Phoebe Gutierrez and Dr. Leo Damasco break down sweeping proposed cuts to Medicaid and the Affordable Care Act—and explain how these changes could devastate healthcare access and stifle telehealth innovation.
In this episode, Phoebe Gutierrez and Dr. Leo Damasco discuss the largest proposed restructuring of Medicaid and the Affordable Care Act in over a decade. The federal proposal includes $715 billion in cuts, new work requirements, biannual eligibility redeterminations, reduced funding for states that support immigrant coverage, and cost-sharing policies that could block access for low-income patients.
Phoebe breaks down what these changes really mean for providers, patients, and the broader telemedicine ecosystem. She explains how complex red tape could cause millions to lose coverage, and why startup innovation in value-based virtual care may stall under the proposed rules. With both clinical access and entrepreneurial opportunity at stake, this episode is essential listening for healthcare professionals navigating a rapidly shifting policy landscape.
Telemedicine Talks explores the evolving world of digital health, helping physicians navigate new opportunities, regulatory challenges, and career transitions in telemedicine.
🔗 LinkedIn: https://www.linkedin.com/in/pkgutierrez/
📩 Email: phoebe@telemedicinetalks.com
PHOEBE: Hey everyone. Welcome back to telemedicine Talks. So this week, , it is going to be mainly me talking about some key policy changes, , that are just happening at the federal government. I'm gonna try my best to explain it. You while I stare at
LEO: Leo and see his eyes glaze over.
Oh, absolutely. I saw the topics of this and I was like, wait, what? Definitely things I don't know about and really kind of a shaky foundation, so this is way useful for me as well. So, , thank you for running the Phoebe
PHOEBE: show. Let's go do it. It's the Phoebe show. So, , as many of you all know,
I am an ex policy expert in the Medicaid space. And so this week, there has been some really significant, and almost like just in my lifetime, I've never seen cuts like this, , around the Medicaid program and the Affordable Care Act. And so this week around , [00:01:00] May 13th, the House Energy and Commerce Committee.
Advance their proposal to basically cut $715 billion from Medicaid in the Affordable Care Act over the next 10 years. So this episode, I'm gonna be unpacking these policy shift and really what it means for patients and providers and the broader healthcare system and how ultimately downstream some of these changes will impact telemedicine.
, But also they are probably gonna impact your neighbor and some people in your communities too. So jumping in, with our political climate, not to get political, , but with our political climate, you know, , the federal government is really looking for a way to reduce cost and get some cost savings.
And as we all know, healthcare costs continue to rise and there's just more and more uninsured people in the United States. And so one of the key things that this administration, , is really focusing [00:02:00] on is Medicaid coverage and some key requirements that are going to potentially have some cost savings.
So in this proposed, , budget, they're, , recommending some work requirements. They're shortening some enrollment periods, they're making, , stricter eligibility checks and then building in some cost sharing models, which is, some of these things are a little bit new, , in the Medicaid world, or at least, , since
LEO: I've been in the Medicaid world.
Now. Now real quick, I'm gonna show my ignorance here, right? So, , Medicaid, what exactly is that? I think we hear the term. And we hear the term Medicare as well. So I come from the military system where we didn't have to worry about this. So I personally don't know about it. I erroneously now that I know, use the term interchangeably.
But so bright. You're shaking your head already. . Um, can you just kind of break it down what that means and
PHOEBE: what kind of [00:03:00] population that involves? Yeah, absolutely. So. Medicaid and Medicare are two completely different programs that have different eligibility criteria. So Medicare is what is, governed at the federal level.
I think that's, that's the program that a lot of people, like you had said, Leo is like, it's for the older adult, you know, population or the disabled population. So for people who are on social security, like you would, be eligible for Medicare, medicare is broken out into like four parts A, B, C, and D.
And it's really confusing to be perfectly honest, like Medicare. Medicare is a little bit more confusing , in my opinion, just because it is so segmented. , Whereas like Medicaid is a state program, so every state. Has a Medicaid program. Most of the time a state is not gonna say, , we don't call it a California Medicaid program.
It's called Medi-Cal. So most of them have rebranded into, [00:04:00] whatever they kind of want to call it. , And Medicaid is what was covered under the Affordable Care Act. So for individuals that met a certain income threshold or potentially. , Blind, disabled over the age limit meets some other sort of like eligibility criteria would be eligible for Medicaid in the States.
And so previously, before the Affordable Care Act, you had to either have a child, you had to be pregnant, you had to be disabled or blind, or you had to be an aged person. So over the age of 65 with the Affordable Care Act that basically. Said like, we're gonna throw all those rules out and we're just gonna say, if you meet below a certain income or a poverty, threshold, , you are gonna automatically be eligible for healthcare.
, In, , the state, and this is where it gets kind of tricky, is because every state. Has gotten to [00:05:00] adopt the program that they want, wanted to, in the sense of how it relates to funding. So some states expanded, like California, where we really try to cover as many lives as possible. And then you have other states like Texas that take a little bit more of a, , conservative approach, I guess you can say.
And they didn't necessarily expand access. Medicaid. The biggest thing to understand is it's jointly funded. So it's funded by the states and the federal government. So for every buck the state spends, the federal government's gonna chip in on a specific formula. , And it's called like a federal match or an fmap.
And I'll dive into that a little bit too. . To kind of set the stage, you know, there's about 85 million Americans who rely on Medicaid today. And in some states there's actually, , one out of three people are on Medicaid. And so it's the largest payer for long-term care and it really is a huge, huge, huge payer in the [00:06:00] maternal and infant space today.
So now I'm gonna talk about. How Medicaid works now and then what some of these changes, that are proposed, like how they're actually gonna impact people on the ground level. And, uh, Leo, stop me if I go on a rant or a tangent because I just, I know this, I know these programs so well in these rules, so well that, ask me questions
LEO: if it doesn't make any sense
PHOEBE: oh, yeah, yeah.
I'll definitely pull you back. So long story short, the way that I interpreted a lot of the budget changes were simply to take some of that control away from state. The federal government is kind of saying, sure, you can continue to do what you wanna do, but , we're gonna reduce how much, what we're gonna fund.
We're gonna reduce, certain levels of eligibility criteria. Like we're gonna really try to make it kind of harder for the states that wanna expand this access. They're also trying to make it a little bit harder for people in the sense of. Like one of the big [00:07:00] things that is changing is they're proposing mandatory work requirements that just does not exist today.
There's a lot of, , people who can't get work or are trying to get work or physically can't work that are getting Medicaid coverage. And this now is saying that if you. Don't have a dependent, you have to work or volunteer or participate in some sort of like, community engagement for at least 80 hours a month in order to qualify.
And if you don't do that, we're gonna terminate your coverage. And I think part of the problem with this requirement.. Like a lot of people are trying to work today and they just can't. But also figuring out this reporting process and this oversight process to effectively do this when you're talking with such a vulnerable population, I.
It is, it's just gonna be really, really tricky to be able to actually like, monitor and force and oversee this. And it's gonna be really hard [00:08:00] on a person who's gonna have to somehow report these requirements in a way that they're not used to or not accustomed to, that ultimately, you mess up one time, it could impact their eligibility overall.
The next one that I think I personally know is like a huge issue is they wanna propose biannual eligibility. Redeterminations. So the way that we all get healthcare today Leo? I'm assuming the way it works for you too is. You're eligible and then you're eligible until you're just not eligible anymore, or you change plans or something like that.
Medicaid is different. So every year you actually have to reapply for Medi-Cal or Med Medicaid. California is Medi-Cal and basically what they're doing there is they're verifying you still meet the income, you still are within the state that you're, you know. That you claim to be in and that you don't have any additional [00:09:00] dependence or anything that's gonna change your potential eligibility there.
And so I for a fact this is a hard thing for people to do today. They have to do it once a year, and it is always a horrible process for people because unbeknownst to most people, this process is also through paper. They mail it to you, so you get this. Huge packet of papers, you have to submit it back.
Most of them are trying to figure out, , what this means. They're using words like exactly what I said, biannual eligibility, redetermination, which isn't very, isn't in English. And a lot of people actually straight up lose coverage because they don't submit that once a year. This change is proposing that they do it twice a year.
For states that actually have to do this process. One it's really hard to do once a year, twice a year is like, oh my gosh, I couldn't imagine in California where we have 14 [00:10:00] million people that get Medicaid. But also you just have a lot of people that don't know how to support the administrative burden of it.
And then ultimately just turn a blind eye and lose coverage. So I think during COVI, there was a good like 20% of people that would've lost. Coverage in California if they didn't put some of these redeterminations
LEO: on hold that, that's a lot of paperwork for twice a year, just on paper. Just trying to process it alone, is there any thought of if that's even feasible, like administratively feasible on the state's end,
PHOEBE: or it just doesn't care? It, I mean, again, like put maybe in a state like Rhode Island or Vermont or you know, something where it's not as like popula, populated and dense in California, I could tell you this would be a, a significant burden.
LEO: Sure.
PHOEBE: The states that actually need it, right. The states that need it. Like,, I couldn't, see a way that like Texas and Florida would be able to do this, [00:11:00] like super easily either. And that, I think that's the piece I get the need to ensure that , you wanna reduce fraud, waste, and abuse.
I totally understand. Like you don't want people, getting Medicaid that don't necessarily qualify, but I feel like there has to be a better way than already just a process that is already a little
LEO: bit broken. Making it even harder. Yeah.
PHOEBE: Yeah. That makes sense. As we probably all know this administration is really cracking down on some of the immigration policy as well as just how that, translates into healthcare.
And so currently anyone who, is an immigrant, you get like a a waiting period where a state will request additional information from you to verify your healthcare status before they can either grant you access or deny you coverage. And now this is proposing to eliminate that opportunity. So if they don't actually provide all the [00:12:00] necessary documents upfront, there's no longer that we're gonna do a back and forth and you could submit those things after the fact.
It's, you're just gonna get denied. And that kinda leads into my next thing where it's actually they're going to be, , removing. The ability for you to enroll any time. So you're gonna only be able to enroll in these programs once a year during a, a specific open enrollment period.
Whereas historically, again, , you gotta really think about what Medicaid is there for. It's a safety net. It's for people who. You can't get coverage or people who are really sick or, you know, little things like that. And so limiting it to where like you can only get sick during this one time a year to a population that's already, going through it.
That again just,
LEO: adds some more friction there. Now is it only that immigration population that this applies to, let's say you're not an immigrant, you know, do they still allow the back and forth or is it just
PHOEBE: Oh, they do. That's interesting. Yeah. [00:13:00] Currently still, they're proposing some pretty significant changes for states that are a little bit more inclusive and liberal, so.
In certain states, and so, sorry that this is so California centric. It's just, I lived it, I breathed it. I, you know, I kind of gotta share that. But you know, in California, for example, there are programs where they're called wraparound services, where if a person is an undocumented immigrant, the state actually covers whatever the federal government won't cover for them.
So if a person is, , undocumented, they could still get coverage. The same way that any other Medi-Cal member or , Medicaid member would get coverage. The big issue here is the administration is saying that if you can continue to do that and provide the coverage, but then we are gonna actually reduce your federal matching by 10%.
and that is [00:14:00] gigantic. For a state that is, relies on federal funding and federal matching to be able to do a lot of the services that they provide.
They are also proposing some more cost sharing program. So basically what, like you and I would consider a copay, one thing just to really clearly like, explain and lay out is that there's a specific reason that copays don't exist for this population, and it's because that there's supposed to be zero barriers to care.
So by layering in a copay or a deductible or something that, some sort of cost sharing that ultimately, kind of signals that if you don't have the $10 to go to the doctor, well then I guess you're just not going to the doctor and you're dealing with a population that might be having to choose between do I feed my family dinner or do I [00:15:00] go talk to, you know, my provider who may or may not even help me out.
Historically, that was one of the reasons why Medicaid has, you know, there's lots of rules around it. There's no balance billing. There's, , there's not supposed to be any sort of like cash payment. That's why a lot of, , cash pay companies actually have to opt out. You know, there's a lot of rules around that.
And by adding some of this, again, you're just kind of creating the some potential barriers there. And then of course. There is the waiver changes that are being proposed. And so I think we did an episode about waiver programs. Leo can't really remember, but a waiver program is basically like an innovative startup.
So you know, you wanna do something that's really cool and pushing boundaries and you really wanna try something that's gonna, maybe potentially save you some money, but also drive better outcomes. States will apply for what's called an 1115 [00:16:00] waiver. And it's basically like a state's way of saying like the federal policies, you know, still apply, but we have this really interesting subset where we wanna kind of experiment and try things out.
And so while states can still apply for an 1115 waiver and get funding, they have to be strictly budget neutral. And that's really hard when you're piloting and you're trying to demonstrate, , almost like proving a concept. and so it's really gonna significantly limit some innovation in Medicaid and, you know, potentially slow down some programs in that
LEO: aspect.
And, and tying this into kind of telemedicine too, since your telemedicine talks as well, it kind of slow down the progress in telemedicine, right? A lot of the telemedicine innovation, new businesses, startups depend on this, right? Depend on this flexibilities. And you're right. We, we may see a slow down in kind [00:17:00] of , how we can provide care flexibly in,
PHOEBE: in, in the virtual space too.
Yeah. Well I think what's gonna happen is, I think it's gonna be harder for some of the, like, value-based care companies Yeah. To be able to position themselves well while still making money if there isn't money to fund some of the innovation that they are doing. So, you know, in theory, a lot of these states will, will come up with a program, we'll go, okay, well we really wanna do, you know, whole person care.
And then from there you delegate it down to the health plans and then the health plans goes and finds their partners. Um, but if there's not the funding there to be able to, if you go to a health plan and it's like they're kind of low balling you that's where you're gonna kind of just see it.
It's just gonna be stifled because you're just not gonna have a lot of the same companies and organizations that are gonna wanna do the work for the little return that they would receive under a budget neutral waiver. And those things are like in, in my [00:18:00] experience, I did tons of waiver programs.
They get evaluated. You have to submit this like 300 page document to the federal government. They get evaluated. You have to show budget neutrality. You have to show all this data. And at the very end of it, if they deem it. Like that, it's not budget neutral. If it doesn't meet their very specific criteria, , they're actually gonna revoke the funding.
And they usually do that after the fact. So it's this it's, again, it's, it could be just , an interesting thing and I'd be very curious to see kind of like where the administration takes that. If that one does go through. Some other key updates are, just around like the Affordable Care Act marketplace and just again, what so many people have been accustomed to in the United States since, you know, the Affordable Care Act was launched.
I don't, did I ever tell, like, you know, in California I got to, uh, implement the Affordable Care Act. It was like one of my favorite. Chaotic moments. So seeing some of this stuff getting unwound is a little like, I dunno, there's a
LEO: little [00:19:00] crack in my heart. Um, yeah. How, how long ago was that too? This
PHOEBE: is like a mainstay now, but yeah.
I mean, I'd like, I can't remem I mean, 2013 if I'm, if I'm just throwing it out there based on memory, but yeah, 20 13, 20 14 October,
LEO: I specifically remember it was on
PHOEBE: OCT on October. Oh, that's awesome. But so some of the other things are. They are shortening the enrollment period where people can actually enroll in a state health plan basically.
So it's going to be reduced to, one month basically. And they're not gonna allow continuous enrollment. So similar to what I said earlier, currently today, if you don't have coverage, you would qualify for a life event because you don't have coverage. You can't switch plans, you can't make significant changes like that.
But let's say like you lose your job or something were to happen, you could go to, a marketplace within your state and actually sign up [00:20:00] today and get, coverage that same month. So removing this again, it's going to really, really, really, kind of like impact that
there's also going to be kind of like an auto enrollment fee that they are going to be, you know, applying. So like. Basically for people who are not automatically verifying eligibility and doing, some of, you know, basically people aren't doing their due diligence and checking, they're gonna actually start charging you for the administrative burden.
And this is again, like, this is I think a little, intended to discourage, you know, some kind of like passive enrollment, but ultimately I think this is just going to confuse the hell out of people. And it's just going to, really drive more people losing access. And then even for people, not in the Medicaid space, but just like, again, like the, just the standard, you know, affordable Care Act marketplace there's gonna [00:21:00] be a lot more real time verifications and a lot less time that you get to report any sort of discrepancies.
And so this again, is like, I know from experience one key thing that really fell through the cracks. During the unwinding of , the COVID pandemic when, you know, they kind of finally said like, all right, all these people who haven't submitted all this stuff to us, you're gonna lose coverage.
And millions and millions of people lost coverage simply because they didn't provide the information, because, they just, it's a confusing process. This again is like, it's the most like aggressive restructuring of Medicaid and the Affordable Care Act and in, you know, in my lifetime since the Affordable Care Act has been launched and.
I think that, you know, like if you are like a healthcare provider or a startup, or you are anybody who works in this population, it's gonna be really [00:22:00] important to like, one, make sure that you understand these key changes when they are, effectively, going into action for lack of better words but also that you really understand.
How this is going to impact your future business and your future operations.
LEO: Kind of like what you had said, Leo. Yeah. Yeah. So you know, what I'm seeing is that, you know, a lot in, in telemedicine we're seeing a lot of shift. You know, it used to be cash pay a lot. Now you know, these telemedicine companies are trying to go into the payer market, the Medicaid market, and you know, this has the potential to reduce that market for them.
That's kind of what I'm seeing now. Which is unfortunate, right? Because a lot of the people in the Medicaid population, this is the only care that they could get, right? They're not gonna be able to afford a cash base, a cash based service, [00:23:00] more or less, you know, some of these cash based services are super cheap, but they're also super, nuanced and only fit a tight niche, right?
It's not gonna be this wide range. So maybe, tell missing companies that. Provide kind of the cheaper nuanced care may see an uptick, but you know, kind of the generalized overall care that, some companies provide that do rely on Medicaid may see a, a decrease. So it's gonna be interesting to see kind of the market shift and how, this will affect, you know, just again, just the telemedicine companies that are starting up and, and relying on in the Medicaid market or.
You know, they were relying on the Medicaid market and trying to transition
PHOEBE: away from more cash base. Yeah. Yeah. No, I agree. I agree. I think I, I'm curious to see if like, public health is gonna kind of step up a little bit yeah. You know, Medicaid again is like separate than public health and, and you know, public health really is there to kind of.
Again, kind of be a safety net for those who have like [00:24:00] no coverage. Um, and so it would be curious to see if there are gonna be maybe some emergence of some like public health dollars that are gonna be reallocated to support some of these
LEO: things. Where do those dollars come from though? Like private pay, like.
The
PHOEBE: state? I, I'm not sure. Yeah, I mean, that, that's the problem. The problem is, is like public health dollars come from typically like federal grants or state funds. So again, it's kind of like you're just, you're gonna shift money from one bucket to another bucket and you're gonna play , , that little game.
But unfortunately, I think the. You're just gonna see a lot more people who are going without coverage. And I don't know if there is an option besides, , continuing to be able to support our Medicaid programs , and
LEO: give them the funding that they need. Yeah, no, it's, uh, it's gonna be an interesting shift and yeah, looking forward to see how this [00:25:00] kind of shapes the future market.
No, this is awesome. This is awesome. Definitely new information for me, for sure. New vocabulary, but, um, no, this is definitely important to understand, right? Uh, just to get a finger on the pulse on where our , medical
PHOEBE: care is going. So, yeah. Yeah. And we, I can link kind of, I'll link.
The budget so that anybody who wants to take a look at it, you could read it for yourself. There's other things that they proposed. Of course for me, I focused heavily just on kind of like, you know, the Medicaid space and the Affordable Care Act space, but there's other budget cuts in there also that you can see kind of where else potentially there might
LEO: be some loss of funding too.
Yeah. No, thank you so much for the education and knowledge. Yeah, if you have any questions, definitely touch base with Phoebe, phoebe@telemedicinetalks.com. Pick her brain and, yeah. Thank you so much. Any closing [00:26:00] thoughts? You know, um, kind
PHOEBE: of mic drop events? No, I mean, you know, my mic drop is let's keep Medicaid funded.
Um, I I always joke, but it's like , I have a bleeding heart for the Medicaid population. I think one of the things that, one of the reasons that I got into healthcare was because, you know, my, my grandma could not get coverage, and this was before the Affordable Care Act. She actually passed away.
And so for me it is having these programs, being able to fund these programs. Like I will gladly pay my taxes knowing that my neighbors and, friends and kids and the sickest of the sick can continue to go to the doctor and get free access and not feel like. There's any sort of barriers to care, and I'm just, I'm nervous that we're going back to before where , it's , the financial decision.
Do I pay or do I [00:27:00] stay healthy? And I think Medicaid has just been there to be like, don't worry about paying us, we're we got you covered. So no. That's my parting thought. My parting thought is let's keep Medicaid funded. And uh, too bad I'm not bigger. 'cause I would, I would love to
LEO: shout that from the mountaintops.
No, thank you so much. Um, again, drop us a line, um, share your thoughts and looking forward to hearing from you and looking forward to joining us next time.