Musk and DOGE Pose a Potential Risk to the Well-being of Millions of Americans

As Donald Trump gets ready to start his second term as U.S. president next week, the nation continues to face significant health challenges. These include rising medical costs, stagnant life expectancy, and widespread burnout among healthcare workers.

Amidst the healthcare crisis, an unexpected figure has emerged—a private citizen with no official government role is now poised to have a major impact on the federal budget.

Elon Musk, the wealthiest person in the world, co-leads the Department of Government Efficiency (DOGE), a non-government entity assigned with cutting $500 billion in annual government spending.

However, as Musk and his DOGE co-chair Vivek Ramaswamy navigate the fiscal challenges, they are confronted with a harsh reality. Achieving their target will require them to cause significant hardship for millions of American families.

Reducing Dollars From American Healthcare

Since Trump’s first term as president, the economic situation of the country has deteriorated drastically.

In 2016, the national debt stood at $19 trillion, with $430 billion spent annually on interest payments. By 2024, the debt had skyrocketed to $36 trillion, necessitating $882 billion in debt servicing—13% of federal spending that DOGE cannot touch.

In addition to that figure, another 48% of government expenditures that Trump has deemed politically off-limits include Social Security, Medicare, and Defense. This leaves only $2.6 trillion (39%) of the $6.75 trillion budget available for reduction.

In a recent op-ed, Musk and Ramaswamy committed to finding half a trillion in savings by eliminating expired or misused federal programs (a significant decrease from the $2 trillion Musk had previously promised).

However, the examples they provided—such as the Corporation for Public Broadcasting, Planned Parenthood, and various international grants—only amount to less than $3 billion, not even 1% of their target.

Therefore, Musk and Ramaswamy will likely need to concentrate on American healthcare. Despite trillions of dollars in government spending on healthcare, the options for cuts are limited.

Medicare, the $850 billion program for Americans over 65, is off-limits. The same goes for the $300 billion in tax-deductibility for employer-sponsored health insurance and $120 billion in expired health programs for veterans. Cutting either of these would entail raising taxes for 160 million working Americans or negatively impacting the health of millions of veterans.

Thus, DOGE has few choices but to reduce programs that support low-income Americans: Medicaid and online health exchanges.

Here is how these cuts would likely unfold and the devastating consequences they would have on the lives of over 20 million Americans:

1. Decrease ACA Exchange Funding

Since the Affordable Care Act was enacted in 2010, it has offered insurance premium subsidies to Americans earning 100% to 400% of the federal poverty level.

For lower-income families enrolled in the online health exchanges, the ACA also includes Cost Sharing Reductions, which help offset deductibles and co-payments. These reductions, averaging 30% of total premiums, make coverage more affordable for enrollees.

Without CSRs, a family of four earning $40,000 could encounter deductibles as high as $5,000 before their insurance benefits kick in. Consequently, 7 million individuals would quit the exchanges, with an estimated 4 million families ending up uninsured entirely.

If CSR payments ceases in 2026 due to Congressional inaction, federal expenses could decrease by approximately $35 billion annually. As millions of individuals leave the exchanges and opt out of re-enrollment due to unaffordable out-of-pocket costs, DOGE could also claim additional savings of up to $50 billion. While these reductions may assist in meeting budgetary goals, the human toll is unmistakable: millions of low-income American families would lose health insurance.

2. Cut Medicaid Coverage, Tighten Eligibility Requirements

To reach $500 billion in annual savings, DOGE will undoubtedly target Medicaid, which provides healthcare for over 90 million low-income Americans, including children, seniors, and individuals with disabilities.

Various cost-cutting measures are on the table, such as reducing federal payments to states, tightening eligibility criteria, and transforming Medicaid into lower-cost block grants.

Remember that the Affordable Care Act extended Medicaid eligibility to individuals earning up to 138% of the federal poverty level. While Medicaid expansion remains voluntary, 40 states embraced the program, aiding in cutting the U.S. uninsured rate in half—from 16% (50 million people) to 8% (25 million). DOGE would need Congressional approval to reverse this expansion, stripping coverage from millions in participating states.

Another probable strategy involves imposing work requirements on Medicaid recipients. While advocates argue this would boost employment, data indicate most Medicaid enrollees already work for employers that do not provide insurance—or they are unable to work due to caregiving obligations or serious health issues. In reality, work requirements would mainly function as administrative obstacles, disqualifying or dissuading eligible individuals and escalating the uninsured rate.

Converting Medicaid funding into block grants is a final option. Unlike the existing system, which adjusts funding based on necessity, block grants offer states a fixed amount. This would likely compel states to reduce services, further restrict eligibility, or both. Even though proponents claim block grants offer states more flexibility, the primary outcome would be fewer medical services and fewer Medicaid beneficiaries.

In total, Medicaid currently costs $800 billion annually, with the federal government covering 70%. Decreasing enrollment by 10% (9 million people) could save over $50 billion annually, while a 20% decrease (18 million people) could save $100 billion.

The repercussions of such actions would be severe. Medicaid covers over 40% of U.S. childbirths, ensuring healthier babies and shielding families from financial distress. It funds regular checkups, vaccinations, and the treatment of chronic conditions like asthma and diabetes for children. It also provides vital nursing home care and home-health services for seniors and individuals with disabilities unable to live independently.

However, the aftermath does not conclude with tens of millions of Americans losing healthcare coverage. If DOGE scales down Medicaid, states would have to shoulder most of the financial burden. And since states must maintain a balanced budget, increased healthcare expenses would likely result in cuts to education funding, decreased infrastructure investments, and the closure of community hospitals—many of which are already struggling to survive—further stressing local economies and leaving patients with no recourse.

The First 100 Days

The facts are clear: Musk and DOGE must either reduce Medicaid funding and ACA subsidies or abandon their $500 billion commitment. There is no other route to achieve their budget reduction aim in the first year.

However, this harsh approach is not the lone route to fiscal responsibility. There are long-term healthcare solutions that could cut medical expenses while safeguarding the nation’s health. These would necessitate bold, systemic reforms, but they are feasible.

These include altering how doctors and hospitals are reimbursed to incentivize better clinical outcomes instead of higher volumes, capping drug prices at levels akin to peer nations, and utilizing generative AI to prevent and manage chronic diseases more efficiently.

These strategies would decrease costs by enhancing quality and averting heart attacks, strokes, and kidney failure, not by rationing care. Unfortunately, neither Musk nor DOGE has championed these notions.

For the moment, the healthcare of tens of millions of Americans hangs in the balance, seemingly collateral damage in an unfeasible quest politically and financially.