The Centers for Medicare & Medicaid Services (a mouthful popularly known as CMS) is the federal agency that oversees Medicare, Medicaid, the Children’s Health Insurance Program, and the Health Insurance Marketplace. Older adults primarily interact with CMS when they enroll in Medicare or need to resolve a Medicare billing dispute.
Like nearly all federal agencies, CMS resides within the executive branch of government. Following the November 2024 election, the president will appoint the administrator of CMS. Although subject to Senate confirmation, the future of CMS has been called into question by the announcement that TV host Dr. Mehmet Oz will be nominated for that position.
What Is CMS?
CMS is a large agency. It employs more than 6,700 workers, although it does much of its work through contractors. The agency will spend more than $1.5 billion in fiscal year 2024. Most of those funds are used to pay claims for healthcare services. More than 100 million Americans obtain health coverage through programs that are administered by CMS.
While paying claims is a major responsibility of CMS, the agency also plays a vital role in overseeing the American healthcare system. CMS monitors quality of care, assesses the safety and quality of certain medical facilities, and maintains an immense collection of healthcare data.
Why Does CMS Matter?
Most western nations treat healthcare as a fundamental right. In those countries, universal healthcare assures that everyone receives medical care. Because healthcare is funded by the government, the profit motivation that keeps private insurance companies in business does not drive up prices. In addition, the centralization of healthcare administration avoids the administrative inefficiencies of submitting claims to hundreds of private insurance companies.
Because political decision makers in the United States tend to see profits earned by private insurance companies as a good thing, Americans do not enjoy the benefits of universal healthcare. As a consequence, the United States has the most expensive healthcare system in the world.
Despite spending more on healthcare than any other nation, health outcomes in the United States are worse than those in other high-income nations. Americans as a group are likely to die younger, often from avoidable causes, than residents of other countries with substantial wealth. Political concerns about “socialized medicine” cannot change the reality that, as a whole, residents of countries with universal healthcare enjoy better health than Americans.
Fortunately, the Medicare and Medicaid programs give the most vulnerable Americans the opportunity to obtain medical care when they need it. CMS administers the Health Insurance Marketplace, but seniors only depend on private insurance if they choose to do so.
While older Americans can purchase a Medicare Advantage plan through a private insurer, those plans are primarily funded by payments from CMS. For America’s senior population, the proper administration of CMS may be vital to their ability to obtain affordable healthcare.
Original Medicare vs. Medicare Advantage
About half of Medicare enrollees have opted for a Medicare Advantage plan, while the other half rely on Original Medicare (often supplemented by Part D drug coverage, Medigap, or employer coverage). Medicare Advantage plans may provide coverage for dental, hearing, and vision care services that Original Medicare does not cover, sometimes for “zero cost” above the Medicare premium that funds the plan. While those services tend to be limited when they are offered at no extra cost, they usually include basic diagnostic services that may help patients identify healthcare issues.
The extra services provided by a Medicare Advantage plan can come with hidden costs. Seniors who opt for “zero cost” Medicare Advantage plans might pay more in deductibles and co-pays if they develop a serious illness than they would have paid with Original Medicare. Because insurance companies are motivated to earn a profit, they might also be more likely than Original Medicare to impose onerous requirements for prior authorization of expensive procedures, including chemotherapy.
Original Medicare allows patients to choose any doctor who accepts Medicare — and almost all doctors do. Medicare Advantage plans typically limit the patient’s choice of physicians to those who are within the provider’s network. The plans might be a good choice for seniors who are satisfied with the network physicians, but the wrong choice for seniors who want to stick with a trusted doctor or who need specialized care that isn’t offered through a provider’s network.
Seniors who elect a Medicare Advantage plan may find it difficult to return to Original Medicare. Although they have a right to make that election during the Open Enrollment period every year, insurers selling Medigap plans can discriminate against seniors with preexisting conditions if they didn’t purchase a Medigap plan when they first become eligible for one.
The Push to Privatize
Some politicians have pushed to privatize as many government services as possible, sometimes (as is true in the prison industry) with disastrous results. That push has included calls to replace Original Medicare with an insurance system that is solely administered by private companies.
When Congress authorized Medicare Advantage plans, it assured the public that private insurers would operate more efficiently than the government and thus reduce the cost that the government pays for senior healthcare. The reality is that Medicare Advantage plans cost the government about 6% more than original Medicare.
Advocates of privatization include the authors of Project 2025, a list of policy proposals produced by the Heritage Foundation. Project 2025 proposes making Medicare Advantage plans the default enrollment option for Medicare. For years, healthcare scholars have warned that steering seniors to Medicare Advantage plans will cause Original Medicare to “wither on the vine.”
Whether Dr. Oz is qualified to run CMS is for the Senate to decide. It is concerning, however, that Dr. Oz has expressed support for expanding Medicare Advantage and has promoted Medicare Advantage on The Dr. Oz Show. Whether he believes in the further privatization of Medicare, or of making Medicare Advantage the default option, are questions the Senate needs to explore at his confirmation hearing.