Hello, and welcome back to this week’s edition of the Gist Weekly. As always, we appreciate your continued readership and invite you to forward this email to friends and colleagues—please encourage them to subscribe as well!
In the News
What happened in healthcare recently—and what we think about it.
- Administrative NIH funds cut, then restored in some states. Last Friday, the National Institutes of Health (NIH) announced that it would cap indirect funding at 15% of total grant awards. The cap was to take effect on Monday. Indirect funding covers research institutions’ overhead and administrative costs. Three lawsuits challenging the cap were filed on Monday in the S. District Court for Massachusetts. One lawsuit, filed by 22 state attorneys general, sought to block the rule from affecting their states. A federal judge issued a temporary order later that day halting the policy in those 22 states, with a hearing scheduled for next Friday. The two other cases were filed on behalf of universities and hospitals, attempting to block the rule from going into effect nationwide. Notably, Senator Susan Collins, Chair of the Senate Appropriations Committee, came out against the indirect funding cap and said she called Robert F. Kennedy, Jr., prior to his confirmation as Secretary of Health and Human Services (HHS), who reportedly told her that “as soon as he is confirmed, he will re-examine this initiative that was implemented prior to his confirmation.”
- The Gist: Affecting roughly $9 billion in NIH research funding, this policy change could be catastrophic for research institutions, especially academic medical centers that had budgeted for this funding. While this new administrative funding level is similar to that which private research funders provide for overhead and administrative costs, many institutions have come to rely on higher indirect funding rates from the government to support cutting-edge research. Halted in some states for now, the legal threat remains for all research institutions, which may be forced to make cuts or strategic changes. Should this policy be fully enacted, there could be decreased innovation in the long term. Additionally, to earn confirmation, some of President Trump’s more controversial nominees, including now Secretary of HHS Robert F. Kennedy, Jr., had to make assurances to skeptical lawmakers like Senator Collins to earn their confirmation votes. This disagreement could be an interesting early test to see if these promises were made in good faith.
- House GOP targeting $880B in healthcare cuts. On Wednesday, House Republicans released a budget resolution that tasks the Energy and Commerce (E&C) Committee to find $880 billion in spending cuts. The directive is in response to many lawmakers’ goal to extend tax cuts from President Trump’s first administration through the budget reconciliation process. The House hopes to lower mandatory spending by $1.5 trillion over the next 10 years to fund these tax cuts. While it is unknown what exactly will be cut, Trump has promised to not touch Medicare, leaving Medicaid as the major source of spending in the committee’s purview. The Senate Budget Committee passed a budget plan on Wednesday that did not include an extension for the tax cuts. Lawmakers have until March 14 to pass a spending bill in order to avert a government shutdown.
- The Gist: Medicaid remains popular with voters, and conservative lawmakers—especially those in swing districts—remain worried about cutting such a popular health program. House Speaker Mike Johnson promised to not make significant cuts to Medicaid, leaving the E&C Committee with a difficult task that likely will lead to indirect cuts to the program. For providers, Medicaid remains a prominent payer in many states and any cut to its funding would hurt many providers’ financial sustainability. More importantly, Medicaid cuts would also be a huge loss for care access for many patients, especially for those in red states. However, uniting the House GOP could prove to be even more difficult than finding what to cut, because the Republican majority’s thin margin and members’ competing priorities will make passing the budget reconciliation package challenging. If recent history is any indicator, a few weeks will likely pass before consensus emerges.
- Some webpages on federal health agencies’ websites restored. On Tuesday, a federal judge ordered federal agencies to restore access to health-related webpages and datasets that had been removed. On President Trump’s first day in office, he issued an executive order directing all federal agencies to remove webpages that promoted “gender ideology;” this led to the removal of many webpages across all agencies, including many within HHS. The removal of HHS webpages was challenged last week by Doctors for America, an advocacy group for physicians and medical students, which filed a lawsuit in which it argued that adequate notice for the changes was not given and the loss of these webpages would harm patient care. These now-restored webpages include reports on HIV testing, guidance on reproductive healthcare, and a study on “sex differences in the clinical evaluation of medical products.”
- The Gist: Judicial orders blocking executive action have caught the ire of the administration as it tries to “flood the zone” with a flurry of executive actions. While the administration has complied with the order to restore access to the webpages, supporters have suggested that the administration should ignore judicial orders, potentially setting the stage for a constitutional crisis over the separation of powers. Even though these pages are now restored, this action may further erode confidence in health data among a public that is already distrustful towards public health agencies.
Plus—what we’ve been reading.
- Confronting an undervaccinated America. This piece, published last month in The Atlantic, imagines life in the United States should vaccination rates continue to drop. This picture is not pretty: infectious disease experts envision a return of deadly and debilitating diseases such as measles, whooping cough and chicken pox. Other diseases, including polio and rubella, could follow. It’s impossible to predict how quickly outbreaks might happen, because a pathogen must find a vulnerable population first. But experts are certain that diseases previously thought to be essentially eradicated—including measles, polio, and rubella—will reemerge. It’s only a matter of when. These likely outbreaks pose a threat to the unvaccinated and vaccinated alike as well as an unprepared healthcare system.
- The Gist: Widespread vaccination is one of the great public health achievements of the 20th century, widely credited with saving millions of lives. Most Americans continue to support childhood vaccination but public trust in government health agencies is declining, while the proportion of parents who report having skipped or delayed a dose of some vaccines is rising. Secretary Kennedy is well known as a vaccine skeptic; although he has promised not to undermine vaccine confidence, he would still have the authority and ability to diminish trust in vaccines. Regardless, hard-won progress already is facing setbacks. Last week, 14 confirmed cases of measles, a disease declared effectively eliminated in the United States 25 years ago, were reported in a rural Texas community with particularly low vaccination rates and the 16 measles outbreaks last year made 2024 one of the country’s worst years for the disease in decades. Perhaps the most unsettling aspect of a less vaccinated future: most providers no longer know how to diagnose and treat these diseases, because they haven’t needed to. Doctors would have to familiarize themselves with symptoms they’ve never seen, and hospitals would need to employ diagnostic tests that haven’t been used for decades.
Graphic of the Week
A key insight illustrated in infographic form.
Health policy in the second Trump administration
Following President Trump’s busy first few weeks in office, this week’s graphic takes stock of the president’s health policy actions to date. Some of President Trump’s many health-related executive orders have faced legal challenges; there is almost certainly more action to come that would impact providers. So far, Trump has paused all outstanding rulemaking, begun the process of withdrawing the US from the World Health Organization, implemented a thorough external communications pause for health agencies, and withdrawn several Biden-era executive orders related to healthcare. Other attempts to transform the care delivery landscape have met resistance. In some instances, hospitals find themselves in the difficult position of deciding between conflicting federal and state guidelines, risking millions of dollars in research funding or violating state nondiscrimination protections. However, there are multiple healthcare priorities and actions that are still taking shape. Republicans will ultimately need to make significant cuts if they hope to extend the tax cuts from Trump’s first term, making cuts to federal healthcare programs appear imminent. Secretary Kennedy might use his platform to spread vaccine safety skepticism and refocus the department on chronic diseases. On a positive note, the agenda of the new Chairman of the Federal Trade Commission is still developing, but free speech issues appear to be a more important priority than M&A activity at this time. Overall, the current health policy picture presents a combination of threats and opportunities for providers and in most of these cases, patience will be essential.
This Week at Kaufman Hall
What our experts are saying about key issues in healthcare.
The Covid pandemic’s impacts on healthcare have been well-documented, but the headwinds health systems are facing today began to form well before the pandemic.
In a new blog, Kaufman Hall’s Dan Clarin joins in a conversation with Rich Liekweg, CEO of Missouri-based BJC Health System, and Nick Barto, President of BJC Health System. Looking back at a decade of change, Liekweg and Barto reflect on changes in their system’s strategic decision-making and discuss their roadmap for the future.
On Our Podcast
The Gist Healthcare Podcast—all the headlines in healthcare policy, business, and more, in ten minutes or less every other weekday morning.
Last Monday, host J. Carlisle Larsen spoke with Craig Garthwaite, Professor of Strategy and Director of Healthcare at Northwestern University’s Kellogg School of Management, about a recent $10 million endowment to establish a center to train the next generation of healthcare leaders.
This Monday, we hear an encore of JC's conversation with Benjamin Hamar, MD, Maternity Center Director at UMass Memorial, about a novel postpartum hospital-at-home program being piloted by the health system.
To stay up to date, be sure to tune in every Monday, Wednesday, and Friday morning. Subscribe on Apple, Spotify, Google, or wherever fine podcasts are available.
Thanks for reading! We hope you have a wonderful Valentine’s Day filled with happy moments with your loved ones. We’ll see you next Friday with a new edition. In the meantime, check out our Gist Weekly archive if you’d like to peruse past editions. We also have all of our recent “Graphics of the Week” available here.
Best regards,
The Gist Weekly team at Kaufman Hall
