Inside Year One: Health Care Developments Under a New Administration

This article is part of Inside Year One: Key Developments Under a New Administration. Click here to read the full newsletter.

During President Trump’s first year in office, the health care sector saw notable policy changes that have continued to shape the landscape. One major development was the expiration of enhanced premium tax credits introduced under the American Rescue Plan, which ended in late 2025. If Congress does not reinstate these credits, this change is expected to increase insurance premiums and could lead to coverage losses for millions of Americans, while also impacting insurers, hospitals, and other providers through higher uncompensated care costs and reduced clientele. Medicaid expansion
incentives have concluded, and certain regulations intended to streamline Medicaid enrollment have been suspended, which may influence state-level decisions on Medicaid coverage and slow or reduce Medicaid enrollment.

Legislative Impacts and Administration Initiatives

The OBBBA implements several Medicaid and Medicare changes between 2025 and 2027. In particular, nondisabled adult Medicaid recipients will need to demonstrate monthly work, education, or volunteer activities starting in 2027, while eligibility reviews shift from annual to semiannual for expansion populations. Additionally, according to the provisions in OBBBA, states lose the ability to use health care provider taxes for program financing, and certain enrollees will face new cost-sharing requirements in 2029. Moreover, federal senior health coverage becomes restricted to specific residency and citizenship categories, and facilities offering abortion services lose federal reimbursement for all care. As a result, federal analysts at the Congressional Budget Office (CBO) project 10 million more uninsured individuals by 2034. We expect that health care providers will experience increased uncompensated care costs, with rural facilities facing particular risk given existing financial pressures. The law allocates approximately $50 billion over five years for rural health support; however, some analysts question whether this addresses the full financial impact.

Two January 2025 EOs addressed transgender policy. The first eliminated federal recognition of transgender identities and terminated government funding for related initiatives. The second EO imposed restrictions on gender-affirming care for transgender youth. Medical facilities serving patients under 19 years old with these services risk losing federal support and facing heightened government oversight. Courts have intervened in multiple jurisdictions, with judges in Washington,
Minnesota, and Oregon blocking implementation, and other rulings temporarily halting the funding restrictions.

The EOs present operational and financial challenges for health care providers. Following the EOs, medical facilities in multiple states modified or suspended certain clinical programs, while organizations offering specific services to patients under 19 face potential federal funding losses and heightened regulatory oversight. Ongoing litigation has created varying enforcement requirements across different jurisdictions, complicating compliance planning and resource allocation for health care administrators. These policy changes may also affect patient confidence in health systems, requiring providers
to strengthen outreach and communication efforts while navigating an uncertain regulatory environment.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.