Who Really Runs Medicare and Medicaid and Why It Matters to Every American’s Healthcare

When most Americans think about healthcare, they think about cost, coverage, or maybe even their doctor. But few think about the agency quietly overseeing over $1.5 trillion in healthcare spending every year. That agency is the Centers for Medicare & Medicaid Services (CMS) and understanding how it works is essential to understanding your healthcare.

In this deep dive into CMS authority, we’ll unpack the structure of the agency, who leads it, how decisions are made, and most importantly, how it affects every American’s access to healthcare.

Medicare and Medicaid: What They Are and Why They Exist

Before diving into CMS, let’s clarify the difference between the two programs it manages: Medicare and Medicaid.

• Medicare is a federally funded health insurance program for people 65 and older, and for certain younger individuals with disabilities.
• Medicaid is a joint federal and state program that helps with medical costs for people with limited income and resources. It often covers services Medicare doesn’t—like long-term care.
• Both programs were signed into law in 1965 under President Lyndon B. Johnson as part of the Social Security Amendments of 1965 (National Archives).

Despite serving different populations, these programs are united under one roof: CMS.

🧾 Medicare vs. Medicaid: What’s the Difference?

Meet CMS: The Agency Behind America’s Biggest Healthcare Programs

What Is the Centers for Medicare & Medicaid Services (CMS)?

The Centers for Medicare & Medicaid Services (CMS) is a powerful federal agency housed within the U.S. Department of Health and Human Services (HHS). It was officially established in 1977, originally known as the Health Care Financing Administration (HCFA), and was renamed CMS in 2001 to better reflect its expanding responsibilities.

What Does CMS Do?

CMS administers four of the largest health programs in the United States:

1. Medicare – A federal insurance program serving individuals 65 and older and those with qualifying disabilities.
2. Medicaid – A joint federal-state program that provides healthcare coverage for low-income individuals and families.
3. Children’s Health Insurance Program (CHIP) – Offers low-cost health coverage to children in families who earn too much for Medicaid but can’t afford private insurance.
4. The Affordable Care Act (ACA) Marketplace – CMS oversees the federal health insurance exchange (HealthCare.gov) and regulates private insurance plans that participate.

Scope of CMS Authority

• Budget: CMS manages a massive portion of the federal budget—over $1.5 trillion in annual spending as of 2024.
• Reach: Combined, Medicare and Medicaid provide healthcare coverage to over 160 million Americans—nearly half the population.
• Regulation: CMS sets national standards for how care is delivered and paid for, how health plans operate, and how states can structure their Medicaid programs.
• Quality Oversight: The agency also monitors care quality and provider performance through systems like the Hospital Compare and Nursing Home Compare databases.

CMS is responsible for setting national standards for costs, coverage, and care quality. While most Americans interact with healthcare providers or insurance companies, it’s CMS that ultimately regulates, approves, and funds much of what happens behind the scenes.

HHS.gov

CMS Authority: Why It Matters

Even though most Americans engage with hospitals, insurance companies, or pharmacies directly, those services are often governed by rules and funding streams that originate from CMS. That includes:

• What procedures are covered
• How much doctors get paid
• What drugs are on formularies
• What benefits states are allowed to offer
• How patients appeal denied claims

So what exactly does CMS authority entail? In short:

• Regulatory power: CMS can write rules that affect what care is covered and how providers are paid.
• Financial oversight: CMS manages one of the largest slices of the federal budget—more than the Department of Defense.
• Policy implementation: When Congress passes healthcare laws, CMS translates them into real-world systems.

According to NIH research, CMS plays a central role in shaping how policies are carried out at hospitals, nursing homes, clinics, and state Medicaid programs.

Who Really Runs CMS? Understanding the Leadership Structure

At the top of the CMS organizational chart is the CMS Administrator, a political appointee nominated by the President and confirmed by the Senate.

This individual has tremendous influence over the direction of Medicare and Medicaid—including:

• Setting payment models
• Launching innovation pilots
• Approving or denying state Medicaid waiver requests

The CMS leadership team includes deputy administrators and directors of various centers like Innovation, Coverage, and Medicaid & CHIP.

Most recently, Dr. Mehmet Oz was appointed to lead CMS under the Trump administration in 2025, sparking debate over priorities like cost-cutting, fraud prevention, and “modernizing bureaucracy.”

(Petrie-Flom Center)

How CMS Makes Decisions: The Process Behind the Policies

The CMS decision-making process is not just bureaucratic red tape—it’s a highly structured process involving:

• Public comment periods for new rules
• Collaboration with state agencies and insurance providers
• Clinical data and economic analysis
• Stakeholder feedback from healthcare professionals, advocacy groups, and citizens

When CMS issues a new rule, like limiting Medicare Advantage overpayments, it affects millions of people and billions of dollars.

CMS.gov – Rulemaking Process

Political Influence: What Changes with Every Administration

While CMS operates as a federal agency, its direction is often swayed by the administration in power.

• Republican administrations often prioritize cost control and privatization, such as expanding Medicare Advantage.
• Democratic administrations focus on expanding access and equity, such as Medicaid expansion under the Affordable Care Act.

This results in rapid CMS policy implementation changes after every major election. For example:

• Trump proposed significant budget cuts to both Medicare and Medicaid.
• Biden expanded subsidies and reinstated ACA protections.
• Trump’s 2025 return brought renewed emphasis on “slashing government waste,” including CMS restructuring.

The Real-World Impact of CMS Decisions on Americans

Here’s how CMS decisions directly affect the public:

• Drug Prices: CMS now negotiates drug prices for Medicare, potentially saving beneficiaries thousands annually.
• Medicaid Expansion: States must seek CMS approval for new benefits or eligibility rules.
• COVID-Era Flexibilities: CMS allowed telehealth expansions and streamlined billing during the pandemic.

These actions show how the CMS policy implementation process touches everything from hospital bills to telehealth access.

CMS and the States: A Delicate Medicaid Partnership

Medicaid is unique because it’s federally funded but state-run. That means:

• States apply for waivers to test new policies (like work requirements or block grants)
• CMS can approve or deny these waivers based on budget impact, legality, and equity
• Some states expand Medicaid, others restrict it

This tug-of-war between CMS governance and state health departments leads to a patchwork of healthcare access across the country.

Medicaid.gov – State Plan and Waivers

Oversight and Transparency: Who Keeps CMS Accountable?

CMS is not unchecked. It’s monitored by:

• Congress (via budget hearings)
• Office of the Inspector General (OIG)
• Watchdog organizations like the Medicare Rights Center

In 2024, oversight groups called on CMS to increase transparency in Medicare Advantage, which now covers over half of all Medicare beneficiaries.

Medicare Rights Center

Why Every Voter Should Understand CMS

Whether you’re insured, uninsured, on Medicaid, or about to enroll in Medicare, CMS’s decisions shape your healthcare reality.

• Your premiums and copays are calculated based on CMS rules
• Your doctor’s ability to treat you (and get paid) is regulated by CMS policies
• And your state’s Medicaid eligibility is tied to CMS negotiations

Who runs CMS doesn’t just matter in Washington. It matters in your home, your pharmacy, your hospital room.

So, who really runs Medicare and Medicaid? The answer is clear: the Centers for Medicare & Medicaid Services (CMS).

Far from just a bureaucratic office, CMS is the force behind decisions that shape the nation’s healthcare landscape—from the price of your prescriptions to whether your loved ones qualify for coverage. With its vast budget, sweeping authority, and ability to shift policy with each administration, CMS is one of the most influential yet underrecognized agencies in the federal government.

As debates over healthcare continue to dominate headlines and campaign promises, understanding how CMS operates, who leads it, and what powers it holds isn’t just useful. it is essential. Because whether you’re a senior on Medicare, a low-income family relying on Medicaid, or simply a voter concerned about healthcare access, the policies CMS enacts today will impact your health and finances tomorrow.

Being informed about CMS means being empowered to ask better questions, hold policymakers accountable, and demand a healthcare system that works for everyone.

References:

• U.S. Department of Health and Human Services. What is the difference between Medicare and Medicaid?
• National Archives. Social Security Amendments of 1965 – Medicare and Medicaid Act
• National Institutes of Health (NIH). Centers for Medicare and Medicaid Services Innovation Center: Critical Evaluation Needed
• Petrie-Flom Center, Harvard Law School. What You Need to Know About Medicare and Medicaid to Survive the Current Election Cycle