The Trump Health-Care Agenda Is Taking Shape

New policies are reshaping Marketplace coverage, prescription-drug prices, Medicaid, rural hospitals, provider payments and prior authorization

The Trump administration’s health-care agenda did not end with the 2025 reconciliation fight. That fight combined substantial Medicaid cuts with a conscious decision not to extend the enhanced Affordable Care Act premium tax credits enacted under President Biden. Since then, the agenda has continued through legislation, final and proposed regulations, demonstration programs, trade policy and negotiated agreements in four broad areas:

• Policies allowing thinner coverage and expanding access to catastrophic and bronze plans on state exchanges;

• Policies affecting prescription-drug prices, Medicare drug subsidies, pharmaceutical tariffs and the future domestic supply of pharmaceuticals;

• Policies affecting Medicaid eligibility and financing and providing temporary support for rural hospitals; and

• Policies affecting provider compensation, insurance payments, prior authorization and price transparency.

This analysis reflects policies enacted, announced or issued through August 6, 2026.

Expanded Access to Catastrophic and Higher-Cost-Sharing Bronze Coverage

The 2025 reconciliation law makes bronze and catastrophic plans offered through the health-insurance exchanges eligible for health savings account contributions beginning January 1, 2026. This expands access to HSAs, although many lower-income households purchasing bronze coverage may have little money available to contribute after paying premiums and other living expenses.

A previous memo on this blog examined separate regulatory changes, which are now finalized and will take effect in 2027 and 2028. Beginning with the 2027 plan year, HHS will give insurers greater flexibility in setting cost sharing for bronze plans, permit additional non-network plan designs, allow catastrophic plans to have multiyear terms of up to ten years and discontinue federal requirements that insurers offer standardized plans or limit the number of nonstandard plans. Changes to the permissible cost-sharing requirements for catastrophic plans will begin in 2028. Together, these policies expand the availability of thinner coverage and give insurers more flexibility in plan design, while potentially exposing some households to greater out-of-pocket costs.

President Trump has asked Congress to enact a broader plan that would send some federal health-insurance assistance directly to eligible individuals, fund cost-sharing reductions, restrict certain pharmacy-benefit-manager and broker payments, and require insurers to disclose denial rates, administrative expenses and profits. It remains a legislative proposal rather than an operating replacement for the existing premium tax-credit system.

Prescription Drug Prices, Subsidies and Tariffs

The administration’s prescription-drug policies move in several different directions. It is trying to reduce selected drug prices through Medicare negotiations and voluntary agreements with manufacturers, while also ending a temporary Medicare premium subsidy and pursuing tariffs that could increase the cost of imported pharmaceuticals.

CMS has announced that the Medicare Part D Premium Stabilization Demonstration will end after 2026. In 2026, the demonstration reduced the base-premium calculation by $10 for participating stand-alone prescription-drug plans and limited their year-to-year premium increases. Ending the demonstration removes that additional premium support beginning in 2027 and could contribute to higher premiums for some plans. However, the effect will vary by plan, and final average Medicare Advantage and Part D premiums for 2027 will not be released until September 2026.

In April 2026, President Trump imposed tariffs on imported patented pharmaceuticals and associated pharmaceutical ingredients, but the policy does not apply one uniform rate to all pharmaceutical imports. The standard tariff is 100 percent, while a 20 percent rate applies to products from companies with approved plans to expand production in the United States. Imports from the European Union, Japan, South Korea, Switzerland and Liechtenstein generally face a 15 percent rate, and imports from the United Kingdom face a 10 percent rate. Companies entering both most-favored-nation pricing agreements and domestic-production agreements may receive temporary exemptions. Generic drugs, biosimilars and their associated ingredients are exempt for now, although the administration is required to reconsider their treatment within one year. The tariffs took effect on July 31, 2026, for companies identified in the proclamation and are scheduled to take effect on September 29, 2026, for other covered companies.

TrumpRx directs cash-paying consumers toward discounted prices offered by participating manufacturers and pharmacy services. The administration has also negotiated voluntary most-favored-nation arrangements with major drug companies, although these agreements apply only to selected products and purchasing arrangements rather than establishing a universal limit on American drug prices.

At the same time, the administration is continuing the Medicare drug-price negotiation program created under President Biden. Republicans opposed the initiative during the Biden administration, but President Trump has retained it, and CMS has selected additional Part B and Part D drugs for negotiation. Its continuation is consistent with other parts of the Trump health-care agenda that use aggressive federal intervention to reduce pharmaceutical and provider prices.

This approach also reflects Trump’s broader preference for negotiating company-specific deals rather than relying entirely on uniform legislation or regulation. The administration has exchanged pricing, tariff and regulatory concessions with individual corporations and, in strategic industries outside health care, has sometimes taken federal equity stakes. No comparable government purchase of stock in a health-care company has yet been announced.

The clearest health-care example is the administration’s November 2025 agreements with Eli Lilly and Novo Nordisk covering GLP-1 drugs. The companies agreed to offer reduced prices for Ozempic, Wegovy, Zepbound and related products through TrumpRx and participating public programs, while also making commitments to expand domestic manufacturing. Medicare access to GLP-1 drugs for weight management is not yet a universal permanent benefit.

Medicaid Regulations and Rural Hospitals

The administration’s Medicaid agenda began with the substantial eligibility and financing changes enacted in the 2025 reconciliation law, but it has since continued through a series of CMS regulations and administrative actions. These measures implement the law’s work requirements and financing restrictions while also imposing tighter federal controls on provider taxes, state-directed payments and Medicaid demonstration spending.

In June 2026, CMS issued an interim final rule implementing the new Medicaid work and community-engagement requirement. Beginning no later than January 2027, many nondisabled, nonpregnant adults ages 19 through 64 must document at least 80 hours a month of employment, education, training or community service. The regulation specifies how states must verify compliance, identify exemptions, notify beneficiaries and terminate coverage when the required information is not supplied.

CMS has also issued new regulations governing the provider taxes states use to finance their share of Medicaid. A January 2026 final rule closed arrangements under which states imposed disproportionately high taxes on Medicaid-related business and then used the revenue to obtain additional federal matching funds. A separate proposed rule issued in July would implement the reconciliation law’s new limits on provider taxes and gradually reduce the permissible tax thresholds in states that expanded Medicaid.

A May 2026 proposed rule would impose additional restrictions on state-directed payments made through Medicaid managed-care plans and on certain targeted payments in fee-for-service Medicaid. Among other changes, it would generally limit covered payments to Medicare rates in expansion states and 110 percent of Medicare rates in non-expansion states. If finalized, the rule could substantially reduce payments to hospitals, physicians and other providers beyond the reductions already required by the reconciliation law.

CMS is also tightening its oversight of Section 1115 Medicaid demonstrations. The agency has announced plans for stricter budget-neutrality standards intended to limit how much federal spending states can obtain through demonstration projects, although the detailed regulation has not yet been proposed.

At the same time, the reconciliation law created the $50 billion Rural Health Transformation Program, distributed over five years, to support rural health-care access, workforce development, technology and alternative delivery models. The program may help some rural hospitals and providers adjust to the broader Medicaid changes, but it is temporary and considerably smaller than the projected long-term reductions in Medicaid financing.

Provider Compensation, Insurance Payments and Prior Authorization

The administration’s policies affecting providers and insurers demonstrate that its health-care agenda is not simply deregulatory. In several areas, it involves greater federal intervention in provider compensation, surprise-billing arbitration, prior authorization and price disclosure.

The bipartisan No Surprises Act, enacted during Trump’s first term, has substantially reduced unexpected out-of-network billing, although its provider-payment arbitration system has developed significant operational problems. An HHS evaluation found that out-of-network bills declined by 15 percent for emergency services and 11 percent for nonemergency services at in-network facilities during the law’s first year. A separate study estimated that the law reduced annual out-of-pocket spending by about $567 among directly insured adults who gained new protections, although it found no measurable reduction in premiums.

The Trump administration’s May 2026 changes to the law’s arbitration system are meaningful but mostly procedural. The final rule reduced the administrative fee from $115 to $15 per party, expanded the batching of similar claims and limited batches to 50 claim items. These changes may make arbitration faster and less expensive, but they do not directly limit the amounts arbitrators can award.

The larger unresolved issue is the extraordinary growth in disputes under the arbitration system. CMS has reported millions of disputes since the federal portal opened, far more than originally anticipated. The administration is considering additional changes intended to reduce administrative burdens and address concerns about unusually high payment demands. Depending on their design, such changes could place greater weight on insurers’ median in-network prices, narrow the claims eligible for arbitration or otherwise limit exceptionally high awards. No new reimbursement standard has yet been adopted.

In its proposed 2027 hospital outpatient payment rule, CMS would pay for specified imaging services provided by off-campus hospital outpatient departments at the lower rates paid to physicians’ offices. The direct financial loss would therefore fall on hospitals and hospital-owned outpatient facilities, not on independent physician offices. Patients would generally benefit from lower cost sharing, while the policy would reduce the financial advantage hospitals obtain by purchasing physician practices and billing the same services at hospital rates.

In the same proposed 2027 hospital outpatient payment rule, CMS would substantially reduce Medicare payments for drugs purchased through the 340B program. Eligible hospitals and clinics buy these drugs at steep discounts but may receive the normal Medicare or private-insurance reimbursement, retaining the difference to support their operations. CMS proposes paying average sales price minus 33.4 percent, which it estimates would reduce Medicare drug payments by $4.55 billion and beneficiary cost sharing by $1.15 billion during the first year. Because the change must be budget-neutral, much of the federal savings would be redistributed through higher Medicare payments for other hospital outpatient services.

Criticism of 340B “abuse” generally concerns the rapid expansion of participating hospital sites and contract pharmacies, weak verification that every hospital and patient is eligible, the possibility of duplicate Medicaid discounts and the absence of a federal requirement that hospitals pass the drug discount directly to patients or document precisely how the retained revenue is used. GAO has repeatedly found weaknesses in federal oversight, although participating hospitals argue that the revenue finances uncompensated care and other safety-net services. The CMS proposal addresses the size of Medicare’s payment relative to hospitals’ acquisition costs, but it does not by itself resolve the broader debate over eligibility, contract pharmacies or the use of 340B revenue.

Prior-authorization policy is moving in two directions. A Biden-era rule retained by the Trump administration requires Medicare Advantage, Medicaid and CHIP plans to decide urgent requests within 72 hours and standard requests within seven days and to provide a specific reason for denials. The administration has also proposed extending electronic prior authorization, decision deadlines and denial disclosures to prescription drugs beginning in 2027.

At the same time, the WISeR demonstration introduces private prior-authorization contractors into selected parts of Original Medicare. The companies use artificial intelligence and other technology to review designated services and receive a share of the Medicare savings attributed to care they prevent. This creates a financial incentive to deny or redirect services, although CMS adjusts compensation for performance and can recover payments when a denied claim is successfully appealed.

WISeR includes a model-specific safeguard: a recommendation not to approve care cannot be made solely by an algorithm and must be reviewed by an appropriately licensed human clinician. Providers may resubmit a request without limit, but a non-affirmation does not immediately trigger the formal Medicare appeals process. To obtain a formal appeal, the provider must generally perform the service, submit the claim and receive an actual Medicare denial—potentially leaving the provider or patient exposed to financial risk while the dispute proceeds.

That safeguard does not amount to a general federal prohibition on AI-based insurance decisions. The Biden administration proposed broader guardrails for Medicare Advantage plans’ use of artificial intelligence, but CMS declined to finalize them in 2025. The Trump administration instead secured a voluntary commitment from major insurers to have medical professionals review clinical denials. WISeR therefore has an enforceable human-review condition within that demonstration, while the broader insurance market remains governed by existing coverage rules and a voluntary industry pledge rather than a comprehensive new AI regulation.

Finally, the administration is strengthening hospital price-transparency requirements already in effect. Hospitals must provide more useful information about negotiated prices and actual allowed amounts, use standardized machine-readable files and attest that their reported data are accurate. Separately, the administration has proposed broader disclosure requirements that would make insurer denial rates, administrative expenses, profits and prior-authorization outcomes more visible to consumers, employers and researchers. Those broader insurer-disclosure requirements have not all been finalized.

Conclusion:

The Trump health-care agenda begins with an ideological choice: restrain federal health spending even if that slows movement toward more universal coverage. Cost reduction is the constant theme running through all the administration’s health care proposals. The administration’s policies address Medicaid and insurance coverage, prescription-drug prices, hospital payments, billing disputes, prior authorization and other technical features of the health-care system.