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By Suzanne Blake
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The Trump administration's newly released Fiscal Year 2026 budget proposal calls for targeted cuts to Medicare and Medicaid operations. The administration said it will eliminate "wasteful" and "woke" initiatives while maintaining direct benefits to tens of millions of Americans.
Why It Matters
More than 70 million people rely on Medicare and Medicaid for health coverage in the U.S.
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Democrats have long been raising concerns that President Donald Trump's administration and Republicans will make cuts to these popular programs, but Trump has insisted he will not. The administration has pledged to root out waste, fraud and abuse of these programs, which it says will save money.
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What To Know
According to budget request released by the White House on Friday, the administration aims to "eliminate funding that had been used to carry out non-statutory, wasteful, and woke activities" and will end "unnecessary DEI and support contracts."
It also proposes cuts to programs focused on health equity and public outreach related to the Inflation Reduction Act, which passed in 2022 during the administration of former President Joe Biden. The White House emphasized that none of the proposed changes will reduce benefits to Medicare or Medicaid beneficiaries.
Under the new budget, congressional committees would be tasked with identifying administrative savings within Medicaid and Medicare—totaling up to $880 billion in reductions over 10 years.
The Trump administration says the savings will come from eliminating nonessential contracts and focusing agency resources on core health service functions. "This cut will have no impact on providing benefits to Medicare and Medicaid beneficiaries," the administration's budget says.
Critics have raised concerns that such large budget reductions could eventually affect service delivery.
"You cannot materially cut spending strictly through administrative tweaks," Kevin Thompson, CEO of 9i Capital Group, previously told Newsweek. "The cost is embedded within the system itself—health care pricing, insurers, regulatory structures, all of it."
At the same time, federal oversight of Medicare programs is ramping up in other ways.
The Department of Justice recently opened investigations into alleged kickbacks between Medicare Advantage brokers and insurers. Prosecutors are examining whether middlemen improperly steered seniors toward plans based on the incentives they received, not on patient needs.
Newsweek reached out to the Centers for Medicare and Medicaid Services for comment.
What People Are Saying
House Speaker Mike Johnson, a Louisiana Republican, to CNN: "The White House has made a commitment. The president said over and over and over, 'We're not going to touch Social Security, Medicare or Medicaid.' We've made the same commitment. Now that said, what we are going to do is go into those programs and carve out the fraud, waste and abuse, and find efficiencies."
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: "This is political sleight of hand, plain and simple. What they're calling 'woke activities' are actually programs designed to reach underserved communities. Why target health equity initiatives? Because they're easier to label as unnecessary than admitting to benefit cuts."
"The math doesn't work. You can't slash billions without consequences. It's like removing the foundation but promising the house won't collapse."
Smile Insurance Group CEO Chris Fong told Newsweek: "The new budget and the statements made by Trump is counterintuitive to each other in actual practice. There are currently numerous examples of government benefits that are being under utilized because lack of knowledge and education that those benefits exist. Additionally, an argument can be made that this budget is discriminatory towards certain groups of US citizens by making it much harder to know about and access these benefits."
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "The new budget proposals do scale back from some of the bigger, broader cuts to Medicaid and Medicare that were originally proposed. Medicaid and Medicare are two of the most popular government programs, and there was a general belief that major cuts to them would trigger a backlash at the ballot box in future years."
"Still, it's hard to imagine the cuts to administration and recipient resources would be enough to add up to the lofty funding the budget hopes to save. The jury is still out as to whether the final budget will impact recipients' coverage in any way."
Senator Bill Cassidy, a Louisiana Republican, told CNBC: "The president has said, for example, that he doesn't want to touch Medicare and Medicaid...He's saying don't cut benefits to beneficiaries."
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "Every time I hear the word 'woke' used in a budget conversation, it hits like a dog whistle. A term that once stood for awareness and justice has been twisted into a pejorative. That kind of rebranding, turning something powerful into something weaponized is frustrating, but not surprising, but I digress."
What Happens Next
The Trump administration's budget still needs approval from Congress, where Democrats are likely to push back against reductions to health equity initiatives and DEI programs. Meanwhile, lawmakers on both sides of the aisle are expected to closely scrutinize how the administration defines and implements "wasteful" or "duplicative" spending.
Legislative debate over the final budget terms is expected to continue through the summer, but there's doubt on how the budget could actually be enacted without shrinking benefits. "When politicians say cuts won't affect services, check your wallet and your pulse," Ryan said.
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