Social Security and Medicare are by far the biggest contributors to our national debt. The federal government spent $1.6 trillion and $992 billion, respectively, on these programs in fiscal 2025. President Donald Trump promised during his campaign that he would “not cut one penny from Social Security or Medicare,” making it unlikely that there would be progress on lowering federal spending during his presidency. But his administration has made several regulatory changes that lower Medicare spending in a responsible and prudent way.
The most significant is the administration’s push for site-neutral payment reform. For years, Medicare has paid vastly different rates for the same service depending on where it is delivered. The Affordable Care Act has made this problem worse. A routine procedure performed in a hospital outpatient department can cost taxpayers and seniors far more than when it is done in a physician’s office, despite there being no meaningful difference in quality. This distorted payment structure has encouraged hospital systems to buy up independent practices and shift care into higher-cost settings, driving consolidation, monopolization, and higher prices.
By expanding site-neutral payments, the Trump administration is restoring the principle that Medicare should pay for the service, not the sign on the building. Equalizing payments reduces incentives for costly hospital acquisitions, lowers costs for seniors, and saves taxpayers billions of dollars, too, all without cutting any guaranteed benefit. That is the kind of reform Medicare needs.
The administration has also embraced aggressive Medicare drug price negotiations, a policy long discussed in Washington but rarely implemented with seriousness. Prescription drug spending is one of the fastest-growing components of Medicare, particularly in Part B and Part D. For too long, the federal government has been a price taker rather than a price setter, subsidizing cheap medicines for the world, especially Europe.
By using Medicare’s market power to negotiate better prices on costly drugs, the administration is using leverage to improve the system’s cost efficiency. Lower drug prices reduce premiums and cost-sharing for seniors and ease pressure on the federal budget. Importantly, these negotiations are targeted at the most expensive medicines that account for the most spending, ensuring savings are meaningful rather than symbolic.
Another area where the administration deserves credit is for curbing overpayments in Medicare Advantage, which has a good record of delivering cost-effective coordinated care to Medicare beneficiaries. However, many insurance companies employ consultants to find ways to game the system and maximize revenues without delivering more care. Their interest is in maximizing income while minimizing outlays. The federal government’s interest, and that of all taxpayers, is the opposite.
One common practice is for insurance companies to undertake “chart reviews” that analyze patient medical records for possible diagnoses of ailments that patients have not asked their doctor to treat. Plans have strong financial incentives to make patients appear sicker than they are. This is known as upcoding, which leads to higher payments from taxpayers without necessarily improving care.
The Trump administration has taken steps to tighten risk-adjustment audits, refine payment formulae, and scrutinize billing patterns that suggest abuse. Even modest improvements in payment accuracy can produce substantial savings, given the size of Medicare Advantage. Cracking down on overpayments protects taxpayers and the long-term sustainability of Medicare, while preserving the option for seniors who prefer private plans.
RENTS FALL AGAIN AS TRUMP’S DEPORTATIONS RISE
None of these reforms grabs headlines the way sweeping benefit cuts or tax hikes would. But that is precisely their virtue. They represent the slow, technical, and often unglamorous work of making a massive federal program more efficient.
Trump’s promises not to cut Medicare were a winning political gambit. But his administration has shown that honoring that promise does not mean tolerating waste, distortions, and gaming of the system. Site-neutral payments, tougher drug price negotiations, and a crackdown on Medicare Advantage overbilling are meaningful steps toward a more sustainable Medicare program and lower federal deficits.