As the recent debate over Obamacare subsidies shows, the American healthcare system is deeply dysfunctional—and poorly understood. Obscure agencies and programs are making the problem even worse.
In December, the Centers for Medicare and Medicaid Services (CMS) announced a pair of new mandatory payment models that bear a troubling resemblance to President Trump’s recent implementation of a Most Favored Nation (MFN) approach. Echoing the President’s Executive Order, the Global Benchmark for Efficient Drug Pricing (GLOBE) and Guarding U.S. Medicare Against Rising Drug Costs (GUARD) models tie the prices of drugs payable under Medicare Parts B and D to those in foreign countries with socialized healthcare systems. These models are nothing more than destructive price control schemes that will hinder research and development and distort the marketplace through overreaching government intervention, ultimately harming patients.
The Center for Medicare and Medicaid Innovation (CMMI), established under the Patient Protection and Affordable Care Act (ACA or “Obamacare”), was created to test and implement innovative healthcare payment and service delivery models. But it has rightly faced criticism for not being as groundbreaking or effective as initially anticipated. Despite receiving significant funding of about $1 billion per year to drive healthcare innovation and improve care, CMMI has failed to deliver for taxpayers and consumers. In the last decade, CMMI has launched over 50 model tests. From 2018 to 2020, CMMI models have reached nearly 28 million patients and over 528,000 health care providers and plans. Of these model tests, only six have generated statistically significant savings for Medicare and, by extension, taxpayers.
Despite early claims that it would control healthcare spending, CMMI costs taxpayers’ money rather than saving it. According to a 2023 Congressional Budget Office (CBO) report, CMMI has made very few improvements to a deeply broken and dysfunctional healthcare system. The Center spent $7.9 billion to operate models “that aim to improve quality of care or reduce spending on services,” and those models reduced spending on healthcare benefits by $2.6 billion. The net cost of CMMI’s activities was a disappointing $5.4 billion.
A recent poll commissioned by the Council for Citizens Against Government Waste (CCAGW) indicates that a majority of voters are skeptical of CMMI and its effectiveness. The poll finds that 61 percent of voters agree that CMMI models that fail to save money should be eliminated. Only 29 percent of voters believe CMMI’s $10 billion per decade budget is a wise use of taxpayer dollars. More than 75 percent of voters are concerned that CMMI increases government interference over personal healthcare decisions and agree that Congress should establish safeguards over CMMI to protect patients from mandatory policy changes.
CMMI was originally intended for small-scale healthcare payment reforms but has evolved into a tool for implementing broad, national healthcare policies without Congressional approval. Mandatory models reflect a concerning mission drift; it leverages CMMI’s authority to enable the Trump administration and future administrations to advance healthcare policies without Congressional oversight. Troublingly, CMMI can expand models without a new law. This power should be limited to prevent the shift toward socialized medicine and national healthcare policies that adopt a one-size-fits-all approach, which undermines Congress’s constitutional role. Lawmakers, not unelected bureaucrats, should make healthcare policy decisions because they are accountable to voters and can be replaced through the election process if constituents disapprove of their decisions, thereby ensuring some oversight. Backdoor price controls are just the latest in a series of affronts to Congressional powers.
Congress has long criticized CMMI. At a June 13, 2024, House Energy and Commerce Subcommittee hearing on health, Committee Chair Cathy McMorris Rodgers (R-Wash.) said, “I have a hard time believing any objective observer could look at the results thus far and describe CMMI as a success.” Rep. Michael Burgess (R-Texas) stated, “[W]hen the administration changed in 2017, and I immediately thought here is our chance to remove CMMI, the Congressional Budget Office said you can’t do that because of all these savings that are built into the law. But then it turns out those savings were ephemeral and they weren’t really savings at all, were they?”
In December 2023, Rep. Adrian Smith (R-Neb.) introduced H.R. 6732 to increase transparency and oversight of the program. He said, “There’s no question CMMI lacks transparency. Worse, since its creation, it has failed to improve Medicare and Medicaid for beneficiaries — which is why I am introducing this bill to increase accountability and reassert congressional authority.”
CMMI hasn’t effectively reduced costs for taxpayers and consumers, and clearly lacks the ability and will to do so. Additionally, CMMI threatens progress and innovation with MFN-style price controls. Lawmakers and the Trump administration should rein in CMMI and prioritize market innovation and healthcare reform over broken bureaucracy.
Christina Smith is the director of the Taxpayers Protection Alliance’s Consumer Center.