By Martin Baccardax

Medicaid might not be the "third rail" of American politics in the way that Social Security benefits are, but it could be the proverbial Costco hot dog.

Nearly 80 million Americans, most of them with low incomes, are covered by Medicaid and the Children's Health Insurance Program, which are jointly funded by the federal government and individual states. And at nearly $800 billion a year in total costs, Medicaid and CHIP represent around a tenth of the annual U.S. budget, and around 18% of total healthcare spending, according to data from the Centers for Medicare & Medicaid Services.

In other words, it is huge.

So huge, in fact, that Republican lawmakers are looking at ways in which it can be trimmed as they pore over details of a tax-and-spending package, dubbed the "one, big, beautiful bill," that they hope to pass later this year.

Multiple media outlets, however, have reported that President Donald Trump excoriated his party colleagues, with an expletive, not to tamper with the program during a closed-door meeting in Washington. Instead, he instructed lawmakers to focus on weeding out the "tremendous waste, fraud and abuse" he claims can be found within the program.

The president's message, in fact, echoes a similar admonishment from Costco co-founder Jim Sinegal, who famously told then-CEO Craig Jelinek that one aspect of the bulk retail giant's revenue stream was off limits.

Jelinek, frustrated by the losses tied to Costco's $1.50 hotdog and soda combination, which hasn't changed since 1985, was thinking about a modest price increase in 2018. "If you raise the effing hotdog, I will kill you," Sinegal told Jelinek in a conversation he shared during a public event shortly after. "Figure it out."

They did. Costco began making its own Kirkland-brand hotdogs from a company-owned plant in Los Angeles, which it later expanded to Chicago, and kept the price unchanged. It is now the signature offering of Costco's $250 billion in sales and emblematic of the group's effort to keep prices low and keep value-focused customers willing to pay its $65 annual membership fee.

Trump might be thinking the same thing: cutting into Medicaid would lead to immediate fiscal benefits, ease the nation's deficit burden, and help extend the tax cuts he won during his first term.

But it could also represent a sea-change in American politics that alienates the estimated 80 million people covered by Medicaid, rattles seniors who rely on Medicare, and add to the pressures Republican lawmakers are likely to face in the 2026 midterm elections.

"We're not changing Medicaid, and we're not changing Medicare," Trump told reporters in Washington on Tuesday. Time will tell if he has "figured out" how to keep that promise.

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May 20, 2025 15:29 ET (19:29 GMT)

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