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President Donald J. Trump’s healthcare agenda: flexibility and choice, fiscal conservatism, public health reform and deregulation

  • Report
  • 10 minute read
  • February 10, 2025

President Trump's strategic agenda for healthcare is taking shape and setting the stage for a horizon of healthcare transformation. This transformation aims to shift the emphasis from treatment to prevention while enhancing personalized care and continuing to push to cut drug costs.

Looking ahead, the Trump administration and GOP are in a position to accelerate their health agenda with four key themes:

  • Flexibility and choice: Shift decision making on healthcare from federal level to states and individuals
  • Fiscal conservatism: Emphasize policies that reduce government spending in an effort to balance the budget and pass upcoming tax legislation
  • Public health reform: Revaluate the current health system to “Make America Healthy Again”
  • Deregulation: Reduce the volume of existing federal regulations

Donald Trump’s second term as president marks a significant shift in the political landscape, with considerable implications for the health industry. It is important to consider how the landscape has changed since President Trump’s first term. For one, the debate to repeal and replace the ACA no longer retains the level of political or public support it did in 2016 and healthcare resources and policy efforts that had been focused on the pandemic during the last term can now focus on regulatory and market reform.

Strong momentum exists for change and disruption given Republican control of Congress, a far more prepared executive transition team and cabinet nominations with packed agendas. Yet, the new Trump administration will need to work alongside a Republican Congress with very slim majorities and less ideological consensus than in past years. This may create delays or conflict as legislation is negotiated despite early political momentum.

One main focus of political energy in 2025 will be in negotiating the delicate balance of legislative policy change to offset the cost of an ambitious agenda including tax proposals, energy policy, deregulation priorities, defense funding, and border security. The key to passage will be in maintaining support of both hardliners who are concerned with national debt and centrists who are more hesitant to cut popular federal programs. Major cuts to Medicaid funding, ACA subsidy programs, and drug pricing are all on the table. Continued emphasis on trade policy and tariffs is also expected and may move swiftly as these do not require Congressional action.

On the regulatory front, President Trump’s health agenda focuses on broad public health reform with the goal of making America healthier. These initiatives are triumphed by new appointees with perspectives that may resonate with consumers and align with patient centric ideals. This may create increased emphasis on preventive health, funding for chronic diseases, and scrutiny of manufacturers’ role in agency decision making.

Ultimately, the Trump administration is poised to fulfill campaign promises, address unfinished business from his previous administration and potentially set the trajectory of the Republican party for the future.

What can health industry executives expect from President Trump’s healthcare proposals?

Under the Trump administration, shifts toward deregulation and a market-driven system can be expected; these will alter the landscape of healthcare policy in a manner reminiscent of his first term while also addressing contemporary conservative priorities such as the “America First” agenda. The administration is likely to prioritize deregulation, fostering competition and innovation while reinvigorating efforts to tackle fraud and abuse. By decentralizing control, the administration may seek to empower states to design and implement healthcare solutions tailored to their unique needs, thereby helping reduce bureaucratic inefficiencies, and promoting localized innovation, yet potentially creating a more fragmented regulatory landscape with reduced state budgets.

Expect big announcements and headlines that catch attention but may take time to come to fruition; organizations that utilize this time to proactively prepare with scenario planning will be better positioned to capitalize on new opportunities as they arise. However, shifts in public sentiment and focus of consumer activism may occur more rapidly as they do not need to go through cumbersome regulatory processes; consumer activism and interest in reform may illicit demands for novel change.

Anticipate continued interest from the Trump administration in sweeping economic policy changes which could have profound impacts on health industries. These include tax reforms, tariff policies, AI deregulation, immigration reform and competition policies. These changes might influence the healthcare workforce, disrupt supply chains, and impose budget constraints on health systems.

By considering "no regret" actions, organizations can navigate shifts in the competitive landscape more effectively, positioning themselves for success regardless of how the regulatory landscape evolves.

Impact of economic policy shifts on health industries

The Trump administration aims to extend expiring provisions of the Tax Cuts and Jobs Act of 2017. With healthcare expenditures accounting for approximately 25% of the federal budget, these programs are likely to be impacted.

No regret actions

  • Evaluate the potential impact of proposed tax policies and implement scenario planning and tax modeling to assess the impact of potential changes, including for tax benefits and incentives, cash flow, profitability, and compliance.
  • Reevaluate existing tax strategies to ensure they align with the potential provisions. This includes examining deductions, credits, and other tax benefits that may be affected as well as tax rates and other changes that could impact overall tax exposure.

Large tariffs are proposed for Mexico, China and Canada, among others. Tariffs could shift costs for essential medications and equipment, impacting shortages or introducing new strain on the supply chain.

No regret actions

  • Conduct scenario analysis on current supplier dependencies and identify alternative sourcing options to mitigate potential cost increases and supply disruptions caused by tariffs. Develop contingency plans to ensure a stable flow of essential medications and medical devices.
  • Work closely with suppliers and manufacturers to explore pricing adjustments, contract flexibility, and tariff mitigation strategies. Strengthen partnerships with domestic and diversified international vendors to reduce reliance on heavily impacted regions.
  • Explore key Customs and Trade impact levers to reduce potential tariff exposure, such as the use of foreign trade zones, origin determination analyses, first sale for export valuation, alternative valuation options, and duty drawback.

The new administration has rolled back Biden-era regulations and aims to reduce regulatory burdens on businesses. At the state level, AI regulations are rapidly evolving, potentially leading to a fragmented and complex compliance landscape.

No regret actions

  • Develop a scalable AI governance framework that aligns with evolving federal policies, emphasizing innovation and operational flexibility while enabling compliance with emerging state-level regulations.
  • Invest in onshore AI infrastructure and strategic partnerships to gain first mover advantage in securing investment funds and accelerate adoption and operational efficiencies while proactively monitoring and adapting to the fragmented regulatory landscape to help mitigate compliance risks.

Administration plans include enhancing border security, activating mass deportation and reducing visa availability. These measures may exacerbate current workforce challenges including those which rely heavily on skilled international talent.

No regret actions

  • Identify critical staffing gaps and develop targeted recruitment strategies, including domestic talent pipelines, expanded training programs, and partnerships with educational institutions to address shortages, particularly in rural healthcare settings.
  • Work with legal and HR teams to assist current international employees in navigating visa challenges, while advocating for policies that maintain access to skilled foreign healthcare professionals and researchers.

A more favorable regulatory environment for healthcare mergers and acquisitions is expected, easing restrictions and accelerating deal approvals. Scrutiny of pharmacy benefit managers (PBMs) and private equity’s influence on healthcare costs is expected to continue.

No regret actions

  • Conduct dynamic, real-time scenario modeling and tracking of key developments in target markets to determine which assets and innovations to invest in versus which portfolio components should be divested.
  • Monitor regulatory shifts and adjust M&A strategies and competitive positioning to capitalize on a more favorable consolidation environment while preparing for continued scrutiny on PBM practices and pricing transparency.

In addition to broader economic policy changes, the Trump administration and Republicans in Congress are pursuing several initiatives that target the health sector more directly. These policy changes are expected to reshape healthcare financing, regulation, and market dynamics, influencing key industry trends. Understanding these shifts will be crucial for stakeholders navigating the evolving healthcare landscape.

Key policy shifts impacting payers and providers

Shift in funding, focus on fraud, waste and abuse (FWA)

Republican-led proposals aim to cut health program funding, with a focus on Medicaid; could shift the broader marketplace, affecting service provision, funding from federal and state sources and ACA subsidies.

No regret actions 
  • Evaluate funding dependencies and reimbursement models to anticipate potential Medicaid cuts and shifts in ACA subsidies, implementing cost-containment strategies and fraud prevention measures to maintain financial stability and service continuity.
  • Assess your FWA capabilities, including the use of data analytics and AI, considering potential increases in regulatory scrutiny.

Coverage and eligibility shifts

Policies may alter coverage scope including changes to eligibility requirements and ACA subsidies. Potential for a rollback of Medicaid expansion and shifts towards risk pools and short-term less restrictive plans.

No regret actions
  • Conduct scenario analysis and financial modeling to assess the impact of rising uninsured rates, adjusting revenue cycle strategies, charity care policies, and risk-sharing arrangements to help mitigate financial risk and enable service sustainability.
  • Adapt coverage strategies and patient outreach initiatives to navigate shifting eligibility requirements, enabling financial resilience through alternative plan designs, risk pool adjustments, and proactive enrollment support for impacted populations.

Demand and cost drivers

Health and economic policy changes are expected to reduce healthcare consumption and potentially result in higher health system operating costs.

No regret actions
  • Assess and adjust reimbursement models to account for shifting healthcare utilization patterns and rising operational costs, enabling sustainable coverage strategies.
  • Enhance care delivery efficiency and cost structures by leveraging value-based care models and operational improvements to mitigate financial pressures from reduced healthcare demand and increased medical supply costs. Consider strategic cost takeout programs to prepare operations ahead of tariff impacts.

Key policy shifts impacting pharma/medtech

Shifts in pharma-agency and pharma-DTC interaction

Nominations to health agency positions have sparked scrutiny of pharma-industry interactions and the role of external advisors in agency decisions. Interest remains in reforming promotional advertising regulations.

No regret actions 
  • Assess current regulatory and engagement strategies to understand potential impacts of changes to sponsor-agency interactions (i.e., ad com reforms, shifts in user fees, data transparency) on development timeline, costs and compliance requirements.
  • Evaluate emerging risks associated with the use of digital platforms and social media for drug and device advertising, confirming that risk mitigation plans are in place to address changes in direct-to-consumer promotion regulations.

Stricter pricing controls and IP regulations

Continued pressures on drug pricing controls, including the potential for expanded negotiation list, and potential IP or exclusivity restrictions can impact pharma's revenue and innovation cycle planning.

No regret actions
  • Assess scenarios for future pricing reform and model potential Gross-to-Net impact.
  • Consider reductions to SG&A and other operational costs to maintain profitability, as needed.

Global supply chain disruption

Pharma and medtech companies should consider how potential tariffs and growing geopolitical tensions impact manufacturing locations and vendors.

No regret actions
  • Assess total imports and the cost of potential tariffs; consider customs mitigation strategies (e.g., first sale value); understand the impact of tariffs on global operating results.
  • Analyze supply chain and model various tariff scenarios to determine potential options; consider commercial, operational, tax, and customs strategies to offset tariff impacts.

Getting into the weeds: what health policy specifics are on the Trump administration and GOP agendas?

The Trump administration and the GOP have outlined a series of health policy initiatives aimed at reshaping the role of government in the health industry and realigning market incentives to focus on competition and innovation.

  • Medicaid restructuring: The GOP is considering various reforms to Medicaid with a strong interest in budget cutting measures. This includes establishing work requirements, altering eligibility thresholds, or limiting federal Medicaid spending with block grants or per capita cap financial systems. Interest also exists in rolling back ACAs expansion of Medicaid. These measures are estimated to save billions of dollars over the next decade and are likely to be part of a broader effort to help reduce the federal deficit and reallocate resources more efficiently. The policies would provide states with enhanced control over the program while also leading to significant coverage losses.
  • Strengthening Medicare: President Trump has pledged to protect Medicare's financial stability without funding cuts or raising the eligibility age. His administration is focusing on shifting to Medicare Advantage (MA) while implementing policies to curb overspending, including price transparency, tackling waste and fraud, and potentially extending the $35 insulin cap to commercial plans. Plans for drug price negotiations remain under development.
  • ACA Marketplace: The most prominent plan from the Trump campaign on ACA reform was promoted by then Vice Presidential Candidate JD Vance who expressed support for proposals to re-introduce risk pools to the marketplace, which function by dividing enrollees with higher spend and lower spend into separate plans. The Trump administration may also revive earlier efforts to offer more short-term duration health plans and promote Individual Coverage Health Reimbursement Arrangements (ICHRAs), enabling employers to reimburse employees for their healthcare expenses.

  • 340B Drug Pricing Program: Amidst a tangle of court cases and state level legislation, congressional interest in reassessing the 340B Drug Pricing Program continues with a goal of aligning with original program intentions. Proposed reforms aim to tighten eligibility criteria and reduce the number of contract pharmacies, potentially altering market dynamics, access to medications, financial pressures, and reporting requirements.

  • Pharmacy Benefit Managers: President Trump has signaled Pharmacy Benefit Manager (PBM) reform as a priority, which continues to gain bipartisan support. While not included in the 2024 end-of-year package, proposed legislation, including requirements for pass-through rebates, discounts, transparency measures received bipartisan backing and may resurface in 2025 along with forced divestiture of internal pharmacies. GOP key health committee chairs, such as Senator Mike Crapo of Senate Finance, are now seeking a path forward, focusing on enhancing transparency and reducing prescription drug costs.

  • Physician payment reform: With ongoing concerns that physician payments are failing to keep pace with inflation, the GOP reconciliation budget proposal from the House Ways and Means Committee included physician payment reform, signaling potential action. In 2024, a bill to stabilize payments by tying them to inflation in goods and services also gained strong stakeholder support. However, the GOP’s specific approach to reform remains uncertain.

  • ACA subsidies: In his second term, President Trump proposes to allow enhanced Affordable Care Act (ACA) subsidies to expire with the aim of reducing federal spending. This move could lead to increased premiums and out-of-pocket costs for millions, potentially decreasing ACA plan enrollment and increasing the uninsured population. The subsidy provisions will automatically expire in December 2025 if congressional action is not taken.

  • Site neutral payments: Congress has shown strong support for site-neutral payment reforms in Medicare, which are scored as having one of the largest potential impacts on the federal budget. The Senate HELP Committee has released a bipartisan framework for reforming site-neutral payments, including carve-outs to protect rural hospitals. Advocates argue these reforms could lower healthcare costs and reduce unnecessary hospital-based services, though critics warn they may still impact access to care in certain communities.

  • Nonprofit tax status: The budget proposal put forth by the House Ways and Means estimates eliminating or reforming the nonprofit tax-exempt status could save $260 billion over 10 years. While some proposals advocate for fully revoking this status, negotiations may instead lead to stricter charity care and community benefit requirements rather than a complete repeal. Organizations should scenario-plan for potential outcomes, as these changes could significantly affect financial stability and operations.

  • Fraud waste and abuse: The Trump administration seeks to intensify efforts to combat fraud, waste, and abuse in the healthcare sector as part of the broader DOGE effort for governmental efficiency and fiscal responsibility. With a broad approach to fraud, waste and abuse, the administration is targeting eligibility as well as instances of overspending. This initiative aims to improve program integrity and reduce unnecessary expenditures, potentially leading to stricter compliance requirements for healthcare providers.

  • Emphasis on chronic disease/prevention: President Trump emphasized chronic disease prevention through the "Make America Healthy Again" (MAHA) initiative, aiming to address rising rates of conditions like obesity and autoimmune disorders. This policy includes establishing a presidential commission to investigate these health issues and reforming federal health agencies. The health industry should anticipate shifts in regulatory focus toward preventive care and wellness programs.

  • Research funding shifts: Agency nominees are expected to shift focus away from rare and infectious diseases, emphasizing grant reporting, auditing, and oversight of NIH research funding. Foreign grants and partnerships are likely to face added scrutiny as the new administration begins implementing 'America First' initiatives aimed at positioning the US as the world leader in science and technology innovation. Additionally, there may be a trimming of the number of centers at NIH and a possible split of the CDC to separate policy-making and research entities, thereby limiting their ability to influence policy.

  • Pharma advertising, IP restrictions: Robert F. Kennedy Jr., nominated to lead the Department of Health and Human Services, has been a vocal critic of direct-to-consumer pharmaceutical advertising, citing concerns over public health and drug costs. This potential policy shift, along with increased scrutiny of the pharmaceutical IP landscape, could profoundly reshape marketing strategies and how companies communicate with consumers.

  • Vaccine safety: The Trump administration's rhetoric regarding vaccine safety has sparked debate and raised concerns about vaccine hesitancy. Concern exists for potentially undermining public trust in immunization programs and increasing the risk of preventable disease outbreaks. As key nominations approached Senate confirmation hearings, their rhetoric has become more neutral. Potential actions may focus on adverse event reporting, liability protections, and immunization recommendations.

  • Transparency requirements: During his first term, President Trump introduced price transparency requirements such as mandating that hospitals post standard charge information. Compliance has been inconsistent, which has prompted calls for stricter enforcement and higher penalties to enable adherence. The Trump administration is expected to build on these policies with stricter enforcement, though the approach has not been detailed.

  • Competition policy: Changes in FTC leadership may create a more favorable M&A environment, with Andrew Ferguson replacing Lina Khan as Chair. It is likely that regulators will continue to scrutinize the role of PE in health quality, and cost of care. Bipartisan support continues for PBM scrutiny and enhancing transparency in payer and provider deals.

  • Reverse Biden-era policies: President Trump acted quickly during his first days in the office to reverse or modify regulations that had been put in place by the previous administration. Policies aimed at promoting health equity, providing transgender healthcare, advancing women's health, and regulating Environmental, Social, and Governance (ESG) criteria have been revoked.
  • AI oversight and innovation: President Trump has proposed shifting AI oversight toward industry self-governance, aiming to reduce government regulations and foster innovation. This includes rescinding key Biden-era policies focused on federal oversight and creating the "Stargate" initiative—a public-private partnership designed to position the US as a global leader in AI development by enhancing AI infrastructure and electricity generation. Agencies have been tasked with writing a new AI action plan.
  • One-In, Two-Out expands to One-In, 10-Out: The Trump administration has already rescinded a swath of Biden era policies across various sectors aiming to enact bold deregulatory ambitions which served as a hallmark of his campaign. Building upon the president’s first term effort to deregulate, the administration is now targeting an ambitious goal of rescinding 10 regulations for each new regulation put in place. This approach aims to reduce the regulatory burden on businesses and promote a more favorable environment for economic growth.

Budget proposals clarify GOP priorities with additional detail and budget impacts

While many of the public health reform policies and those focused on deregulation may be promulgated through the executive branch, it will take Congressional action to implement fiscal policies. Given the large impact proposed cuts may have on the health sector, it is advantageous to conduct scenario planning as details of potential reforms emerge. Wish lists are being released as factions of the GOP negotiate what to include in a possible reconciliation package. These lists provide insight on GOP priorities for potential spending cuts, tax changes, and other fiscal measures aimed at reducing the federal deficit and restructuring government programs. A proposal put forth by the House Ways and Means Committee, below, details proposed healthcare saving options for the period 2025–2034, with projected savings in billions of dollars.

Proposed healthcare saving options (2025-2034)

Savings in billions of dollars


Improve Uncompensated Care
Medicare Site Neutrality
Block Grant GME at CPI-M
Recapture excess Affordable Care Act (ACA) subsidies
Eliminate Medicare Coverage of Bad Debt
Repeal Obamacare Subsidies “Family Glitch” Final Rule
Limit Federal Health Program Eligibility Based on Citizenship Status
Reform IRA’s Drug Policies
Improve Senior Access to Innovation and Telehealth
Geographic Integrity in Medicare Wage Index
Reform Obamacare Market Plan Design and Eligibility
Reform Medicare Physician Payments
Eliminate Inpatient-only List
Second Chances for Rural Hospitals Act
Reform Graduate Medical Education (GME) Payments
Prevent Dual Classification for Hospitals Under Medicare
Repeal DACA Obamacare Subsidies Final Rule
Other Reforms to Obamacare Subsidies

Source: House Budget Committee Proposal

The road ahead

How the new administration will impact your business

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