Health Services and Telehealth Policy under the Next Administration: An Analysis
The BIG THINGS that could happen in health services, health insurance, and health tech
A second Trump administration raises important questions about the future direction of American health care policy. This analysis examines potential policy changes across key health care services domains, drawing from previous administrative actions, stated policy positions, and broader Republican health care reform proposals. This article will focus on areas that are likely to have the largest market-shaping impact on care delivery, specifically.
I recently covered potential impacts to American health policy under RFK, Jr. and Dr. Mehmet Oz in another article here.
And, I covered health services, FDA, public health, and health policy broadly under the next Trump Administration in yet another prior article.
However, I have not gone into great detail on the health services market specifically, so that is the purpose of this article. This topic area deserves significant attention because the health services spending, driven by federal health policy decisions, is the bulk of the federal budget and comprises a significant portion of total health care spending in the United States which was approximately $4.5 trillion in 2022.
I will also note that this article is based on historical priorities from the previous administration, written policy documents from those close to the administration, from my conversations around Washington, D.C., and from comments and public statements made by nominees for HHS, CMS, and other posts.
This does not necessarily mean that these policies in the form that they are discussed will occur, but this should give you an idea of what at least a portion of the incoming Congress and administration will be pushing.
Medicaid Policies: Fundamental Restructuring
The biggest change that may occur in the incoming administration is to Medicaid, which is a state-federal partnership program that provides health coverage for low-income families, children, pregnant women, and individuals with disabilities and other individuals with incomes below a percentage of the federal poverty line. The program currently serves approximately 80 million Americans.
Total Medicaid spending by both states and the federal government in 2023 exceeded $880 B. The federal share of this is approximately 70%. If you look at the total federal 2023 budget you will note that this is about 10 percent of the $6.1 B total spending. So, Medicaid is a key area of focus for those who seek to cut federal spending.
Now, Medicaid is a very large federal program. Eighty million Americans (though many are children) is a large component of the electorate. It has become increasingly popular and understood by both sides of the aisle over the last decade and is critical for urban and rural Congressional districts alike. Importantly, deep red states like Mississippi, South Carolina, Idaho, and Alabama are heavily reliant on the federal component of Medicaid spending. And, swing states like North Carolina and Georgia also accept a high percentage match for their programs. That makes drastic changes like outright program elimination or massive cuts to the federal share less likely, though not impossible. But, nonetheless, the House Republicans have put health program cuts on the table.
There are several key policy proposals to watch in this space:
Per Capita Caps and Block Grants
The next administration and Congress might revive proposals to fundamentally restructure Medicaid financing through per capita caps or block grants. Per capita caps would limit federal funding based on enrollment categories and set limits on spending per enrolled individual, while block grants would provide states with fixed funding amounts. These approaches aim to control federal spending but would significantly impact state budgets and beneficiary access to care (here is a good analysis and bit of history on this policy proposal from KFF).
Previous proposals suggested potential savings of $800 billion over ten years through such reforms. However, critics argue these changes could force states to reduce benefits, restrict eligibility, or absorb increasing costs as health care expenses rise.
Those who might support cost-cutting efforts in these programs might suggest that there is an urgent need to curb deficit spending and that need may outweigh the health impact. While those who oppose them might argue that the consequences of benefit reductions and access to care restrictions would have negative ripple effects across the public’s health, poverty rates, and elder care.
A more important part of the debate here is how much of a cut is “too much.” A slight decrease in spending that still yields savings could potentially be absorbed over time and may force states to innovate, whereas a “large chop” might have significant detrimental effects for a large portion of the population.
Importantly, Medicaid covers almost 50% of U.S. children, so major cuts to benefits and access restrictions to pediatric preventive, developmental, and early treatment services might result in a lifetime of less healthy and less productive citizens. Worse health results in poor educational attainment, lower job performance and productivity, and significant economic consequences. Medicaid is also a major payor for elder care programs and long-term care, so cuts to Medicaid would potentially leave the senior care market in dire straights—and, in many cases and areas it is already in rough shape.
A decent size cut to Medicaid would have a few likely effects on care delivery markets:
Hospitals would likely see an increase in uncompensated care in their emergency rooms which may threaten facilities operating on very thin margins. This may have a more significant impact on facilities who have large medicaid populations.
Medicaid managed care organizations like Centene (which is already lobbying like crazy), United Healthcare Community and State, Humana, Aetna, Blue Cross Blue Shield, and other small regional plans would likely see reductions in capitation payments and enrollment thus squeezing margins and contracting revenue.
Pediatric clinics, and all clinics across the board, would likely see reimbursement cuts in Medicaid which would likely hinder access as clinics would move to reduce the number of patients they see with Medicaid coverage. This occurs because states would compensate for less total funding with reimbursement rate reductions on their fee schedules.
Reduced reimbursement rates and coverage policies would result in potential harm to innovative care delivery companies and technology companies that have significant exposure to a Medicaid patient population.
Reduced eligibility determinations by states would reduce the number of covered individuals with insurance which would potentially reduce the volume of patients for certain care delivery organizations.
This may hinder the coverage of innovative, emerging, or very expensive technologies, procedures, and services for Medicaid beneficiaries. In a business sense, cuts to the total Medicaid spend would reduce the market size for certain services and products.
If cuts are deep enough to long-term care, this would put nursing homes and home care agencies in a tough financial position in an already challenging business environment. It would also likely reduce the quality of existing services due to reimbursement cuts. This would have second and third order effects on the next generation who would have to bear the burden of care for their parents.
Here is a good article that add more detail on the impact from these policies.
Work Requirements
Work requirements for "able-bodied1" Medicaid recipients could return as a central policy focus. The first Trump administration approved several state waivers implementing work requirements, though many faced legal challenges. These policies typically require beneficiaries to document 80 hours monthly of work, job training, or community engagement.
Experience from states like Arkansas showed significant coverage losses under work requirements, with many eligible individuals losing coverage due to reporting challenges rather than actual non-compliance. These policies did not generally have the effect of increasing employment rates among the Medicaid eligible population.
The evidence on these policies show they are counterproductive to the intention of the preventing the “free rider problem” and may not save money at all after accounting for administrative costs and other negative economic consequences. Most folks on Medicaid are parents of young children, persons with both physical and cognitive disabilities, and older adults who are likely not subject to work requirements.
After excluding groups exempt from the typical work requirement policies, that leaves ~1.3 M out of 70 M eligible, “able-bodied” enrollees subject to work requirements. Many more of these individuals are working or acting as caregivers, so the actual population targeted by this policy is quite small.
The effects in some states might be greater than others, so Medicaid MCOs are likely to see some financial impact and hospitals may see increases in uncompensated care.
Section 1115 Waivers
Expanded use of Section 1115 demonstration waivers could give states greater flexibility to modify their Medicaid programs. Project 2025’s section on the U.S. Department of Health and Human Services (HHS) suggests a desire to allow states the flexibility to use 1115 waivers without lengthy review and approvals by CMS. Block grants would also provide states with more program flexibility. Previous waivers approved under Trump included provisions for:
Premium requirements
Requiring enrollees to pay premiums for Medicaid coverage and canceling coverage for non-payment
Health savings accounts
Reduced or changed benefit packages
Time limits on coverage
Drug screening requirements
Changes in provider payment models and implementation of new payment systems
The Section 1115 waiver process has been used to accomplish a wide variety of state programs from new payment and delivery system reform projects, to work requirements, to food insecurity programs. This is a key area to watch in Medicaid under the next administration as it is an area that the administration itself can influence heavily.
Naturally, these programs could have similar impacts to the ones already discussed in the health care services market, but they could also create opportunities for new technology companies to support the administration of these programs.
Medicare Policies: Market-Based Reforms
Medicare expenditures exceeded $839 B in 2023. It represented approximately 14 percent of federal spending. Medicare also provides benefits for about 20% of the US population. Due to the baby boomers aging into Medicare over the next decade, significant growth in expenditures is expected.
About 57% of Medicare expenditures are covered via payroll taxes and premiums paid by beneficiaries. The rest is funded by Congress. Given the expected growth in expenditures, there have been efforts over the last 14 years to experiment with payment models to curb spending in the Medicaid program via alternative payment models tested via the Center for Medicare and Medicaid Innovation.
Medicare is important not only for its inherent purpose, but because it is a benchmark for Medicaid programs and commercial insurers. The Medicare Physician Fee Schedule is the basis for many other fee schedules across the US health system and Medicare coverage is often an unofficial floor or baseline for other insurance products. Medicare also serves as a proving ground for new coverage concepts, payment models, and the data produced from these programs also serves to inform how other payors operate.
Thus, Medicare policy is very important to monitor regardless of your direct relationship to the program itself.
Medicare Advantage Expansion
A second Trump administration might accelerate the shift toward Medicare Advantage (MA) plans. Current MA enrollment exceeds 50% of Medicare beneficiaries, and policies could further incentivize MA growth through:
Default MA Enrollment: this is a policy that has been proposed in a number of places and would also likely garner support from Dr. Oz, who is nominated to be CMS administrator. Dr. Oz has specifically addressed Medicare Advantage in the past (you can read more here).
Eliminating Traditional Medicare all together (more on this one later)
Allowing more flexibility in marketing via Medicare Advantage rule making
Allowing for more supplemental benefit options to draw beneficiaries
Making Medicare Advantage the default enrollment option for new beneficiaries would be a massive shift, requiring an active choice to select traditional Medicare. This would significantly accelerate MA market share growth and potentially reshape the Medicare landscape.
However, recent pushback against prior authorizations and bad practices in MA related to risk adjustment may hinder this policy or backfire from the electorate. United Healthcare, for example, is the largest MA plan, so Republicans in Congress would have to contend with the recent backlash. Additionally, recent estimates suggest that MA may be more expensive than traditional Medicare and that the government “subsidies” that bolster the MA insurance segment may not come with better health outcomes.
If pro-MA policies were implemented, they would have the following effects among others:
MA plans would see significant increases in enrollment and revenue growth
Providers often receive less reimbursement than traditional Medicare
Companies that partner with MA plans to offer supplemental benefits like home delivered meals, gym memberships, and others would likely see a market size expansion
Backlash from beneficiaries if prior authorization and other insurer frictions are not reigned in by policymakers
Risk Adjustment Modifications
Changes to Medicare Advantage risk adjustment methodology could significantly impact plan payments and market dynamics. Potential changes might include:
Simplified diagnostic coding requirements
Modified payment algorithms
Reduced audit intensity
New or streamlined quality metrics
Once there is an indication that the next administration and Congress is very pro-MA, it will be critical to monitor changes to risk adjustment and oversight. If risk adjustment is changed with the effect of reducing per beneficiary revenue to account for historical overcharging and aggressive risk adjustment strategies employed by MA plans, then the effects of a default option on MA company profits may be muted.
Traditional Medicare's Future
Some policy proposals suggest eventually phasing out traditional Medicare in favor of an all-MA system. While politically challenging, incremental steps could include:
Reducing traditional Medicare payment rates
Limiting provider participation requirements
Creating additional incentives for MA enrollment
This would have significant (dare I say earth-shattering) ramifications for other insurance markets, for the coverage of novel technologies, and for innovation. While it may surprise you, Medicare drives adoption of new medical devices, care models, and CPT codes in a way that private insurance does not. It would also serve to reduce competition in the insurance and provider markets, which is generally in conflict with other Republican philosophies in health policy (i.e., competition).
Administrative Burden Reductions
There is a general push to reduce administrative burden in federal health programs. Reporting requirements, quality metrics, billing complexity, and more contribute to high administrative burden. Providers experience high burdens in health programs, so, while it is clear that this is a priority for the incoming administration and its policy-infrastructure in Washington, D.C., the exact methods buy which this will be achieved is unclear.
Some argue, and I think any physician practice would agree, that Medicare Advantage actually results in much higher administrative burden for clinics, so it is clear that some of the policies proposed have conflicting effects.
Fraud, Waste, and Abuse
There are specific calls to use artificial intelligence methods to identify fraud, waste, and abuse in Medicare claims. First, this is a good idea because the general consensus suggests that somewhere between 20 - 30% of Medicare spending falls under the category of FWA. This is a very bipartisan issue and if it is successful, it can help alleviate some of the budget concerns.
However, this is a complex task to accomplish and could result in additional administrative burden. If you use AI, it is important that the identification of instances of fraud, for example, are both precise and accurate as the investigation proceedings are expensive and resources are limited.
Coverage of Emerging Technologies
Medicare coverage policies for new technologies, particularly AI-driven solutions, could see significant changes. A future administration might:
Accelerate coverage determinations for AI diagnostics
Expand reimbursement for digital health tools
Create new payment models for technology-enabled care
There are several very influential Republicans in Congress that are fans of remote patient monitoring, digital therapeutics, and artificial-intelligence-based medical devices and clinical decision support. This is also a bi-partisan issue.
This is an area to watch closely as it has ramifications for start-ups, emerging care models, and care delivery as a whole.
Telehealth and Remote Patient Monitoring
PHE Flexibility Permanence
The COVID-19 public health emergency (PHE) dramatically expanded telehealth access. A future administration could make permanent many PHE flexibilities:
Removed geographic restrictions
Expanded eligible provider types
Audio-only service coverage
Relaxed technology requirements
These flexibilities are set to expire on December 31, 2024. The outcome may be an extension for two years, a three month extension (kicking it to the new administration), or an expiration if nothing is done. Fortunately, this is a bipartisan issue, but the challenge is how these flexibilities will be paid for, or off-set as the Congressional Budget Office estimates additional cost from these policies.
Remote Patient Monitoring Expansion
RPM coverage could expand significantly, reflecting technological advances and growing evidence of effectiveness. Changes might include:
Broader device coverage
Simplified billing requirements
Expanded eligible conditions
Enhanced payment rates
Rural Access and Workforce Solutions
Telehealth could play a central role in addressing rural healthcare access and workforce shortages through:
Enhanced rural broadband funding
Cross-state licensing support
Rural-specific payment bonuses
Technical assistance programs
Expansion in these areas could have the following effects:
Significant tailwinds for telemedicine providers like Teladoc and other companies
Significant tailwinds for connected medical device manufacturers and software companies
Increased pressure on commercial payors to cover telehealth and RPM-based services
A reduction in frictions related to licensure might significantly expand the telehealth market, though this is regulated by States currently, I think federal action could occur via the interstate commerce clause of The Constitution (don’t quote me on this one)
Conclusion
The future Trump administration's health care policies would likely emphasize market-based solutions, state flexibility, and reduced federal oversight. While some changes could accelerate innovation and efficiency, others raise concerns about access and equity. The complex interplay between these policy domains requires careful monitoring of implementation and outcomes.
Health care stakeholders should prepare for potential significant changes while recognizing that legislative and practical constraints may moderate the scope and pace of reform. Success will require balancing innovation and efficiency with maintaining essential healthcare access and quality.
You can also see my previous article looking at RFK, Jr. and Dr. Oz, below.
This is not my word, this is from the policies.