Entitlement programs will survive, but likely at a cost, experts say

Amid all that sturm and drang over drastic cuts in government programs led by President Trump’s chief cost cutter Elon Musk is the realization that, despite fears, entitlement programs –
Social Security, Medicaid and Medicare – will survive largely intact.

That’s not to say there won’t be some costly and uncomfortable changes coming. But experts generally believe that the entitlements’ record of being “untouchable” will remain.

“Medicare most likely remains largely insulated from legislative spending reductions because, history has shown, elected officials can seriously jeopardize their political future with major changes to Medicare, especially coverage or benefit cuts,” says Josh Schultz, strategic engagement manager for CITIZ3N, a subsidiary of Softheon, a healthcare technology company for health plans, brokers, and government agencies. “Doing so would directly affect America’s seniors – a significant voting bloc that turns out at higher rates than other age groups.”

Tariff blowback may help protect entitlements

Indeed, some experts say that the political blowback the Trump administration is already facing over the international tariffs it implemented will further the likelihood that entitlements will be untouched.

“While the president doesn’t face reelection, any Medicare cuts would unquestionably be a defining factor in the midterm elections,” said Schultz.

So far, the administration has not implemented reductions to Social Security benefits and campaign promises to protect the program have been upheld. Earlier budget proposals that included measures like tightening eligibility for disability benefits were rejected by Congress.

All is not well with the Social Security Admin.

Still, all is not well at the Social Security Administration. Office closures, staffing and service cuts, and policy changes have created chaos within the department, workers say. The department’s website has crashed several times in the last few weeks, causing delays, frustration, and raising fears. But no benefits have been slashed or payments delayed. Wired reported The Trump administration wants to migrate all social security data and rewrite code in months, which could cause system collapse and further outages.

The SSA operates the largest government program in the US, administering social insurance programs, including retirement, disability and survivor benefits. About 69 million Americans each month receive a social security benefit this year, totaling about $1.6 trillion in benefits paid during the year and accounting for 22% of the total federal budget. While costly and facing challenges by population growing older, the program is still popular despite being dubbed a “Ponzi scheme,” by Musk, who is heading the Department of Government Efficiency (DOGE).

Medicare, too, has seen no direct benefit reductions, despite threats. Benefits for enrollees remain intact and the administration seems focused on cost-saving measures targeting providers and drug pricing (e.g., site-neutral payments and drug price transparency rules). It has promoted private Medicare Advantage plans, which may not reduce benefits but shift enrollees to managed care.

Medicare is a 'political third rail'

"Medicare is such a political third rail that neither party wants to be seen as gutting it, so I do expect the program to survive in some form,” said Lily Vittayarukskul, CEO of Waterlily, which uses AI to predict long-term care needs “But ‘survival’ can still mean higher out-of-pocket costs or new eligibility hoops that, in effect, shift more of the burden onto seniors.

When lawmakers talk about trimming entitlements, that usually translates into subtle policy changes that reduce benefits or leave gaps in coverage, rather than an outright dismantling.

About 54% of the eligible Medicare population is enrolled in Medicare Advantage, which is supposed to lower costs. However, some argue that Medicare Advantage has increased the system's costs because of upcoding (when a provider codes one’s medical care with the code for a more severe condition to receive a higher reimbursement).

“At the same time, Medicare Advantage lowers care quality as enrollees are denied care more often,” says Yehuda Tropper, CEO of Beca Life Settlements, a viatical and life insurance settlement company. “An example is UnitedHealth's use of AI to deny care to MA enrollees. That means the continuation of Medicare while cutting the care it provides to patients and providing higher payouts to insurance companies.”

Vittayarukskul foresees a rollback of certain expansions added over the past decade, from the Affordable Care Act’s preventive screenings, to home-based supports in the Chronic Care Act, to the Inflation Reduction Act’s drug affordability measures.

“Eliminating these benefits could lead to higher out-of-pocket medication costs, delayed diagnoses of serious conditions, and reduced options for managing chronic illnesses before they escalate,” she said. “Not only would that translate into pricier acute hospitalizations and riskier outcomes, but it would also push more individuals into advanced stages of disease that amplify long-term care needs. Because Medicare was never meant to cover extended custodial care, such rollbacks could leave families footing even larger bills.”

Medicaid: Reduced coverage for some

Medicaid is a somewhat different story. Work requirements and administrative changes have led to reduced coverage for some, though major structural cuts have not been enacted. However, the administration has introduced a block grant initiative, allowing states to receive a fixed amount of federal funding for Medicaid.

This approach could result in decreased federal funding and increased financial risks for states opting in, compelling them to cut coverage, reduce benefits, or lower provider payment rates. Additionally, the administration proposed significant cuts to Medicaid funding. For instance, the House budget resolution aimed for about $880 billion in reductions over 10 years, which could lead to millions losing access to Medicaid. Furthermore, the administration decided against expanding Medicare and Medicaid coverage for anti-obesity medications, limiting access to these treatments for beneficiaries.

“This dynamic also further strains Medicaid as the funder of last resort, where the millions of families who already run out of money trying to cover long-term care will quickly become tens of millions,” said Vittayarukskul. “As Medicaid increasingly struggles to keep pace with the ballooning costs of care, more states may follow Washington’s lead with programs similar to the CARES Act, essentially mandating or incentivizing private or state-based LTC insurance solutions to pull strain off of Medicaid."

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].