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In collaboration with:
March 5, 2025
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Spotlight: It’s Budget Time
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Following passage of separate budget resolutions in the House and Senate, both chambers will have to resolve the differences and pass identical resolutions in order to move forward with a reconciliation package to advance the Trump Administration’s policy priorities. In addition to a complex path ahead for budget reconciliation legislation, Congress and the Trump Administration must reckon with an impending government funding deadline in the middle of March. Because appropriations are not subject to special rules in the Senate, like nominations and reconciliation, it will require 60 votes in the Senate, meaning the legislation will need bipartisan support.
Congress will likely need to pass another Continuing Resolution (CR) to continue funding the federal government and to avert a government shutdown. The Trump Administration reportedly submitted a range of “anomalies” to be included in any stopgap bill. Anomalies in a CR provide funding for certain agencies or programs at a level that represents an increase or decrease from current funding levels.The administration’s anomalies list has been reported to include increased funding for Immigration and Customs Enforcement (ICE), shipbuilding under the Department of Defense, and recently opened Indian Health Service (IHS) facilities, as well as decreased funding for the IRS.
Some Republicans in Congress have also suggested that anomalies could be used to codify cuts being made by the Department of Government Efficiency (DOGE). Democrats oppose codifying the DOGE cuts and are insisting on guarantees from congressional Republicans and the White House that the Trump administration will actually spend the money included in any new appropriations legislation. In the event efforts to pass a CR fail and funding lapses, federal agencies are generally required to begin a shutdown of the affected projects and activities, which includes the prompt furlough of non-excepted personnel.
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Congress is moving forward on using budget reconciliation to advance key parts of President Trump’s agenda; the House and Senate have now each passed budget resolutions. Following a day of uncertainty leading up to the House’s vote on the FY 2025 budget resolution, with a number of potential “No” votes, Speaker Johnson ultimately rallied enough Republican support to advance the resolution. Representative Thomas Massie (R-KY) was the only Republican that voted “No” on the resolution, having previously stated on X that the resolution will increase the federal deficit over time due to a lack of spending cuts.
The House and Senate will need to reconcile the differences between the two budget resolutions, including deciding if there will be one or two reconciliation attempts this year, how long to extend the Tax Cut and Jobs Act provisions expiring this year, and how much savings will be needed to meet the requirements of reconciliation. The savings required to meet reconciliation instructions could further inform the potential for the inclusion of policies that reduce or limit the growth of Medicaid spending.
Additionally, the Senate is moving forward on considering two key health care nominees:
- On March 5, the Senate HELP Committee will hold a confirmation hearing on the nomination of Dr. Jayanta Bhattacharya to serve as the National Institutes of Health (NIH) Director. Dr. Bhattacharya is a Professor of Medicine and Health Policy at Stanford University, a research associate at the National Bureau of Economics Research, a senior fellow at the Stanford Institute for Economic Policy Research and at the Stanford Freeman Spogli Institute. Additionally, he directs the Stanford Center on the Demography of Health and Aging. In November, President Trump nominated Dr. Bhattacharya for NIH Director, stating that, “Jay and RFK Jr. will restore the NIH to a Gold Standard of Medical Research as they examine the underlying causes of, and solutions to, America’s biggest Health challenges, including our Crisis of Chronic Illness and Disease.” This hearing comes amidst the backdrop of NIH’s recent announcement that it will reduce the indirect cost rate for all grants to 15%, a significant reduction for many universities. This issue is expected to generate a number of questions at his nomination hearing.
- On March 6, the Senate HELP Committee will hold a confirmation hearing on the nomination of Dr. Martin Makary to serve as Food and Drug Administration (FDA) Commissioner. Dr. Makary is Chief of Islet Transplant Surgery and a Professor at the Johns Hopkins School of Medicine and a Professor at the Johns Hopkins Carey Business School. Additionally, he is a public policy researcher and an author of three books on health care. Dr. Makary previously criticized FDA for the agency’s slow and bureaucratic processes during the COVID-19 pandemic. In November, President Trump nominated Dr. Makary for FDA Commissioner, stating in a post on Truth Social that he is confident that Dr. Makary “will restore FDA to the Gold Standard of Scientific Research, and cut the bureaucratic red tape at the Agency to make sure Americans get the Medical Cures and Treatments they deserve.”
Following these hearings, the Senate HELP Committee must vote to advance the nominations, and then they must be passed by the Senate to begin their official work. Confirmation of these nominees only requires a majority in the Senate. Hearings for additional nominees, including the Centers for Disease Control and Prevention Director and Centers for Medicare & Medicaid Services Administrator are expected in the coming weeks.
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Health Care in the Administration
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The Trump Administration has continued its rapid pace of executive actions and announcements, including implementing DOGE-related priorities to reduce federal spending and reduce the size of the federal workforce.
- On February 26, the Office of Management and Budget (OMB) and the Office of Personnel Management (OPM) issued a memo to heads of departments and agencies with “Guidance on Agency Reductions in Force (RIF) and Reorganization Plans.” To meet the requirements of President Trump’s Executive Order on Implementing the President’s “Department of Government Efficiency” Workforce Optimization Initiative, agencies are instructed to seek consolidation of agency organization charts, consolidate management layers where unnecessary layers exist, implement technological solutions that automate tasks, reduce the use of outside consultants and contractors, and eliminate functions that are not statutorily mandated. Agency plans must be submitted to OMB and OPM for review and approval no later than March 13, 2025. The guidance also notes that “agencies or components that provide direct services to citizens (such as Social Security, Medicare, and veterans’ health care) shall not implement any proposed [agency RIF and reorganization plans] until OMB and OPM certify that the plans will have a positive effect on the delivery of such services.”
- On February 26, President Trump signed an Executive Order launching the Department of Government Efficiency (DOGE) Cost Efficiency Initiative, aiming to enhance transparency and accountability in federal spending. Under the order, agency heads must implement centralized technological systems to record and justify all payments for federal contracts, grants, and loans, with these justifications to be posted publicly when legally permissible. Agencies have 30 days to review existing contracts and grants for potential termination or modification in order to reduce overall Federal spending or reallocate spending to promote efficiency and advance the policy priorities of the Trump Administration. The order prioritizes review of funding to educational institutions and foreign entities. The initiative also freezes government credit cards for 30 days (with exceptions for disaster response and other critical services), requires written justification for non-essential travel, and mandates a comprehensive evaluation of government-owned real property for potential disposition. Several categories are exempt from the order, including law enforcement officers, Customs and Border Protection, Immigration and Customs Enforcement, uniformed services, and classified information systems. Agency DOGE Team Leads will provide monthly informational reports to the DOGE Administrator on contracting activities and travel justifications as part of this government-wide efficiency effort.
Entities receiving federal grants should anticipate a review of grant funding and prepare for potential grant terminations or negotiations on revised scopes of work that align with Trump Administration priorities. Grantees should also prepare for additional oversight and public reporting on the use of grant funding.
In the first few weeks as Secretary of Health and Human Services, Robert F. Kennedy Jr. laid out his priorities in a speech to department employees, rescinded a policy requiring public comment on certain department actions, and released guidance defining sex strictly as male or female.
- On February 18, Secretary of Health and Human Services, Robert F. Kennedy Jr. spoke to department staff about his Make America Healthy Again agenda. He spoke on the “epidemic of chronic disease,” as well as the prevalence of autism and fatty liver disease among teenagers, and expressed concern with “overmedication, particularly in children” highlighting the number of children taking medication for ADD and ADHD. He emphasized the need for transparency in science and said that “only through radical transparency can we provide Americans with genuine informed consent, which is the bedrock and foundation stone of democracy.” He said his goals as Secretary “will be to create a culture of competency, of ethics, of openness, of transparency, of caring, of pride, so that individuals who share these ideas can flourish and thrive.” He also asked staff to let go “of any preconceptions that you may have about me” and “establish a mutual intention to work toward what we all care about, the health of the American people.”
- On February 19, the Department of Health and Human Services (HHS) announced several actions supporting President Trump’s executive orders aimed at “defending women and children” and reinstating “biological truth” in federal policies. In line with Executive Order 14168, “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” HHS released guidance defining sex strictly as male or female, based on reproductive biology, and outlined corresponding definitions for related terms. The Office on Women’s Health has also launched a webpage providing resources on these new definitions and policies. Additionally, HHS’s Office for Civil Rights (OCR) rescinded prior HHS guidance supporting gender-affirming care, in line with Executive Order 14187, “Protecting Children from Chemical and Surgical Mutilation.” Acting Director Anthony Archeval stated that this action reflects the Administration’s stance on recognizing only two sexes—male and female. HHS OCR also announced last week that is has initiated a compliance review of the Maine Department of Education and the University of Maine System in response to Maine’s stated intention to not comply with the Executive Order 14201, “Keeping Men out of Women’s Sports.” OCR contends this violates anti-discrimination laws under Title IX of the Education Amendments of 1972. Acting Director Anthony Archeval emphasized the commitment to ensuring equal athletic opportunities for women and girls.
- On March 3, HHS published a policy statement rescinding the 1971 “Richardson Waiver,” with the goals of “re-aligning its rule-making procedures with the Administrative Procedure Act (APA).” The APA mandates that federal agencies publish a notice of proposed rulemaking, allow public participation through comments, and provide a statement on the rule’s basis and purpose. However, it exempts matters related to agency management, public property, loans, grants, benefits, or contracts from these requirements. The APA also allows agencies to bypass these procedures for “good cause” when deemed impracticable, unnecessary, or contrary to public interest. Through the 1971 Richardson Waiver, HHS established a policy of extending the APA’s notice-and-comment procedures to areas that were not statutorily required by law, including matters related to public property, loans, grants, benefits, or contracts, and advised sparing use of the “good cause” exemption. With this updated policy statement, HHS has indicated that it now considers this waiver contrary to the APA’s clear text and an imposition of obligations beyond the statute’s maximum procedural requirements. By rescinding the waiver, HHS states it will adhere strictly to the APA’s provisions and notes it is not obligated to apply notice-and-comment procedures unless required by law. Additionally, HHS noted that the “good cause” exemption will be employed as appropriate, aligning with APA requirements. HHS’ new policy is likely to be challenged in court, but if implemented, it could result in fewer opportunities for health care stakeholders, including funders, to submit public comments on changes to health care programs and funding, such as NIH grants and agency reorganizations.
- On March 4, the Centers for Medicare & Medicaid Services (CMS) announced in a one-page CMCS Informational Bulletin (CIB) that it is rescinding two guidances issued in 2023 and 2024 on utilizing Medicaid to address health-related social needs (HRSN). The CIB said that “CMS will consider states’ applications to cover these services and supports on a case-by-case basis to determine whether they satisfy federal requirements for approval under the applicable provisions of the Social Security Act and implementing federal regulations,” without reference to the rescinded guidances. The guidance recission does not impact 1115 waivers that have been previously approved, but could impact discussions between state Medicaid programs and CMS regarding pending and future waiver applications. Several 1115 waivers including services to address HRSNs were approved prior to the 2023 and 2024 guidances, but the recission increases uncertainty on what types of activities CMS may approve in future waivers. Funders should work closely with state Medicaid programs on future waiver proposals to address HRSNs.
Additionally, on February 26, USDA announced the investment of up to $1 billion to combat avian flu and reduce the cost of eggs. U.S. Secretary of Agriculture Brooke Rollins outlined the USDA's five-pronged strategy, which includes providing $500 million for biosecurity, $400 million in financial relief for impacted farmers, and $100 million for vaccine and therapeutics research. The five-pronged approach to combating avian flu encompasses investing in advanced biosecurity measures for all U.S. poultry producers; enhancing financial relief to assist farmers and accelerate repopulation efforts; reducing unnecessary regulatory barriers within the chicken and egg industry to promote innovation and decrease consumer prices; exploring new avenues for vaccines, therapeutics, and other protective strategies to safeguard egg-laying chickens and mitigate depopulation; and evaluating temporary import-export solutions to reduce consumer costs while considering global best practices.
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