One of the benefits of traditional Medicare is the flexibility of choosing your doctor and the ease of seeing specialists. But that could be about to change.
Healthcare providers under Medicare could soon be tightening their spending by scaling back care or requiring more prior authorizations, as the Centers for Medicare and Medicaid Services (CMS) pushes to have all beneficiaries in cost-cutting models by 2030.
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The CMS Innovation Center earlier this year released a new strategic goal to move Medicare and Medicaid beneficiaries to accountable care arrangements with providers who assume the financial risk of providing care, a CMS spokesperson said. CMS has said it aims to have all people with traditional Medicare in such arrangements by 2030.
Under these arrangements, groups of doctors, hospitals and other healthcare providers work together to coordinate patient care. The accountable care organizations then are financially responsible for the care provided — getting bonuses if spending is lower than targeted, and penalties if spending is higher.
“Accountable care organizations are structured to operate more like Medicare Advantage plans — they are rewarded for not providing care, there’s more prior authorizations,” said Mary Johnson, an independent Social Security and Medicare analyst. “It’s a way for the government to save more on Medicare. There will be more denials of care, more delays of care.”
In reality, patients may not realize they are in an accountable care organization, but they may see differences in the care they receive, Johnson noted.
“Patients are not necessarily going to see the best type of care,” she said. “People will have the briefest interactions with the doctors; instead of a 30-minute appointment, you might have a 15-minute appointment. Instead of a follow-up call with a nurse, you’ll get a robo-call. You’ll be submitting all this paperwork for prior approvals.”
Accountable care organizations (ACOs) date back to concepts of coordinated care and cost controls from the 1990s, but were formally created by the Affordable Care Act, commonly known as Obamacare, in 2010. Traditional Medicare is now embracing the concept of ACOs to save money.
“This is a good direction for the Medicare program to be moving. It could modestly reduce spending without hurting care,” said Matthew Fiedler, a senior fellow in economic studies at the Center on Health Policy at the Brookings Institution, a nonpartisan think tank. “Whether the goal that CMS has set out will be met is a question.”
As of July 2024, about 33.5 million people were enrolled in traditional Medicare, representing just under half of the total Medicare enrollment of 67.3 million people. Of those in traditional Medicare, 53.4% of people were in an accountable care relationship with a provider as of January 2025, according to CMS. That represented more than 14.8 million people and marked a 4.3-percentage-point increase from January 2024 — the largest annual increase since CMS began tracking accountable care relationships, according to CMS.
“Every year there’s a shiny new thing in healthcare,” said Michael Cannon, director of health-policy studies at the Cato Institute, a libertarian think tank. “Medicare is finally talking about a different approach.”
Robert Moffit, senior research fellow at the Heritage Foundation, a right-wing think tank, and former deputy assistant secretary of health and human services under the Reagan administration, said moving traditional Medicare beneficiaries to accountable care organizations will allow the program to operate more like Medicare Advantage, which cuts costs by tightening the controls on care.
“The problem with traditional Medicare is that it does not coordinate care, which leads to overtreatment and people getting services they don’t need,” Moffit said. “If you look at Medicare Advantage and ACOs, they’re trying to do the same thing — prevention, coordinated care, controlling costs.
“The challenge of Medicare is the dramatic growth in cost. We’re seeing a dramatic increase in patients as baby boomers age,” he added. “The sheer volume of people we’re taking care of comes as the working population to support Medicare is declining. There’s tremendous fiscal pressure. You can’t separate any discussion of the country’s financial health without talking about entitlement spending.”
The total number of people enrolled in Medicare is projected to rise from about 63 million in 2020 to around 77 million in 2030 as the population ages.
Medicare spending doubled between 2008 and 2022 and is expected to double again by 2032, reaching about $1.9 trillion, according to the Medicare Payment Advisory Commission (MedPAC), a nonpartisan agency that advises the U.S. Congress. Medicare spending is anticipated to increase as a percentage of the national gross domestic product, rising from 3.1% in 2021 to 3.9% by 2030, according to MedPac.
“Medicare and Medicaid are not something that can go on spending money forever. When the music stops, the government is going to have to reduce Medicare and Medicaid spending,” Cannon said. “Healthcare is the biggest share of the federal budget. Medicaid gets cut first; poor people don’t vote as often as older people. But eventually they’re going to have to cut Medicare.”
Whether the ACO model will be successful in trimming costs while still providing care remains to be seen.
“Year after year, decade after decade, president after president … promises this time, by God, we’ll make Medicare work efficiently — and taxpayers stand there holding the tax burden,” Cannon said.
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