In early 2025, the Department of Government Efficiency (DOGE), a new federal initiative spearheaded by Elon Musk under the Trump administration, began making waves across various government agencies. Originally formed by rebranding the United States Digital Service, DOGE aims to streamline federal operations and reduce wasteful spending. Recently, its focus has turned to the Centers for Medicare and Medicaid Services (CMS), which oversees Medicare and Medicaid—two of the largest healthcare programs in the United States. Together, these programs provide coverage to over 160 million Americans, including older adults, low-income individuals, and people with disabilities, while consuming a significant portion of federal and state budgets. But how might DOGE’s efforts reshape these critical healthcare systems? Here’s an exploration of its potential impact.
Understanding Medicare and Medicaid
Before diving into DOGE’s role, it’s worth clarifying what these programs do. Medicare is a federal health insurance program primarily for individuals aged 65 and older, as well as some younger people with disabilities or specific conditions. Funded through payroll taxes, premiums, and general revenue, it operates under uniform national standards. Medicaid, on the other hand, is a joint federal-state program that supports low-income individuals and families, with eligibility and benefits varying by state. The federal government provides matching funds to states, covering at least 50% of costs (and up to 90% for certain expansion populations), making it a vital lifeline for millions.
Both programs are administered by CMS, which manages everything from payment systems to provider contracts. In 2023, Medicaid spending reached $880 billion, with the federal government footing 69% of the bill, while Medicare spending hit $829 billion in 2021, projected to climb to $1.8 trillion by 2031. These massive budgets, combined with reports of inefficiencies and improper payments, have made CMS a prime target for DOGE’s mission.
DOGE’s Mission and Approach
DOGE’s core objective is to enhance government efficiency by cutting costs, reducing bureaucracy, and rooting out waste, fraud, and abuse. Led by Musk, who reports directly to the White House chief of staff, the initiative has already begun examining CMS’s payment and contracting systems. Musk has publicly stated on X that he believes “big money fraud is happening” in these programs, echoing sentiments from some policy experts who argue that healthcare spending is rife with inefficiencies. For instance, a 2024 CMS report identified a nearly 8% improper payment rate in Medicare fee-for-service alone, amounting to $31.7 billion.
DOGE’s approach appears to blend technological innovation with aggressive cost-cutting. Drawing from Musk’s experience in the private sector, where he’s known for optimizing complex systems, the department could leverage data analytics, automation, and process redesign to overhaul CMS operations. Two senior CMS veterans—one focused on policy, the other on operations—are reportedly leading the collaboration, signaling a pragmatic effort to align DOGE’s goals with the agency’s realities.
Potential Benefits for Medicare and Medicaid
If DOGE succeeds, several benefits could emerge for Medicare and Medicaid:
Challenges and Risks
However, DOGE’s involvement isn’t without risks. Medicare and Medicaid are politically sensitive programs, deeply entrenched in American healthcare. Aggressive cuts or reforms could spark backlash if they compromise access or quality. For instance, reducing federal Medicaid funding—say, by lowering matching rates or capping expenditures—might force states to slash benefits, limit eligibility, or underpay providers, potentially leaving vulnerable populations underserved. A Congressional Budget Office analysis suggested that cutting Medicaid by $880 billion, as proposed in a recent House budget resolution, would be nearly impossible without significant program reductions.
Moreover, the complexity of these programs poses a challenge. Medicaid’s state-by-state variation and Medicare’s reliance on private Medicare Advantage plans create a tangled web of stakeholders. DOGE’s outsider perspective, while innovative, may overlook nuances that career CMS staff understand intimately. Musk’s claim of “big money fraud” also raises questions: while fraud exists, experts note that improper payments often stem from clerical errors rather than intentional deceit, requiring nuanced solutions beyond blunt cuts.
As of March 26, 2025, DOGE’s work at CMS is in its early stages. Its staff have accessed key systems, but concrete proposals remain under wraps. The initiative’s success will hinge on balancing efficiency gains with the preservation of care for tens of millions of beneficiaries. Critics argue that past efforts to “fix” healthcare spending have sometimes shifted costs rather than eliminated them, while supporters see DOGE as a long-overdue shake-up of a bloated system.
For now, the healthcare community watches closely. If DOGE can deliver on its promise—cutting waste without gutting services—Medicare and Medicaid could emerge leaner and more sustainable. But if it overreaches, the fallout could ripple through hospitals, nursing homes, and living rooms across the country. Only time will tell whether this bold experiment strengthens or strains America’s healthcare safety net.
