Could changes be coming to Medicare, Medicaid with Dr. Oz leading CMS?

ABC News: With President-elect Donald Trump's recent announcement of former surgeon-turned-TV host Dr. Mehmet Oz to lead the Centers for Medicare and Medicaid Services (CMS), questions are swirling about whether changes could be coming to the government programs.

If his nomination is confirmed by the Senate, Oz would, as CMS administrator, oversee Medicare, Medicaid and the Children's Health Insurance Program. At least 145 million Americans are enrolled under one of the three programs, according to federal data.

Oz has previously expressed support for an option that could lead to more Medicare privatization. Although Oz has not revealed his views on Medicaid, some Republicans in Congress have expressed support for changes that would slash the budget of the program.

Making Medicare Advantage the default

CMS administers Medicare, the federal health insurance program for those mostly aged 65 and older. More than 66 million people in the U.S. receive coverage through Medicare, the program says.

However, Oz has expressed support for Medicare Advantage, a Medicare-approved plan run by private insurance companies. The plan must follow rules set by Medicare, such as limiting out-of-pocket expenses and covering all services covered by traditional Medicare.

"Medicare Advantage has definitely become a much more important part of the Medicare program. It's now the most popular coverage option within the program," Joe Albanese, a senior policy analyst at the right-leaning think tank Paragon Health Institute, told ABC News.

"It's grown very rapidly in popularity over the past decade," he continued. "And that's going change the way that the government interacts with Medicare and Medicare beneficiaries."

In an op-ed co-written for Forbes in June 2020, Oz said Medicare Advantage offers better care due to there being competing plans. He said Medicare Advantage could also be expanded to all Americans who are not on Medicaid, which would be funded by a 20% payroll tax. He has also promoted Medicare Advantage on his show, "The Dr. Oz Show."

Trump, too, has promoted Medicare Advantage, touting new benefits for seniors who were enrolled in the plan. What's more, Project 2025 — a plan of conservative policy proposals proposed by the Heritage Foundation — has proposed Medicare Advantage be the default option for Medicare coverage.

"I don't know what plans would be for such a proposal in Congress or in this administration," Albanese said. "I can say that some of the proponents of a default Medicare Advantage enrollment approach say that [Medicare Advantage] plans are typically able to offer comparable, if not lower costs."

However, critics argue making Medicare Advantage the default option could privatize the program and limit people's options when it comes to receiving care because many doctors and hospitals don't accept Medicare Advantage.

"To move to a default option, I think it'd be hard to get that, particularly in an administration [that] is in favor of less regulation because Medicare Advantage requires a strong partnership with regulators," Daniel Polsky, a Bloomberg Distinguished Professor of health economics at Johns Hopkins University, told ABC News. "It's making a lot of requirements to ensure that the private insurance companies are using federal dollars wisely and acting in the best interests of the patients that they're responsible for."

If Medicare Advantage became the default option, Polsky said, it would increase spending, and the program would not be able to negotiate with as many providers as traditional Medicare can.

"You have to take the good with the bad with Medicare Advantage if you're going to lean into that program," he said. "There are just going to be beneficiaries that will not be served by that program because they need specialized care with specialized providers that they can't access in that program."

Work requirements for Medicaid

Little is known about what Oz's views are on Medicaid, a federal health insurance program for disabled and low-income Americans. CMS works with state programs to administer Medicaid, under which more than 72.4 million people are enrolled.

Some Republicans have called to make cuts to Medicaid, which makes up 9% of the federal budget, according to the Peter G. Peterson Foundation.

PHOTO: Mehmet Oz visits the AW Driving School & License Testing Center in Allentown, Pa., Sept. 23, 2022. (Matt Rourke/AP)

Sen. John Cornyn, a Republican from Texas, proposed implementing block grants, which are lump sums of money the government provides to states to cover medical expenses. This differs from the current method, in which the government contributes dollars for every dollar spent by the states.

Polsky said there would be negative consequences of moving to a block grants program.

"To move to a block grants program, any marginal spending by states would be felt at a much higher level," he said. "Medicaid is a really critical counter-cyclical program, so when we're in a recession or moving toward a recession, spending goes up in the Medicaid program that acts as an important kind of macro balance that would somewhat go away because states have to balance their budgets."

He added that flexibility for spending to go up or down based on the needs of the patient population in a certain state would also be much harder if a block grants program is implemented, which he said could have "negative health consequences."

Some Republicans may also encourage Oz and the Trump administration to implement work requirements as a basis of eligibility for Medicaid, including working or volunteering for a number of hours or being involved in educational activities.

House Budget Committee Chairman Jodey Arrington, a Republican from Texas, told reporters last week that he supports a "responsible and reasonable work requirement."

Polsky said it would be a deterrent to people who would otherwise qualify for Medicaid signing up, but it also doesn't incentivize work.

"My familiarity with the evidence — turns out there weren't too many that were implemented, but there [have] been some work requirements of other programs in the past — with work requirements is that they don't incentivize or ... actual work doesn't increase for people who enroll in these programs," he said.

Polsky said he has found in his research that such requirements create more of an administrative burden due to the added documentation that comes with new requirements.