Axios Future of Health Care

January 24, 2025
Good morning. I am immune to most headlines these days, but I must admit this one got me.
- If you weren't awake before, you probably are now!
Today's word count is 1,297, or a 5-minute read.
1 big thing: All trees, no forest — yet
President Trump has moved into the Oval Office, but his health care agenda — and its impact on the industry — isn't much clearer than it was when he first announced his selection of Robert F. Kennedy Jr. to lead HHS.
Why it matters: The void leaves open the option of both a minimalist and a maximalist approach to policymaking across public health and more nuts-and-bolts health care delivery topics. At this point, it's reasonable for Washington watchers to expect either.
Driving the news: Kennedy will face two confirmation hearings next week. It's pretty obvious what senators will grill him on; what's unclear is his vision for the nation's top health official role beyond "making America healthy again."
- In fact, a lot of what Kennedy and the rest of Trump's team has said in the months since he was nominated is what he won't do — like take away the polio vaccine.
- In meetings on the Hill, he's drastically toned down his vaccine rhetoric compared with his pre-nomination days, my Axios Pro colleague Peter Sullivan reported yesterday.
- Beyond the back-and-forth about Kennedy's vaccine beliefs and intentions, most of the conversation has concerned his controversial past and what he could do if confirmed as HHS secretary.
Where it stands: Trump's headline-grabbing executive orders this week — namely the decision to withdraw from the World Health Organization — were neither surprising nor very indicative as to what will come next on health care, especially outside of the public health realm.
- And while public health is an important topic in its own right, it's generally separate from the health care industries that constitute nearly a fifth of the American economy.
- "We're in this phase where everyone is able to look at data or staff and assume that their best desired outcome is the one that's most likely to occur, and that's a very dangerous position to be in," said Raymond James analyst Chris Meekins, who was also a senior health official in the first Trump administration.
- "The amount of potential outcomes here is significantly broader than what we historically have on the table," he added. "When you're trying to bookend the risk, it's a lot more difficult now because of how wide the bookends are apart."
What they're saying: "The incoming team has developed a much more serious and thoughtful approach to what it wants to do to reform health care programs compared to eight years ago," said Brian Blase, president of Paragon Health Institute, a health official during Trump's first term and the policy lead for the HHS transition team this time around.
The big picture: Kennedy's vow to bring a wrecking ball to public health agencies and break what he views as the health industry's grip on government could easily run against more mainstream Republicans' conviction that large-scale health reform is never going to work in their favor.
- That's reflected in the predictions about what the Trump administration and Kennedy-led HHS will do; it could tinker around the edges or be enormously disruptive to the industry, depending on whom you ask.
A similar dynamic is playing out in Congress. Republican budget hawks' desire to find trillions of dollars in federal spending reductions to offset the extension of tax cuts is running up against that same political conviction.
- And the nomination of government outsiders — many of them critics of the previous administration or the federal bureaucracy — to lead the subagencies within HHS that make trillion-dollar decisions has left plenty of questions about what those agencies will do, too.
Between the lines: If personnel is policy, then Trump's appointments so far signal an eclectic mixture of goals — or a giant incoming clash.
- While the agency head nominees — Kennedy, Mehmet Oz, Marty Makary, Jay Bhattacharya and David Weldon — don't have any prior experience at the agencies they're set to lead, much more experienced (and generally less controversial) policy hands are starting to fill out the positions underneath them.
Reality check: Plenty of major decisions get made by people who work outside of the agencies.
- Heading for White House positions are a couple of staffers from Paragon, which has put forth an ambitious set of health care plans reflecting more traditional GOP health care values.
2. A bunch of high-stakes either/ors
This potential for minimalist or maximalist policymaking is the reality across nearly every realm of health care.
For example ...
- Vaccines: Kennedy could be confirmed, make some new government data public and call it a day. (For the record, I have no idea what that data would be.) Or he could take office and return to false or misleading rhetoric about vaccine safety, making policy decisions that match.
- The FDA: Kennedy could make good on his vow to end the agency's "war on public health," which included a directive for FDA staff to "pack your bags." Or Makary — the FDA commissioner nominee — could implement a thoughtful, biotech-friendly approach to bringing new drugs to market faster, a common GOP goal.
- Pharma: Drug executives have started channeling optimism about Trump 2.0. But Trump campaigned with skepticism of the industry and its motives similar to Kennedy's, and there's absolutely no reason to rule out the revival, in some form, of Trump's attempt to bring U.S. drug prices closer to what other countries pay.
- 👀 "Pharma is whistling past the graveyard," said one source who's working on the health nominee confirmations.
- Medicare Advantage: Sure, Republicans have historically been fans of the program, and there's been a lot of assumption that the Trump administration will be relatively friendly to MA plans. But there's certainly a vein of anti-industry sentiment that's rising within the party, and even orthodox GOP policy wonks are questioning how much the U.S. is spending on the program.
- Dealmaking: Same as above — the GOP is generally friendlier to M&A than Democrats, which is a big deal in the health care world. But Vice President Vance isn't exactly known as a free market crusader, and one of his advisers has been tapped to lead the DOJ's antitrust division.
- Medicaid: Congressional Republicans could extract hundreds of billions, if not trillions, from the program as a way to offset the cost of tax cuts. Or they could decide doing so is too politically toxic and/or they don't need the payfors, leading to much smaller changes.
- Tariffs: Trump has insisted that he'll impose large tariffs on imports from certain countries, which could whack the medical device industry in particular. Or those tariffs could never materialize, at least in their proposed forms — or health care industries could get exempted.
I could keep going, but you get the picture.
What we're watching: The health care industry is full of the country's best lobbyists, but they may not have the same kind of sway over this administration that they've had in the past.
The bottom line: "We remain in this nebulous time where we know something's going to happen, but knowing what is going to happen and what the implications will be is difficult until they start doing things and taking actions," Raymond James' Meekins said.
3. The Paragon worldview
If a Paragon guy led the transition and Paragon guys are heading to the White House, it's worth revisiting what the think tank has proposed doing.
They've put out a lot, much of it extremely thorough. But here are a few bullet points summarizing some of their goals:
- Narrow the focus of the CDC to infectious diseases. Cut priorities would include chronic disease. (Wonder what Kennedy will make of that? 🤷)
- Promote medical innovation by "removing unnecessary and counterproductive regulations and price controls."
- End the enhanced federal payment rate for Medicaid expansion enrollees, as compared to non-expansion enrollees.
- Reduce Medicare Advantage spending by $250 billion over a decade.
- Let the enhanced Affordable Care Act subsidies expire.
- Build on price transparency measures.
Thanks to Nicholas Johnston and Adriel Bettelheim for editing and Matt Piper for copy editing.
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