Last week, the Trump White House released a plan to reduce health care costs that is consistent with its approach to many differing questions. There was a dominant populist impulse, with several provisions targeting corporate interests for supposedly causing most of the problems consumers experience, alongside a more libertarian orientation that emphasizes patient choice and control, although the proposals tied to this theme lacked sufficient detail to be convincing. What the White House did not provide is an actionable legislative plan to lower the cost of health care for most Americans. Instead, the status quo is almost certain to prevail this year and for the foreseeable future.
That might have been the intention, as the White House probably wants to avoid a protracted debate on health care as the midterm election approaches. The administration’s one-page summary of its ideas, called “The Great Healthcare Plan,” seems to have been put together for defensive reasons. The Republican Party has been scrambling for several months to deflect Democratic attacks over the December expiration of enhanced premium credits for Affordable Care Act (ACA) insurance plans that had been approved through 2025 during President Joe Biden’s term. The Trump White House’s plan was developed to provide the Republican Party, or at least key officials in the administration, with something to talk about when opposing a straight extension of the credits.
The administration’s plan contains nine proposals that purport to boost transparency, lower costs, or give consumers more control over their health care choices. The net effect of the plan will be minimal because the causes of high and rapidly rising health costs have deep roots and cannot be addressed with surface changes that leave untouched the basic architecture of the status quo.
Three new insurance disclosure requirements.
The plan calls on “big” insurers to post the following on their websites: plain English versions of their policies, the share of revenue they devote to “overhead” expenses, and their rates of denials for submitted claims.
These provisions will not have much of an effect on costs. Clearer explanations of the policies will not strengthen price competition among those providing services to patients, which is what is needed to lower costs. Further, the ACA already stipulates a minimum level of spending on medical claims (called the “medical loss ratio”), which implicitly limits the share left for overhead and profits. Some researchers argue this restriction raises total costs because higher premiums translate into higher nominal profits. Finally, forcing insurers to disclose claim denial rates might lead to the approval of more claims that might otherwise have been denied, which would drive up total costs. Over time, the higher costs from fewer denials would get passed on to consumers in the form of higher premiums.
Full funding of ACA cost-sharing subsidies.
This proposal would correct an obvious error, and is therefore hard to oppose, but it would raise costs for consumers rather than lower them. Poor drafting of the original ACA has led to a decade of confusion over how to provide lower cost-sharing for households with incomes below 250 percent of the federal poverty line (FPL). Cost-sharing support is treated separately from the ACA’s premium credits, which offset the cost of enrolling in insurance plans. Cost-sharing reduction funds allows lower income enrollees in the ACA plans to pay smaller deductibles and per-service co-insurance than is the case for enrollees with incomes over the 250 percent of FPL threshold.
The original intent was to provide a permanent appropriation outside of the premium credit system to fund these cost-sharing subsidies, but, in the rush to pass the final bill, the final statutory language was bungled. To solve the problem, the Centers for Medicare and Medicaid Services (CMS) worked with insurers on what has come to be known as “silver loading.” With silver loading, insurers continue to offer lower cost-sharing to their ACA enrollees with incomes below 250 percent of FPL, but they pay for the costs of this more generous coverage by bumping up the premium they charge for standard, silver-tier insurance, which is the level that is used to determine premium assistance in every market. The higher premiums trigger higher premium credits from the federal government, which then pay for the cost-sharing support that was supposed to be covered through a separate appropriation that runs outside of the premium system. This workaround raises overall costs to the federal government by substantially bumping up federal premium credits. The administration plan would eliminate silver loading in most states and lower overall federal costs, at the expense of some consumers who benefited from the higher level of premium support silver loading conferred. The Congressional Budget Office (CBO) estimates the federal savings would be $37 billion over 10 years and that an additional 300,000 people would drop out of ACA enrollment.
Ban rebate payments by pharmacy benefit managers (PBMs).
The payment system for prescription drugs has evolved since the 1980s toward a combination of high list prices and variable rebates that depend on deals struck between the manufacturers and PBMs, such as OptumRx (which is owned by United Healthcare). The PBMs construct lists of products (called formularies) that encourage patients to gravitate toward certain products rather than others. The PBMs make money by extracting rebates from the manufacturers in exchange for a preferred position on these formularies.
The pharmaceutical companies have long complained that this arrangement has perverse incentives and hurts consumers because the PBMs rely on rebates for their revenue, which encourages them to push for higher gross prices to make room for them. The net price (after rebates) might be close to what would otherwise be the case if the rebate system did not exist, but some patients nonetheless pay higher cost-sharing because it is usually based on gross charges for the drugs rather than the net, after-rebate prices.
The Trump administration and many in Congress have bought this argument, but the evidence in support of it is weak. There are examples of abuse, and the market is certainly excessively opaque, but employers mostly continue to contract with PBMs because they believe they lower overall costs rather than raise them. It follows that a total ban could easily backfire.
Congress is currently considering passage of a more modest PBM transparency bill that would require more disclosure without banning rebates entirely. Its effect on costs would be modest.
Encourage more over-the-counter drugs.
The White House is promising to eliminate the need for physician prescriptions for more pharmaceutical products (certain statins and allergy medications with low risk profiles are often mentioned as potential candidates). Accelerating this trend, which has been underway for several years, would lower overall costs but not by enough to make much of a difference to most consumers. The most expensive drugs are for conditions like cancer and arthritis, and there is no prospect of eliminating the need for physician prescriptions for them.
Limit drug prices to ‘most favored nation’ levels.
This concept, which would limit prices in the U.S. to a composite measure of pricing in other high-income countries (such as Germany, Japan, and France) was first developed during the first Trump administration and would deliver a seismic shift in government policy if it were enacted by Congress. As CBO has noted, average pricing for brand name drugs in the comparison countries is from 45 to 70 percent below those found in the U.S., so the savings opportunity is real. But it is doubtful such a policy will advance in the current Congress because most Republicans see it as importing price controls from overly regulated international markets that might then undermine U.S. superiority in the biopharma sector. It is notable that there was never a concerted effort to include the most favored nation policy in the GOP “megabill” that Congress passed last summer even though it has long been a priority for the president.
Give individuals direct control over ACA subsidies.
The White House plan restates the president’s recently announced preference for sending ACA premium credits to individuals instead of insurance companies. Under current law, it is individual ACA applicants who are entitled to the support, but the payments are sent to insurers to offset the premiums charged to the enrollees. The administration wants the money sent to individuals who would then use it to offset their costs.
The brief description provided in the release is not sufficient to fully evaluate what this might mean in practice. For instance, does it mean the administration would support an extension of the enhanced credits if the funds were sent directly to individuals, as proposed by Sens. Mike Crapo and Bill Cassidy? Would the funds get deposited into health savings accounts, or would they go directly into standard bank accounts? The administration’s outline provides no information on these important details.
Maximize price transparency.
The administration says it wants to require all providers of medical services receiving Medicare and Medicaid payments to make available their pricing for consumers in order to “avoid surprise medical bills.” As with the previous provision, there is not enough information in the released document to evaluate what this requirement might mean, or if it differs from what is already required by federal regulations. There is certainly great potential in forcing more pricing disclosure by providers of services, but the key is to standardize the services included in pricing bundles for high-volume care, such as common surgeries. The administration does not signal one way or another if it would support requiring more standardization in price transparency rules.
The administration’s health care plan omits many proposals that could deliver more tangible results. For instance, the White House could have embraced “site neutral” payments for services provided outside of inpatient hospital settings. Under current law, Medicare pays hospital-owned clinics and physician offices more than independent facilities for the same services. This reform would lower federal costs and reduce the incentive for further consolidation in the industry, which has pushed prices higher in the commercial market too. However, inclusion of such a provision would have made the entire plan more controversial and therefore possibly less useful in deflecting political attacks.
As 2026 commences, the president is pressing his agenda forward on many fronts, but the energy is mostly directed away from health care. The GOP has long approached the topic warily because of the difficulty of convincing voters that the party has a better approach than the Democrats. The Trump White House is willing to break from Republican orthodoxy on specific health care questions, but its recent release shows it remains reticent about getting mired in a health care debate it could easily lose.
