Yesterday, Donald Trump was sworn in as President, marking only the second time in U.S. history that a president will serve two non-consecutive terms (the first was Grover Cleveland in the late 19th century, in case you haven't read that about a dozen times since the election). This puts Trump in the unusual position of having both a past presidential record to be analyzed and an interest in reshaping the later-term decisions of his predecessor/successor. In today’s blog post, we are going to take advantage of this chronological quirk to explore Trump’s healthcare regulatory agenda, focusing on four key rule-making periods:
Recently finalized rules subject to reversal;
Proposed rules now inherited by the new administration;
Ongoing healthcare models;
What new rules to expect in the next four years.
In the first three sections, we’ll take a look at the rules that are most likely to stay, most likely to go, and where there is still quite a bit of uncertainty.
1. Trump's healthcare regulatory agenda: Reversing final rules with the Congressional Review Act
Once a relatively obscure and rarely used law, the Congressional Review Act (CRA) garnered significant attention during the early days of the first Trump term when it was used to overturn a record 14 Obama-era rules in just the first year (for his part, President Biden utilized the CRA three times). The law permits simple majorities in both the House and Senate to overturn any rule finalized within approximately the last six months of the prior administration.
While powerful, the CRA is not without its limitations. It cannot be used to remove a piece of a rule; the whole thing has to go. So it’s a blunt instrument, not a scalpel. Making matters more complicated, rules that are reversed by the CRA “may not be reissued in substantially the same form”, meaning lawmakers need to be very careful about what policies they decide to take off the table permanently. Finally, rules have to be reversed one at a time (though some lawmakers are trying to change that to allow rule bundling), taking precious time away from the busy first few lawmaking months of a new president’s term.
With those caveats in mind, what recent healthcare rules are safe and what might end up on the cutting room floor?
Our predictions for recently finalized rules
Staying: Of the ten costliest rules finalized during the CRA lookback period, half come from HHS. But three of the five are annual Medicare payment rules. Completely overturning any one of these would wreak immediate havoc on the industry, so they are undoubtedly going to stay. What’s more likely is that future rules will obviate specific portions of these regulations that the new administration finds undesirable, e.g., the 2025 Medicare Physician Fee Schedule's exploratory efforts to address health-related social needs.
Going: One reason to target the costliest rules, other than earning points from fiscal conservatives, is that those savings can count toward Trump’s ‘regulatory budget,’ which we’ll discuss in greater depth in the final section of this post. One of the two non-payment HHS rules that made it to the top ten most expensive list is Supporting the Head Start Workforce and Consistent Quality Programming, which was intended to bolster the Head Start workforce and enhance mental health services offered through the program. With a price tag of roughly $800 million, it will likely end up in the crosshairs, especially in light of attempts in the previous Trump administration to reduce Head Start funding and calls in (the officially disavowed) Project 2025 to eliminate the program all together.
To be determined: The last, and most pricey (at least to health plans), healthcare rule to come out in the last six months strengthens existing mental health parity requirements. But the projected cost of administering these changes will be upward of $200 million per year, which plans caution will increase premiums without solving the underlying behavioral health crisis. Trump has taken executive action to address mental health in the past so he may not want to dismantle this latest reinforcement, but facing industry pushback and pressure to reduce bureaucratic red tape, we don’t know if this particular regulation will make it out of Q1.
2. Trump's healthcare regulatory agenda: Updating recently proposed regulations
Unlike finalized regulations, which take an act of Congress to overturn, the new administration has almost unlimited leeway to adapt rules proposed by its predecessor. And some regulations, like a proposal requiring health plans to cover over-the-counter birth control at no cost to patients, will almost certainly be thrown out altogether. One particularly interesting rule we’re watching is the 2026 Medicare Advantage and Part D proposal. Representing over half of Medicare enrollment, MA has become a hot-button issue for both Democrats and Republicans, and changes here often represent an administration’s stance on the industry more broadly.
Our predictions for the Medicare Advantage and Part D proposed rule
Staying: Two measures within the proposed rule seem targeted squarely at the profits vertically consolidated conglomerates draw from the Medicare Advantage program. The first would extend MLR changes recently applied to commercial and Medicaid plans to Medicare Advantage plans. CMS wants to change how plans calculate MLR in a number of ways, including a requirement that any bonus or incentive payments to providers must be tied to clinical or quality outcomes. This appears to be an effort to prevent plans from inflating their MLR numerator by passing along premium dollars to provider assets they themselves own. The second measure takes aim at high drug costs and, by extension, plan-owned PBMs. CMS asserts that some plans are making it more difficult for beneficiaries to access lower-cost drugs by, for example, having more stringent utilization management and tiering of biosimilars and generics. Lowering drug costs and monitoring healthcare consolidation are issues that cut across party lines, meaning both of these stipulations will likely make it into the final version of the rule.
Going (with some caveats): The Biden administration made headlines when its proposed rule included GLP-1 coverage for weight loss in both Medicare and Medicaid. The financial impact of this proposal would be massive, raising Medicare and Medicaid spending by $25 billion and $15 billion respectively across the decade. The proposal came out in late November, after it was clear the Democrats would not be returning to the White House, leaving the new administration to deal with the fallout. It initially seemed unlikely that this policy would make it to the final Part D rule, based on the cost and previous hesitancy from Trump’s HHS pick RFK Jr. But two recent developments have potentially shifted the playing field. The first is that RFK has softened his public opposition to GLP-1s. The second, and even more meaningful event, occurred when the Biden administration announced that three of the most common GLP-1s would be included in the list of 15 medications Medicare will negotiate for 2027. That would ostensibly lower the price tag if coverage was expanded, but there are still many barriers that could prevent expansion. First, manufacturers would have to decide by February if they’re going to participate in negotiations (or face large tax fines), the IRA would have to survive ongoing political and legal battles (which we discuss in the next section), and the new administration would still have to accept a significant increase in spending (even with lower negotiated prices) on a drug on which it has shown some real ambivalence. With so many moving pieces, a more likely scenario is that weight loss coverage—if it happens at all—will get shifted to a future MA rule when there is less uncertainty.
To be determined: Included in the proposed MA rule are policies designed to curb inappropriate denials behavior from MA plans, a concern that crosses party lines. But within those regulations are some specifically targeting the use of AI. Trump has indicated that he intends to take a more hands-off approach to AI regulation, suggesting he won’t be on board for additional red tape. Still, the guardrails outlined in the proposal are quite general, stating that AI cannot inhibit equitable access and that plans must disclose when it is being used. So while we’d expect a pullback on future regulations, the new administration may find these innocuous enough to slot into Trump’s healthcare regulatory agenda.
3. Trump's healthcare regulatory agenda: Inheriting ongoing innovation models
A significant part of CMS’s regulatory mandate is administering new or emerging healthcare payment models. Many of these models are relatively contained tests of innovative payment and care delivery methods with narrow timelines or target populations. Others, such as the Medicare Shared Savings Program, are incredibly expansive and long-lasting, or in some cases encoded into law. Both are now under the aegis of a Trump CMS, who will use its authority to reshape or preserve programs that align with its specific goals.
Our predictions for CMS healthcare models
Staying: Medicare drug price negotiation was signed into law by the Inflation Reduction Act, so as the head of the executive branch Trump alone does not have the power to halt it completely. But his HHS will have significant leeway to shape the pace and trajectory of the initiative. In the past Trump has supported similar price capping policies, to the chagrin of some of his Republican colleagues. So while Trump himself may not dismantle the program, Congressional Republicans may still make significant changes to it using the budget reconciliation process. It also needs to survive several lawsuits currently underway challenging the legality of the law, but the President does not control its ultimate fate.
Going (or at least scaling back): During the first Trump administration, CMS significantly cut back several mandatory payment models, including cardiac and orthopedic bundles. In general Medicare’s governing body at the time took a softer, more industry-directed approach to payment reform than the Obama administration. Since then, several more mandatory programs have been added under Biden. The newest was finalized in November; called the IOTA Model, it aims to increase access and reduce disparities in kidney transplantation. Another mandatory model, called TEAM and finalized in August, would create bundles for five key inpatient episodes, including Coronary Artery Bypass Graft (CABG) and Lower Extremity Joint Replacement (LEJR). Hospitals have pushed back against the model. While CMS’s new leadership may not choose to cancel the programs altogether, it is likely to at least delay implementation and/or remove the mandatory status.
To be determined: The Cell and Gene Therapy Access Model, a CMMI initiative to lower high-cost drug spending by creating multi-state value-based drug payment agreements within Medicaid, was initially released in February 2023. But the program didn’t begin in earnest until December 2024 when CMS announced that the first round of drugs had been selected for the pilot; both are gene therapies that treat Sickle Cell disease and carry price tags over $2 million. It is not a mandatory model, and the notion of lowering drug costs generally aligns with Trump’s stated principles. But it’s not clear at this point if the new administration is amenable to this specific approach.
4. Trump's healthcare regulatory agenda: Future rulemaking
Reworking past policies will only be a small portion of Trump's healthcare regulatory agenda. As with every incoming administration, Trump and his healthcare appointees have their own ideas about what the next four years in healthcare regulation should look like. Admittedly, the campaign has been a bit light on details but based on actions during the previous administration and statements made in the run up to the election, we have a few ideas about what the early days of HHS will likely be focused on.
Our predictions for the new administration’s future healthcare agenda
Deregulation: One of the first actions taken by President Trump during his first stint in office was to place a cap on additional costs that agencies can incur or impose on the public through regulation. In many cases, that cap was $0. That same executive order charged agencies with eliminating two rules for every new rule created (an endeavor he promises to expand to 10-to-1 in his next term). To that end, the Trump HHS finalized the controversial SUNSET Rule—which would eliminate all HHS rules five years after inception unless the rule was thoroughly reviewed and deemed applicable—days before Biden took office. The Biden administration delayed and later withdrew the rule, but we expect to see something similar proposed early in Trump’s next term.
“Fixing” the ACA: Repeal and replace never picked up the steam Trump might have hoped in his last administration, and on the campaign trail this time around the incoming president had changed to a more reparatory tone. Check out our recent blog post to learn how the second Trump administration will likely approach changes to the individual market.
Chronic disease prevention: Adopting much of the language from his rival-turn-HHS-nominee Robert F. Kennedy Jr., President Trump has begun touting the importance of chronic disease prevention. The initiative even has its own catchy, Trumpist, slogan: “Make America Healthy Again.” But as we wrote in a recent blog post, some things are easier said (or sloganed) than done.
We are of course in the earliest days of this new administration, and we expect to learn a lot more in the weeks to come. Stay tuned as we track the most important updates. We will also be covering some of the topics discussed in today’s post in our March Webinar “Trends in U.S. health status—and the future of public health.” Register here.