Health Care Matters | April 18, 2025
Health Policy Tracker: Trump’s First 100 Days
Executive Order on Lowering Drug Prices
President Trump issued an executive order which aims to alter provisions in the Medicare Drug Price Negotiation Program that was created as part of the Inflation Reduction Act. The order speaks to what the drug industry calls the program's "pill penalty" where small molecule drugs are eligible for negotiation 7 years after FDA approval compared to complex biologics that are eligible after 11 years. President Trump asks Secretary RFK Jr to work with Congress to facilitate this change. For more, read the following:
Trump signs healthcare executive order that includes a win for pharma companies – Reuters
Trump executive order backs change to Medicare negotiation pushed by drug industry – The Hill
HHS Budget Cuts, Including Cuts to Contract Spending by 35%
HHS reorganization plans appear to have been leaked, revealing a proposed $40 billion cut as part of a broader reorganization effort, while separate reports indicate a 35% reduction in contract spending across all divisions. For more, read the following:
Leaked HHS budget signals $40B in cuts, assumes ACA subsidies expire - Fierce Healthcare
HHS cuts contract spend by 35%, with 334 pacts already terminated – Fierce Healthcare
CMS Needs To Nix About $2.7 Billion In Contracts, Per DOGE Order – Inside Health Policy
CMS Shifts Medicaid Focus and States Implement New Requirements
CMS announced last week it will no longer approve or extend federal Medicaid funding requests for designated state health programs (DSHPs) and designated state investment programs (DSIPs). These programs, which have grown from approximately $886 million in 2019 to nearly $2.7 billion in 2025, were criticized by the agency as "overly-creative financing mechanisms" that skirt state budget responsibilities and distract from Medicaid's core mission. This decision comes shortly after Dr. Mehmet Oz was confirmed as CMS administrator and represents a significant shift from the Biden administration's approach, which had encouraged states to implement programs addressing social determinants of health.
Meanwhile, several states are moving forward with implementing work requirements for Medicaid recipients. Indiana Governor Mike Braun announced a new public health initiative that includes work requirements for Medicaid recipients. Similar actions are being taken in Iowa, where Governor Kim Reynolds has submitted a waiver to CMS requesting approval to implement work requirements of 100 hours per month for Iowa Health and Wellness Plan participants. Iowa's Legislative Services Agency estimates that 142,000 of the 181,000 Iowans currently on the state's expanded Medicaid program would be subject to these requirements, with approximately 32,000 individuals likely to lose coverage if implemented. Read more here, here, and here.
Why It Matters
These policy changes mark a significant retreat from recent efforts to address social determinants of health through Medicaid funding. The rejection of DSHP and DSIP funding means states will now need to find alternative funding sources for programs addressing social needs like housing assistance, transportation, and non-medical in-home services if they wish to continue them.
Looking ahead, we anticipate more states will follow Indiana and Iowa in submitting work requirement waivers to CMS, especially given the apparent support from CMS leadership. However, research from KFF suggests these requirements may not achieve their stated goals of increasing employment, as most Medicaid recipients are already working or face barriers to employment. When Arkansas implemented similar requirements in 2018, approximately 25% of enrollees lost coverage with no significant change in employment rates. The combination of work requirements and stricter eligibility verification processes will likely result in decreased Medicaid enrollment across multiple states, potentially increasing the number of uninsured Americans and creating new challenges for health care providers serving vulnerable populations.
Look for the Helpers: Paving the Way for Better Health: A Public–Private Collaboration to Break Down Transportation Barriers for Veterans
A recent collaboration between public and private sectors is breaking down critical transportation barriers for veterans seeking health care. This innovative partnership, highlighted in NEJM Catalyst, addresses one of the most significant obstacles veterans face in accessing medical services by creating reliable transportation solutions. By meeting this fundamental need, the initiative demonstrates how thoughtful collaboration between different sectors can produce practical solutions to health care access challenges. Read here.
What We Are Reading
“All I Do Is Win”: Why Beating Benchmarks Doesn’t Mean That ACOs Are Reducing Costs
Health Affairs Forefront published an article examining how ACOs often meet or exceed performance benchmarks but still fail to achieve significant cost reductions, highlighting the complexities and challenges in measuring true cost savings in healthcare. Read here.
Social Risk at Individual vs Neighborhood Levels and Health Care Use in Medicaid Enrollees
Published in JAMA, this study compared neighborhood-based social risk measures with self-reported social risk measures to identify patterns in health care use among Medicaid enrollees. Results indicate that individual social risk screening during Medicaid enrollment provides unique and valuable information that cannot be captured through neighborhood-level measurement alone, suggesting both approaches offer complementary insights for health care planning and resource allocation. Read here.
Pop health podcast
Advancing Value-Based Care: Progress, Gaps, and Policy Signals
In the latest episode of the Pop Health Podcast, we explore the current state of value-based care with Emily Brower and Mara McDermott, including recent policy developments, emerging trends, federal alignment, and practical tips for tracking meaningful changes in the VBC landscape.