Project 2025 and Medicare
Key Takeaways
- Project 2025 is a policy proposal from the conservative think tank the Heritage Foundation that some believe will influence the second Trump administration.
- The document suggests many policy changes that could affect people on Medicare.
- Some of the most significant ideas for Medicare in Project 2025 include shifting Original Medicare to a value-based care model, making Medicare Advantage plans the default option, and eliminating price controls for prescription drugs.
With President-elect Donald Trump set to take office in 2025, many Medicare beneficiaries wonder what changes could happen to the public health insurance program for people who are over 65 or living with disabilities.
Trump has not made any official announcements regarding his goals for Medicare, but examining Project 2025 could provide some hints. Project 2025 is an approximately 900-page policy proposal published by the conservative think tank The Heritage Foundation that lays out plans for transforming the U.S. government.
After the 2024 election, President-elect Trump told Time magazine that he thought certain ideas presented in the proposal were “very good,” but that others were “pretty ridiculous.” However, he did not specify which ideas he disagreed with and which he supported. While Trump has distanced himself from this controversial document at times, at least 140 contributors were members of his first administration and several have been appointed to top positions for his second term.
We don’t know which — if any — of those ideas President-elect Trump and Congress will try to enact. Nonetheless, the Project 2025 Medicare proposals offer a preview of the developments that may lie ahead. Let’s take a closer look at some of the ideas the Heritage Foundation presented.
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Project 2025 Medicare Changes
Roger Severino, an attorney who served as director of the Office for Civil Rights in the U.S. Department of Health and Human Services during the first Trump administration, is the primary author credited within the health policy sections of Project 2025. His chapter includes criticisms of how Medicare and Medicaid — the public health insurance program for people with limited incomes and resources — currently operate.
Severino writes that while Medicare and Medicaid help many, the programs “stifle medical innovation, encourage fraud, and impede cost containment, in addition to which their fiscal future is in peril.”
Specifically, what does Project 2025 say about Medicare reform? The proposed changes aim to achieve these four overall goals:
- Individual control: Give beneficiaries more control over their healthcare, including more choices in their healthcare providers, hospitals, and insurance plans.
- Curtail regulations: Limit or eliminate regulations that create a burden on doctors.
- Rethink funding: Make the Medicare system more sustainable and a better value for both beneficiaries and taxpayers.
- Utilize AI: Reduce waste, fraud, and abuse with methods that include using artificial intelligence to detect problems.
Medicare Advantage as the Default
The most significant transformation to the Medicare system proposed in Project 2025 is making Medicare Advantage plans the default option for new enrollees.
Currently, eligible U.S. adults first enroll in Original Medicare, the federally administered health insurance program that consists of Medicare Part A (hospital insurance) and Part B (medical insurance). Then, they have options to purchase additional coverage from private insurance carriers, such as adding a Medicare Part D prescription drug plan and a Medicare Supplement plan to help with out-of-pocket costs.
Or, if they prefer, consumers can switch from Original Medicare to a Medicare Advantage plan from a private insurance carrier. Medicare Advantage plans substitute for Parts A and B and may provide a variety of additional benefits such as prescription drug coverage, vision, dental, and hearing.
About 54% of Medicare-eligible adults were already on Medicare Advantage plans as of 2024. Still, making plans from private insurers the default option would be a major shift affecting how people enroll in and use their coverage.
One major difference between Original Medicare and Medicare Advantage is that most doctors and hospitals across the country accept Original Medicare. Medicare Advantage plans, on the other hand, have provider networks, so patients need to visit doctors and facilities that are in their network to get the most out of their coverage.
The proposal features several other suggestions for changing how Medicare Advantage plans function and receive payments, although it doesn’t provide many details.
For instance, under the current system, the federal Medicare program pays fixed amounts each month to the insurance carriers that provide Medicare Advantage plans. Those payments are based on a complex formula that includes factors like beneficiaries’ healthcare needs and plan quality ratings. Project 2025 recommends shifting away from that payment formula to a system where insurers submit competitive bids and consumers have “direct control” over the federal Medicare funds spent on their insurance.
Eliminating Cost Controls for Prescription Drugs
Signed into law by President Joe Biden in 2022, the Inflation Reduction Act made several policy changes intended to lower drug costs for people on Medicare, such as:
- Capping the cost for a monthly supply of insulin at $35
- Providing more subsidies to help people with limited incomes pay for Medicare Part D coverage
- Capping annual out-of-pocket costs for drugs covered by Part D plans (starting at $2,000 in 2025)
- Authorizing Medicare to engage in drug price negotiation with pharmaceutical companies
Project 2025 calls for repealing the Inflation Reduction Act and removing these price controls, claiming these measures make it harder for patients to access new medications.
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Value-Based Care Model for Original Medicare
Project 2025 supports shifting Original Medicare from a fee-for-service model with set payment amounts for every medical service to a value-based care model. In value-based care, payments depend on the results delivered by healthcare providers and hospitals. This approach can lead to more efficient care and better patient outcomes.
Several Original Medicare programs are already in place to shift toward a value-based care approach. For example, the Medicare Shared Savings Program, established in 2012 as part of the Affordable Care Act, created Accountable Care Organizations (ACOs) that use an alternative payment model focused on accountability and care coordination. According to the Centers for Medicare and Medicaid Services, these ACOs served 10.8 million patients in 2024.
Project 2025 proposes making value-based care the norm for Original Medicare, though it also calls for eliminating the Medicare Shared Savings Program.
What Does It Mean?
These are just some of the ideas about Medicare in Project 2025, which touches on many more updates to the regulations that affect doctors, patients, pharmaceutical companies, medical device manufacturers, and insurance carriers. It is unknown how influential these recommendations will be in the next Trump administration, but examining the document provides valuable insight into policy debates that are likely to happen over the next few years.