By JEFF GOLDSMITH

Though the results of the November election are by no means a foregone conclusion, it is worth thinking about how a second Trump administration might affect the nation’s $4.7 trillion health system. People were not the problem with the first Trump term; his healthcare team was strong and capable: Alex Azar, Scott Gottlieb, Seema Verma,. Bret Giroir, Brad Smith etc.  

After the embarrassing political failure of Repealing and Replacing ObamaCare in 2017 (for which blame look to his White House staff), his healthcare team settled in to a quiet and unremarkable term until the COVID wave broke over them and helped drive them out of office. It was not merely ironic but deeply disturbing that MAGA politics prevented Trump from claiming credit for the Operation Warp Speed vaccine miracle his team produced. 

A second Trump term would likely be very different- both more ideologically driven but also fiscally constrained. The people part is completely unreadable at this early hour. But health policy will almost certainly be a second tier priority because trade and tariffs, conflicts with our traditional allies and trading partners, and inflamed social issues like illegal immigration, wokeness, and abortion will crowd out changes in health coverage, costs and payment policy.   

Show Me the Money! 

However, fiscal pressures will force a second Trump administration to confront federal health spending and set him on a collision course with the hospital and pharmaceutical industries, two of the three largest organized actors in healthcare. Trump inherits a 2024 $5 trillion federal budget with a $1.7 trillion deficit, an anomalous degree of fiscal stimulus at the height of an economic boom. That deficit is also a major driver of the inflation Trump has promised to conquer.   

Trump is committed to reauthorizing the individual tax cuts from his 2017 Tax Cuts and Jobs Act which are scheduled to expire in 2025, which would add $3.3 trillion to the deficit over the next ten years. He also wants to reduce the corporate tax rate from 21% to 15%. If Trump does nothing meaningful about federal spending, his FY 26 budget, due shortly after he arrives in the White House, would harbor immense out year deficits and completely gross out both the bond and currency markets–a “Liz Truss” moment for the new regime. The promise of immediately reducing inflation which Trump made in his RNC acceptance speech goes sailing out the window.  

Savaging Medicaid Spending  (or Trying to)

Trump has tied his budgetary hands by committing to not cutting a single penny from Medicare and Social Security, which are forty percent (!) of the federal budget. This commitment appears both in the Republican platform and in Agenda47, which is the Trump campaign’s compilation of commitments made in his speeches. Trump has also committed to not reducing the $850 billion spent on Defense.

Ringfencing Social Security, Medicare and Defense leaves the more than trillion dollar Medicaid program (state and federal combined) as the largest single potential source of potential budgetary savings to avoid inflationary blow-out growth in the federal deficit. At its peak in March of 2023, Medicaid/CHIP enrolled 94 million people, or 28% of the US population. Expect an incoming Trump administration to attack Medicaid spending, both by accelerating the decline in enrollment that began in 2023 with the expiration of the COVID Public Health Emergency and by cutting rates and payments to Medicaid Managed Care providers. Some 24 million Medicaid beneficiaries have been “redetermined” and over 15 million have lost coverage. KFF says present Medicaid enrollment is about 80 million in mid-2024 but that number is certainly moving down 

While Trump has distanced himself from the Heritage Foundation’s Project 2025, that policy blueprint characterized the ObamaCare Medicaid expansion as “inappropriate” and the program itself as a “cumbersome, complicated and unaffordable burden on nearly every state”. It advocated ending what it called “financing loopholes” (e.g. provider taxes that have trued up Medicaid rates to hospitals and physicians vs. Medicare), tightening Medicaid eligibility, and imposing both work requirements and cost sharing, “reforming” disproportionate share payments, time limits and lifetime caps on Medicaid benefits and ending coverage for “middle and upper income beneficiaries”! We can certainly expect inflammatory publicity from a Trump White House on states that have expanded Medicaid eligibility to  “undocumented aliens”, followed by pressure on Congress to prohibit this coverage by statute.   

When former Trump press secretary and present Arkansas Governor Sarah Huckabee Sanders, announced her removal of 400 thousand Arkansans from Medicaid enrollment, she said she was “liberating them from dependency”.  It is likely that that millions more Americans will be “liberated from dependency” on Medicaid during the first two years of a second Trump Administration. There will be work requirements (with politically damaging pressure on the 11 million very poor or disabled “dual eligibles” eg. Medicare plus Medicaid) population), as well as cost sharing and an voucher option to purchase private insurance (!?) for Medicaid beneficiaries. An aggressive effort to “re-welfare-ize” the Medicaid program will raise numerous bureaucratic barriers to Medicaid enrollment, scaring off a lot of otherwise eligible beneficiaries.