference
The Administration cancels some payment trials
Aligning with Trump's efforts to reduce costs while maintaining the quality of care, the Center for Medicare and Medicaid Innovation (CMMI) has announced plans to cancel six payment trials by the end of 2025. The changes by the Trump Medicare innovation center are meant to change the way healthcare providers are paid, according to Axios. These programs include initiatives like Primary Care First, Making Care Primary and End-Stage Renal Disease Treatment Choices.
Read: President Trump's Stances on Social Security and Medicare
Trump pauses hospice industry oversight
The administration has put a hold on a federal program designed to increase oversight of hospice care, which receives over $25 billion annually from Medicare. This pause is meant to root out and eliminate fraud and waste and address fraudulent billing and improper patient enrollments. The program, initiated during the Biden administration, required noncompliant hospices to take corrective action or face expulsion from Medicare. The pause amounts to a win for the hospice industry, which said the Biden plan would penalize well-meaning operators without identifying underperforming ones.
Read: Hospice Is Often Misunderstood: What Is It, and Who Is It For?
OMB steps back funding freeze of Medicare grants and loans
In January, the Office of Management and Budget (OMB) issued a memo to temporarily pause the disbursement of federal grants and loans, including those for Medicare. However, before carrying through with the action, the OMB faced legal challenges and was blocked by federal judges. This led to confusion and concerns about potential impacts on Medicare funding. As of late February, a federal judge continued to block the OMB from freezing federal assistance, delivering another blow to the Trump administration's ongoing efforts to shrink federal spending.
Read: What a Federal Grants Pause Could Have Meant for Social Security and Medicare
DOGE continues to cut waste and fraud
So far, DOGE has taken charge of the Medicare enrollment system to modernize it and reduce costs after previous contractors failed to deliver results. Under DOGE’s federal restructuring, many probationary employees were fired at the Centers for Medicare and Medicaid Services (CMS), which houses Medicare and Medicaid.
According to a recent court filing, affiliates of DOGE have been given access to 19 sensitive systems at the HHS, as reported by WIRED. Nine of those are previously undisclosed. This access includes a centralized accounting system for all CMS programs and several additional HHS accounting systems that pay government contractors. No Medicare or Medicaid beneficiaries' personal information has been accessed — yet.
Read: What You Need to Know About Elon Musk's DOGE's Access to Medicare Systems
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