Health Policy Update | Exclusive News and Resources for GIH Partners

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February 19, 2025

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In an effort to help our Funding Partners better understand the changing health policy landscape in the new administration and Congress, Grantmakers In Health (GIH) is expanding the GIH Health Policy Update newsletter to three issues per month. Working in collaboration with Leavitt Partners, a leading health care policy consultancy, we are adding new installments of the newsletter on the first and third Wednesdays of the month, while we will continue to partner with Trust for America’s Health on the installment released on the second Wednesday of the month. The Health Policy Update is published with support from Robert Wood Johnson Foundation and Missouri Foundation for Health. Please email us at info@gih.org if you have any questions or comments about the newsletter.

 

 

Spotlight: Big Changes Shake Up HHS While Congress Moves Forward on Reconciliation

The U.S. Department of Health and Human Services (HHS) experienced significant changes in recent weeks including the confirmation of Robert F. Kennedy, Jr., to be the new Secretary of Health and Human Services, resignations from top career agency leaders, and reported layoffs of around 3,000-5,000 employees across agencies including Centers for Medicare & Medicaid Services (CMS), Centers for Disease Control and Prevention (CDC), Food and Drug Administration (FDA), and National Institutes for Health (NIH). While the exact impact of the layoffs remains murky, stakeholders have raised concerns they could affect the department’s ability to carry out some core functions, including activities related to Secretary Kennedy’s “Make American Healthy Again” priorities.

 

Meanwhile, Congressional Republicans are forging ahead on preparing budget reconciliation legislation to pass several of President Trump’s policy priorities. The legislation could have significant impacts on Medicaid, as Republicans are seeking to reduce federal spending.

 

More information on these and other policy updates, and potential impacts for funders, can be found below. Additionally, we will be sharing an issue brief soon that includes a deeper dive on potential Medicaid policies in reconciliation and impacts to funders.

 

Health Care in the Administration

On February 13, Robert F. Kennedy, Jr. was sworn in as the Secretary of HHS following a 52 to 48 vote in the Senate. Senator Mitch McConnell (R-KY) was the only majority member to vote “no” on Mr. Kennedy’s nomination, citing Mr. Kennedy’s “record of trafficking in dangerous conspiracy theories and eroding trust in public health institutions.”

 

Following Mr. Kennedy’s confirmation and swearing in, President Trump signed an Executive Order (EO) “Establishing the President’s Make American Healthy Again (MAHA) Commission,” an interagency commission to be chaired by the Secretary of HHS, with the Assistant to the President for Domestic Policy serving as Executive Director (former campaign speechwriter Vince Haley currently serves as in the role). The EO also states that the Commission will include “fresh thinking on nutrition, physical activity, healthy lifestyles, over-reliance on medication and treatments, the effects of new technological habits, environmental impacts, and food and drug quality and safety.” Additionally, the EO dictates that the initial mission of the Commission shall be to “advise and assist the President on how best to exercise his authority to address the childhood chronic disease crisis,” with an initial assessment, titled the “Make our Children Healthy Again Assessment,” required within 100 days of the EO. The assessment must identify and evaluate possible drivers of chronic disease, including “the threat that potential over-utilization of medication, certain food ingredients, certain chemicals, and certain other exposures pose to children with respect to chronic inflammation or other established mechanisms of disease” and “the prevalence of and threat posed by the prescription of selective serotonin reuptake inhibitors, antipsychotics, mood stabilizers, stimulants, and weight-loss drugs.” The Commission is also directed to “evaluate the effectiveness of existing educational programs with regard to nutrition, physical activity, and mental health for children;” “identify and evaluate existing Federal programs and funding intended to prevent and treat childhood health issues for their scope and effectiveness;”[and] “ensure transparency of all current data and unpublished analyses related to the childhood chronic disease crisis, consistent with applicable law.”

 

HHS also experienced reported layoffs of around 3,000 to 5,000 probationary employees (those who were hired or promoted within the past two years) across multiple agencies, including CMS, FDA, CDC, and Administration for Strategic Preparedness and Response. Some probationary employees were reportedly excepted, such as some individuals involved in emergency response and care for unaccompanied migrant children, some scientists, and Indian Health Service providers. Other reports indicate CDC laboratory and epidemiology staff, as well as FDA staff involved in regulating AI-enabled imaging devices were let go. The full extent of impacts to agency activities is not yet known, and additional workforce announcements are anticipated as agencies implement the Executive Order on Implementing the DOGE Workforce Optimization Initiative. These layoffs and Department of Government Efficiency (DOGE) efforts are likely to be the subject of additional litigation and impact ongoing appropriations negotiations for the remainder of fiscal year 2025 and upcoming hearings for CMS, FDA, NIH, and CDC nominees.

 

On February 13, following the Senate’s confirmation of HHS Secretary Robert F. Kennedy, Jr., President Trump announced nominees for several roles within HHS. The nominees include:

  • Gustav Chiarello, Nominee for Assistant Secretary for Financial Resources. Mr. Chiarello is an attorney who currently serves as Senior Special Counsel to the House Committee on the Judiciary on the Subcommittee on the Administrative State, Regulatory Reform, and Antitrust. Mr. Chiarello also previously worked as an attorney at the Federal Trade Commission during President Trump’s first administration.
     
  • Gary Andres, Nominee for Assistant Secretary for Legislation. Mr. Andres currently serves as Staff Director of the House Budget Committee Majority. Mr. Andres also previously served as the Republican Staff Director for the House Ways and Means Committee and for the House Energy and Commerce Committee. He also worked in the White House Office of Legislative Affairs for Presidents George H.W. Bush and George W. Bush.
     
  • Michael Stuart, Nominee for General Counsel. Mr. Stuart is a West Virginia State Senator who has previously served as a United States District Attorney and as a corporate attorney.

These positions require Senate confirmation and are considered by the Senate Committee on Finance, though the Assistant Secretary for Legislation is designated as having Privileged Status and therefore may have an expedited confirmation process. These nominations indicate the Trump Administration is continuing to fill out political roles within HHS; however, many political spots remain unfilled as Secretary Kennedy begins to advance his MAHA agenda.

 

On February 7, the Trump Administration announced a new directive imposing a cap on indirect costs (generally administrative costs) for NIH grants, limiting them to 15 percent of the total grant value. The Administration argues that this measure will redirect approximately $4 billion annually toward direct scientific research, thereby enhancing efficiency and reducing government expenditure. The change is expected to have a significant impact on research institutions, some of which currently have indirect cost rates above 50 percent and could increase pressure for private funders to allow higher percentages of indirect cost rates. Senator Susan Collins (R-ME), Chair of the Senate Appropriations Committee, disapproved the new directive and labeled it as “poorly conceived.” Senator Collins highlighted concerns that the reductions might halt vital biomedical research and lead to significant job losses. She also noted that some cuts could be applied retroactively, exacerbating their impact. Then-nominee for Secretary of Health and Human Services Robert F. Kennedy Jr. assured Chair Collins he would reexamine the directive. Senator Collins also pointed out that the FY 2024 Appropriations legislation includes provisions prohibiting the use of funds to modify NIH indirect costs, underscoring the legislative branch’s stance on the issue. Senator Patty Murray (D-WA), Vice Chair of the Senate Appropriations Committee, criticized the NIH announcement as illegal and indiscriminate, warning it could derail lifesaving research. She emphasized that such reductions threaten the nation’s leadership in biomedical innovation and could have catastrophic consequences for ongoing and future research projects. Senator Murray also met with Dr. Jay Bhattacharya, the nominee for NIH Director, to discuss these concerns. During their meeting, she asked Dr. Bhattacharya about the Administration’s approach to biomedical research funding and sought assurances regarding his stance on the imposed indirect cost caps.

 

On February 14, CMS announced a reduction in funding for the Affordable Care Act (ACA) Navigator program to $10 million (down from $98 million in the 2024 plan year). Navigators receive funding to assist individuals and families in enrolling in health coverage through the ACA, Medicaid, and CHIP. CMS states that the reduction will allow the Federally-facilitated Exchange (FFE) to improve Exchange outcomes and reduce premiums for consumers, as the program is funded by user fees. CMS also said performance data indicates Navigators are not enrolling enough people to justify the amount of federal funding spent on the program, having only enrolled 92,000 consumers in 2024. The reduction in funding will apply to Navigators in the states with FFEs in the next grant period for the 2026 plan year. Senate HELP Committee Chair Bill Cassidy applauded the decision, stating “this is exactly the kind of waste we need to get rid of in Washington.” Navigator funding has fluctuated between past Administrations, reflecting different priorities for ACA coverage. The move could impact people who are eligible but not enrolled in health coverage or people transitioning between health plans and may require greater engagement for funders working with stakeholders to support enrollment of individuals who are eligible but uninsured.

 

On February 11, the United States District Court for the District of Columbia issued an order in Doctors for America v. Office of Personnel Management et al. (Civil Action No. 25-322) requiring HHS, CDC, and FDA (“the agencies”) to restore specific webpages and datasets to their versions as of January 30, 2025 by 11:59 pm on February 11, 2025. Additionally, the agencies were required to work with plaintiffs to identify any other resources that Doctors for America (DFA) members rely on for medical care, which were removed or substantially modified after January 29, 2025, without adequate notice or reasoned explanation. The agencies were ordered to restore additional modified or removed materials identified by February 14, 2025.

 

This order follows the filing of a motion for a temporary restraining order by Doctors for America in response to the HHS, CDC, and FDA removing multiple websites and datasets following the signing of Executive Order 14168, which directed federal agencies to eliminate materials related to “gender ideology.” The court found that DFA demonstrated a substantial likelihood of success on its claims, including violations of the Paperwork Reduction Act’s notice requirements and the Administrative Procedure Act’s prohibition on arbitrary and capricious actions.

 

Health Care on the Hill

Last week, the House and Senate Budget Committees shared their respective budget resolutions for fiscal year (FY) 2025, both of which include instructions to committees for reconciliation.

  • The Senate budget resolution contains reconciliation instructions that would increase spending by about $85.5 billion, to be offset by a corresponding reduction in spending. All spending in the Senate budget resolution is intended for border security, defense, and energy initiatives, with Senate Budget Committee Chair Lindsey Graham (R-SC) indicating that a second reconciliation bill will be used to extend tax cuts set to expire at the end of the year. Per the Senate budget resolution, the Senate Committees on Finance and Health, Education, Labor, and Pensions (HELP) and the House Committee on Energy and Commerce are each instructed to reduce the deficit by no less than $1 billion for the period of FY 2025 through FY 2034.
     
  • The House budget resolution contains reconciliation instructions that would reduce spending by $2 trillion and allows for up to $4.5 trillion in spending for renewing tax cuts. Under the House budget resolution, the House Energy and Commerce Committee is instructed to reduce the deficit by no less than $880 billion for the period of FY 2025 through FY 2034.

Both House and Senate budget resolutions propose spending reductions that may impact various health care programs, including Medicaid. The Senate is expected to consider the budget resolution on the chamber floor this week. The House is also seeking to pass its budget resolution, although some members have already raised questions about the scale of potential Medicaid funding cuts. To move forward with reconciliation, the House and Senate must resolve differences and pass a concurrent budget resolution.
 

On February 12, the U.S. House of Representatives Committee on Oversight and Government Reform, Subcommittee on Delivering on Government Efficiency held a hearing titled “The War on Waste: Stamping Out the Scourge of Improper Payments and Fraud.” During the hearing, members of Congress heard testimony on the prevalence of improper payments within Medicaid and other federal governments programs, as well as potential measures that could be implemented to combat fraud and improper payments. The hearing comes as the Trump Administration has initiated efforts to tackle inefficiencies within the federal government through executive actions including the creation of the DOGE. This past week, CMS released a statement confirming that two officials inside CMS would be working with DOGE on a “thoughtful approach to see where there may be opportunities for more effective and efficient use of resources in line with meeting the goals of President Trump.” It is likely that improper payments in Medicare and Medicaid will be a target for the organization, as well as Congressional oversight. During the hearing, majority members of the Committee advocated for enhanced verification requirements within federal programs, to ensure that ineligible Americans and bad actors do not receive support from programs for which they do not qualify. They also emphasized rooting out improper payments in programs such as Medicaid as a key tactic to reducing the federal deficit. Minority members of the Committee concurred with majority members on the need to prevent improper payments, but cautioned against potential overreach from the executive branch, including the newly formed DOGE. Discussion on improper payments and fraud in Medicaid could fuel efforts to make changes to Medicaid within a reconciliation bill.
 

On February 9, the Ways and Means Subcommittee on Health held a hearing on “Modernizing American Health Care: Creating Healthy Options and Better Incentives.” During the hearing, Republican members discussed expanding Health Savings Accounts (HSAs) and Individual Coverage Health Reimbursement Arrangements, which allow businesses to offer employees a monthly allowance of tax-free money to purchase health insurance. Democratic members of the subcommittee raised concerns about potential cuts to Medicaid and extending the expiring enhanced premium tax credits to help individuals purchase coverage through ACA marketplaces. The hearing highlighted current differences between Republican and Democrat approaches to health coverage and could shed light on negotiations to extend enhanced ACA tax credits that expire at the end of the year. These negotiations will have a significant impact on coverage and the number of uninsured individuals, who may be a priority population for many health funders.

 

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