From Day 1, President Donald Trump has embarked on an ambitious agenda calling for swift policy changes on a range of matters from government spending to trade policy. Additionally, the U.S. House of Representatives passed a budget resolution that many believe could lead to cuts to Medicaid, the federal-state health program that helps pay for medical costs for lower-income people.
Trump has supported the resolution but has also said numerous times that he won’t touch the country’s largest social programs, such as Medicaid. Many people are closely monitoring potential changes to other large social programs like Social Security and Medicare, the federal health insurance program for people over age 64 and disabled people.
Here are three things you should know about Trump moves and statements that might affect Medicare.
1. Trump rescinded a Biden executive order related to lowering prescription drug costs
Trump rescinded many of former President Joe Biden’s executive orders on Day 1 of his presidency. One of those orders directed the U.S. Department of Health and Human Services (HHS) to examine ways to lower the costs of prescription drugs included under Medicare and Medicaid. Specifically, the order asked HHS to look at “new healthcare payment and delivery models that would lower drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid programs.”
In 2023, the Centers for Medicare and Medicaid Services (CMS) published a study on several different payment models that could be used by HHS, including an option for Medicare Part D — which helps cover the cost of subscription drugs — to roll out a plan offering 150 generic drugs with a maximum monthly co-pay of $2.
CMS also explored another plan that would allow the agency to help negotiate outcome-based agreements between drug manufacturers and multiple states, with the hope of increasing bargaining power among states to achieve lower drug costs.
Ultimately, none of these payment models were put into place under Biden’s administration, so the revocation of this executive order doesn’t change much but does raise questions about what HHS could do in the future as it pertains to examining and enacting different payment models.
Official White House photo by Joyce N. Boghosian.
2. Negotiated lower prescription prices remain in place
A big provision within Biden’s Inflation Reduction Act (IRA) allowed the U.S. government to negotiate with drug manufacturers to achieve lower drug costs for many of the most common drugs covered by Medicare.
This initiative is still very much in place. In August 2024, CMS announced that it had successfully negotiated with and achieved lower prices on 10 commonly used and expensive drugs covered under Medicare Part D that are used by millions of people. The new prices will go into place in 2026 and will save Americans an estimated $1.5 billion and save the Medicare program $6 billion. CMS is planning to negotiate prices on another 15 drugs this year, including Ozempic, and those new negotiated prices will go into effect in 2027.
In another provision, the IRA essentially stated that Medicare Part D members would not have to pay more than $2,000 per year in out-of-pocket costs for prescription drugs covered under Medicare Part D. Biden got the IRA passed through a budget resolution, so a majority of the House and Senate could repeal the law. Trump and lawmakers could also make it more difficult to implement certain provisions of the IRA.
However, Trump did express a desire to lower prescription drug prices during his first term, and lower prices would be welcomed by tens of millions of Medicare participants.
3. Trump nominated Kennedy to lead HHS
After withdrawing as a candidate for president, Robert F. Kennedy Jr. threw his support behind Trump. Trump nominated him to become secretary of the Department of Health and Human Services. In early February, the Senate confirmed Kennedy by a vote of 52-48. A vocal critic of vaccines, Kennedy has vowed to investigate vaccines, pesticides, and antidepressants that he believes may lead to other chronic diseases.
It’s unclear how Kennedy’s appointment could impact Medicare and Medicaid. During his confirmation hearings, multiple media outlets reported that Kennedy struggled to provide substantive answers to Republicans who asked about Medicaid reform. Kennedy was also reportedly confused about how the program was funded. “I don’t have a broad proposal for dismantling the program,” Kennedy said in response to a question about Medicaid during his hearing.
Medicare and Medicaid recipients and taxpayers will have to keep watching to see how Trump’s second term impacts the programs.
