Trump proposes big spending cuts to healthcare programs

President Donald Trump’s FY26 budget proposal includes significant cuts to healthcare programs, but the administration says the reductions will not affect core services.

The budget is merely a set of recommendations, given that federal budgetary authority resides with Congress. Trump’s proposals are likely to hold influence with the narrow Republican majorities in both chambers, but much remains to be decided before a final version is passed.

The budget bypasses discussion of Medicare and Medicaid, instead focusing on discretionary spending in HHS and other federal departments. Ideas for tackling mandatory spending levels in the two mammoth healthcare programs will be forthcoming separately, according to the administration.

Developments in the ongoing effort to pass a budget reconciliation bill tied to FY25 likely will affect the FY26 proposals. That bill, which would fund administration priorities such as border defense and a continuation of tax cuts, brings the possibility of significant spending reductions in Medicaid.

Less for HHS

Trump proposes $500 million in new spending for Make America Healthy Again initiatives to “tackle nutrition, physical activity, healthy lifestyles, overreliance on medication and treatments, the effects of new technological habits, environmental impacts, and food and drug quality and safety across HHS.”

Other HHS programs and agencies would be slashed by significant amounts, totaling 26% across the department. The FY26 budget document states that the reductions mostly would apply to ancillary activities or to diversity, equity and inclusion (DEI) efforts, which the administration is seeking to deemphasize.

The document does not refer to previously announced plans to restructure HHS by consolidating agencies and decreasing the workforce by roughly 25%. Thus, the budgetary assumption seems to be that the current portfolio of agencies will be in place going into the next fiscal year. Prospective changes to the 340B Drug Pricing Program also are not in the document.

CMS would lose $674 million, relative to FY25, including by ending “unnecessary DEI and support contracts.” Activities to be eliminated include those focused on health equity and Inflation Reduction Act outreach and education, while the budget document states that Medicare and Medicaid beneficiaries would not be affected.

An estimated $240 million would be saved by leaving out funding for the Hospital Preparedness Program within the Administration for Strategic Preparedness and Response. The document describes the disaster and emergency preparedness program as “wasteful and unfocused” and seeks to kick hospital preparedness planning and funding to the states.

Dramatic cuts

The biggest HHS cuts would be incurred by the National Institutes of Health, at which funding would drop by nearly $18 billion. NIH’s 27 institutes would be streamlined into five programs focused on body systems research, neuroscience and brain research, general medical sciences, disability research and behavioral health. The Advanced Research Projects Agency for Health, a Biden administration initiative, would be retained.

“NIH research would align with the President’s priorities to address chronic disease and other epidemics, implementing all executive orders and eliminating research on climate change, radical gender ideology and divisive racialism,” according to the budget document.

CDC would sustain a cut of more than $3.5 billion, including by consolidating grant programs focused on infectious disease and opioids, viral hepatitis, sexually transmitted infections and tuberculosis into one program. Various of the agency’s programs, including those focused on chronic disease and public health preparedness, would be canceled altogether.

At the Health Resources and Services Administration, more than $1.7 billion would be cut, including $1 billion from eliminating some healthcare workforce programs. The FY26 budget document states that such programs merely support clinicians as they seek to “enter high-paying medical careers,” but the programs generally are geared toward bolstering the supply of clinicians in rural and underserved areas or in specialties facing shortages.

More than $1 billion would be excised from the budget of the Substance Abuse and Mental Health Services Administration, with a focus on eliminating “inefficient funding.”

Healthcare provided through the Department of Veterans Affairs would receive a funding boost, including increases of more than $3.3 billion for medical care and case management and nearly $2.2 billion for an ongoing electronic health record modernization project.

The big picture

The proposed spending cuts and planned HHS restructuring hint at an era of constrained healthcare resources. In addition to the potential Medicaid impact of the budget reconciliation bill, the enhanced subsidies currently available to buy insurance through the Affordable Care Act (ACA) marketplaces are scheduled to expire at the end of 2025. A shifting tariff policy has left hospitals to try to assess the impact on already elevated supply and drug costs.

“With the release of the president’s budget and proposed changes to our country’s health infrastructure, it’s critical that Congress tread carefully as it considers drastic Medicaid cuts that would eliminate millions of Americans’ coverage and access to care,” Chip Kahn, president and CEO of the Federation of American Hospitals, said in a written statement.

“The budget, Congress’s proposed Medicaid cuts and the impending expiration of the enhanced [ACA] tax credits should be considered as a whole with the health of our communities, patients’ coverage and hardworking Americans’ access to care at the forefront.”