On Monday, former President Donald Trump became President Donald Trump once again, relieving Grover Cleveland of the honor of being the only president elected to nonconsecutive terms. Unlike his first term, where there was some trepidation from a handful of members of his own party, this time it is all systems go for the Trump agenda, and his control over the party shows no signs of waning.
Health systems will need to pay close attention to what’s being proposed by the Trump White House, Health and Human Services, and other federal agencies. Timely communications about any changes that impact the delivery of care will be important.
Because President Trump has emphasized cutting the federal budget, with likely cuts to health care spending, working closely with state and federal associations and member organizations should be prioritized. Here are some things hospitals and health systems can expect from the second Trump administration.
Entitlements on the chopping block
Billionaire Elon Musk has been tapped to cut $2 trillion from the federal budget as part of the Department of Government Efficiency, aka DOGE. Health spending accounts for 26% of the federal budget and is discretionary, meaning it does not have to be spent.
Already, Musk has walked back from the $2 trillion number, claiming it will be hard to meet, but Medicaid dollars and incentives for the Affordable Care Act could be impacted. Medicare and Medicaid already underpay providers by about $100 billion, according to the American Hospital Association. This chronic underpayment, combined with increasing care costs, has made it difficult for many hospitals to serve their communities, invest in new life-saving technologies, or expand and upgrade facilities. Further cuts would disproportionately harm rural hospitals and health systems that have a larger share of Medicare and Medicaid patients and are regularly at risk of closing or reducing health care services.
Patients receiving insurance coverage through the ACA will likely be impacted by budget cuts. Repealing the ACA has been a priority of President Trump since his first administration, and while fully rescinding the now-popular law is somewhat unlikely at this time, cutting subsidies passed by President Biden in the CARES Act, reducing dollars for marketing the plans, or tightening eligibility is on the table.
A return to policy by social media and boomerang proclamations
During his first administration, President Trump was a frequent poster on social media. His posts drove conversations, public policy, and the stock market. He frequently targeted specific businesses and individuals. It is still likely that President Trump will continue posting throughout his second administration. This is an important reminder because any business or individual could easily find themselves in the crosshairs of a presidential social media firestorm, especially hospitals or physicians that touch hot-button issues like transgender medicine, vaccinations, or abortion.
Further, it is a favorite tactic of President Trump to make proclamations on policy or his intentions to bolster his bargaining position. Recent examples include making Canada the 51st state and imposing tariffs of 100% on China. Because of this, it is important not to overreact to the initial proposal and look further to see what position President Trump might actually be aiming for.
Executive orders > Legislation
A narrow congressional majority means President Trump will follow the lead of other recent presidents and use executive orders to shape policy decisions. In his last administration, President Trump signed 220 orders, the very first targeting the Affordable Care Act (ACA). Because Republicans in the U.S. House of Representatives occupy the narrowest majority in nearly 100 years, the chances of getting anything substantial passed without bipartisan support will be challenging. Executive orders are President Trump’s best way to advance his agenda quickly.
Executive orders may be challenged in court, but there is little Democrats can do to subvert them. Federal agencies will work to implement the policy changes, but that too takes time. There will be widespread vocal debate and positioning in Congress, but very little is likely to move.
On Inauguration Day, President Trump signed executive orders removing the United States from the World Health Organization, ending a Biden administration provision aimed at lowering prescription drug costs for Medicare and Medicaid recipients, and declaring that the federal government only recognizes two sexes—female and male. Executive orders impacting health care will likely not end there. Some additional health care topics that may be turned into policy via executive order include further cuts to entitlements like Medicaid and Medicare, cuts to funding for the ACA, and restrictions on mailed abortion drugs and access to reproductive health procedures.
Tariffs
Both on the campaign trail and since his reelection, President Trump has promised to implement tariffs to protect American businesses. Specific threats have been levied at friends and foes alike, targeting China, Canada, Mexico, Denmark, and others. Economists warn that this could cause price shocks, have a negative impact on supply chains, and increase the prices of goods.
For hospitals and health systems, increases in costs for pharmaceuticals—both name brand and generic—surgical equipment, and advanced diagnostic equipment like MRI machines and CT scanners could have a significant impact on their bottom line and ability to serve patients. From 2022 data, the U.S. imported $34.7 billion in medical instruments, making it the largest importer of medical instruments in the world.
Because hospitals and health systems work on multiyear contracts with insurers, drastically increased supply costs will tighten already thin margins—with years passing before being able to adjust them in managed care contracts.
Pushback on trans rights
President Trump has said he will sign an executive order instructing every federal agency to cease the promotion of sex or gender transition at any age. He has also said that any hospital or health care provider that performs gender-affirming surgeries or care for minors would no longer meet federal health and safety standards and would no longer receive any funding from the federal government.
Physicians and hospitals that treat trans people, particularly trans children, could see their federal funding cut and may find themselves at the center of heated online debates, threats, and negative media coverage.
Providers that treat children are also likely to see additional scrutiny, restrictions, and pressure regarding hormonal treatments in children, even if not for gender-affirming reasons. It is likely that gender-affirming care will be removed from what is covered by Medicare and Medicaid as well, as the administration looks to take a stronger anti-trans stance.
So, what’s next?
As the whirlwind of the inauguration and first 100 days settles down, we will have a clearer picture of what is likely to happen before the congressional midterm elections in 2026. Our recommendation is to keep a close eye on relevant policies, influence and educate where possible, but also play the long game. If you need help or have questions, don’t hesitate to give us a call.
