Medicare Emerges as Target for Cuts to Offset Trump Tax Bill (1)

Senate Republicans are considering cuts to Medicare spending to help pay for Donald Trump’s signature legislative package.

The GOP lawmakers are proceeding cautiously as they expand their search for savings to a popular health insurance program nearly all Americans rely upon in retirement, presenting the move as an effort to root out waste, fraud and abuse. That includes cutting payments to health insurance companies that run private Medicare plans.

The pivot could open up hundreds of billions of dollars in potential savings for the federal government that Republicans could use to fund tax cuts. Yet Senate Republicans are divided on whether to include changes to Medicare Advantage in the tax bill.

House Republicans largely avoided touching the popular Medicare program in their version of the legislation, looking instead for cuts in the Medicaid health insurance program for low-income and disabled people and food assistance for the poor. They also presented those cuts as efforts to reduce waste, though many advocates of the programs dispute the characterization.

Medicare Advantage

One leading proposal for Senate Republicans is clamping down on private Medicare Advantage insurers to make it harder to game the federal subsidy system by exaggerating the health challenges their enrollees face, Republican Senator Lisa Murkowski of Alaska said.

Demands for better controls on such “up-coding” of medical diagnoses have been raised across the ideological spectrum, with progressive Democrat Elizabeth Warren of Massachusetts among those seeking more guardrails on privatized Medicare plans.

But Republican Senator Josh Hawley of Missouri said his party should steer clear of Medicare, saying touching the health insurance program for the elderly is a “terrible idea” and “crazy.”

Roger Marshall, a Republican member of the Senate Finance Committee that oversees both Medicare and tax policy, raised the idea in an interview with Bloomberg Television on Wednesday.

“There’s a lot of concern on Capitol Hill about Medicare Advantage,” Marshall said, adding that a plan backed by Republican Senator Bill Cassidy of Louisiana to more closely regulate diagnosis codes would save up to an estimated $275 billion over a decade.

Senator Thom Tillis of North Carolina said Republicans may also consider other cost savings in Medicare.

Marshall said in a subsequent interview “it will be the White House’s call” whether to include Medicare savings.

Republicans in the past have promoted Medicare Advantage privatized plans, but their rapid growth in recent years and reporting on the industry’s controversial billing practices has opened the industry up to bipartisan criticism.

The policy could deal a financial blow to UnitedHealth Group Inc., a company facing financial crisis after its stock has plunged since the beginning of the year. Another potentially affected insurer is Humana Inc., which has told Congress that it’s open to some billing reforms, the Wall Street Journal reported Thursday morning.

Humana shares fell as much as 2.2% after Bloomberg reported details of the proposal, while UnitedHealth dropped as much as 1.8%.

Humana didn’t respond to a request for comment. UnitedHealth Group referred to a statement that said the company would support a list of Medicare Advantage policy changes that don’t include the changes Cassidy is pushing.

Cassidy said in a brief interview in the Capitol that his Medicare Advantage billing reform legislation should be on the table. His legislation would require Medicare to consider billing data from a longer period of time and would restrict patient diagnoses from home visits from contributing to payments.

Several Senate Republicans expressed general openness to exploring Medicare Advantage billing reforms on Thursday, including Senator Susan Collins of Maine and Senator Ron Johnson of Wisconsin, who said lawmakers can’t afford not to look at fraud and abuse in privatized Medicare plans.

Johnson said that in his conversations with Trump, the president has been “absolutely” open to cutting waste in Medicare.

The White House responded to a question about cuts to Medicare spending with an emailed statement.

“The president has been clear — no cuts to Medicare, Social Security, or Medicaid. This bill addresses waste, fraud, and abuse in government spending,” said White House spokesperson Kush Desai.

Senate Republican leader John Thune of South Dakota declined to rule out cuts in Medicare generally when asked by reporters on Thursday whether the program would be targeted.

“The focus as you know has been on addressing waste, fraud and abuse in Medicaid, but right now we’re open to suggestions if people have them about other areas where there’s clearly waste, fraud and abuse that can be rooted out in any government program,” Thune said.

(Updates with Humana and UnitedHealth shares dropping, Hawley comment begining with seventh paragraph.)

--With assistance from Erin Durkin and Lillianna Byington.

To contact the reporters on this story:
Rachel Cohrs Zhang in Washington at rzhang698@bloomberg.net;
Steven T. Dennis in Washington at sdennis17@bloomberg.net;
Erik Wasson in Washington at ewasson@bloomberg.net

To contact the editors responsible for this story:
Megan Scully at mscully32@bloomberg.net

Mike Dorning, Michelle Fay Cortez

© 2025 Bloomberg L.P. All rights reserved. Used with permission.