How Donald Trump’s return affects hospitals: Medicaid, the Affordable Care Act and tariffs

President Donald Trump is returning to the White House, and that is likely to have a big impact on hospitals and health systems.

President Donald Trump's return to the White House is likely to have big implications for hospitals and health systems.

Hospitals are pressing Trump to preserve key funding for Medicare and other important priorities. But perhaps the biggest source of anxiety lies over the Medicaid program, which enables Americans with lower incomes to access healthcare.

Medicaid also provides important funds to hospitals, particularly those with a higher percentage of patients with lower incomes.

Moody Ratings issued a report last week on trends to watch in 2025, and projected that hospitals should brace for cuts in Medicaid.

“The Trump administration offers the potential for material shifts in healthcare policy that would negatively affect not-for-profit and for-profit hospitals, particularly concerning Medicaid spending and subsidies for the insurance exchange marketplace,” the report stated.

“Hospitals could suffer from significant federal funding cuts and regulatory changes affecting Medicaid and state directed payments (SDP), which are administered by state Medicaid agencies but approved by the federal government,” Moody’s said. “A reduction in Medicaid or SDP funding would disproportionately impact hospitals in states that expanded Medicaid under the Affordable Care Act.”

Possible loss of subsidies

Trump has said he doesn’t plan to try to abolish the Affordable Care Act, as he did in his first term. He has said he’d look to improve it, although he hasn’t revealed specifics.

Noting that Trump is looking for places to reduce spending to finance tax cuts, it’s possible that Trump will look at cuts to Medicaid and the Affordable Care Act, Larry Levitt, executive vice president for health policy at KFF, wrote in a JAMA Forum article published in December.

“Trump has said that Social Security and Medicare cuts are off the table, and defense reductions are unlikely as well,” Levitt wrote. “That means almost half of federal spending would be protected from cuts, leaving Medicaid, which is the next largest source of federal spending, and the ACA as prime targets for spending cuts. The math is inescapable.”

While Trump may not get rid of the Affordable Care Act, enhanced subsidies put in place by President Biden are slated to expire at the end of 2025. Republicans, who control both the House and Senate, could let that additional aid fade away.

Affordable Care Act enrollment rose to more than 21 million people in 2024, a record, and nearly double the 11 million people in 2020, according to KFF.

But enrollment would almost certainly drop significantly without the additional aid from subsidies put in place by Biden in 2021, Levitt projected.

Nonprofit hospitals in particular could take a hit if the subsidies vanish, or are significantly diminished, Moody’s projected.

“Changes reducing or eliminating subsidies that help purchase insurance on the exchanges would likely lead to a rise in the uninsured or self-pay patients,” the Moody’s report said. “The increase would disproportionately impact not-for-profit hospitals that serve a large number of low-income and vulnerable populations.”

Lisa Kidder Hrobsky, senior vice president of federal relations, advocacy and political affairs for the American Hospital Association, says hospitals will push Congress to preserve the subsidies.

“We really are concerned and want to make certain that these subsidies to get insurance on the marketplaces continue,” Kidder Hrobsky says.

Some healthcare leaders are worried about the prospect of cuts for Medicaid. Georges C. Benjamin, MD, executive director of the American Public Health Association, told Chief Healthcare Executive® in November that he’s concerned about Medicaid cuts.

“We know that there's been at least some verbalization on the campaign about reducing support for Medicaid, because their perspective of the Medicaid program is very different than my perspective of the Medicaid program, which is a comprehensive insurance program for people,” Benjamin said. “They see it as a program that needs to be limited in this cost. It actually saves taxpayers money.”

If hospitals see more patients without any healthcare coverage, then that’s going to affect their bottom line as they provide more uncompensated care.

“A higher uninsured rate stands to increase uncompensated care, curbing margins and straining resources, which could limit hospital investments in community health programs and facilities,” Moody’s said in its report.

Tariffs

Trump has also said he plans to expand the use of tariffs on some imported goods, which could affect hospitals and health systems. President Biden also imposed tariffs on certain medical supplies from China.

If the Trump administration imposes tariffs, it could add to cost pressures for hospitals, Moody’s Ratings said in its report.

“Increased tariffs on imported medical supplies, pharmaceuticals and equipment could lead to higher procurement costs. Hospitals, which operate on tight budgets, may struggle to absorb these additional expenses,” the Moody’s report stated.

Kevin Holloran, senior director of Fitch Ratings and head of the U.S. healthcare sector, said the imposition of more tariffs will add to financial pressures to hospitals. The tariffs by themselves aren’t damaging but they add to the other headwinds hospitals are facing.

“This will, at least over the near term, most likely result in higher prices for equipment and supplies for healthcare providers,” Holloran told Chief Healthcare Executive®.

• Read more: Hospitals poised for better year in 2025, but system remains fragile