As the new administration reaches its early milestones, the healthcare policy 2025 outlook is top of mind for industry leaders. On March 26th, Stephen Jasper (Managing Director, Biotech) and Monique Kosse (Managing Director, Biotech) of Gilmartin Group hosted a webinar with Capital Policy Partner’s Beth Mantz Steindecker (Founding Partner, Senior Healthcare Analyst) and John Leppard (Founding Partner, Senior Healthcare Analyst). According to the insights shared in the webinar, the healthcare sector faces an uncertain political and regulatory environment, but there could be reasons to believe changes might not be as drastic as proposed policies have suggested. Below are our key takeaways from the discussion.
Key Takeaways:
Uncertainty Around NIH Budget Cuts
One of the most pertinent issues revolves around the potential NIH budget cuts and their ripple effects on the research landscape within the life sciences sector. The new administration proposed a 15% cap on indirect costs, but a federal judge quickly issued a temporary restraining order, pausing its implementation. This legal challenge is likely to be resolved in favor of the plaintiffs, as changes to the NIH budget require a formal process and cannot be enacted through executive order alone. While funding is expected to resume in the coming months, long-term uncertainty remains, particularly with the White House budget proposal on the horizon and the 2026 budget cycle approaching later this year. However, given that any changes to NIH funding require congressional approval, significant cuts are unlikely to gain traction in a closely divided Senate.
Medicaid and Medicare
While the administration has assured that existing benefits will remain unchanged, states are already preparing for potential reductions in Medicaid funding. The proposed cuts total $880 billion over the next decade, but policymakers remain mindful of how benefit reductions or rising healthcare costs could impact their re-election prospects ahead of next year’s midterms. Capital Policy Partners anticipates that while Medicaid cuts are likely, they will be significant but lower than the proposed $880 billion and will need to be legislated through Congress as part of a longer-term funding bill. If these cuts fail to fully address the budget shortfall in the reconciliation process, adjustments to Medicare—despite the administration’s assurances—may become necessary.
Additionally, as Medicare reimbursement rule season begins, we can expect a short-term preference for Medicare Advantage, aligning with historical Republican support for the plan structure. However, there is no guarantee that incoming CMS leadership will maintain the same level of support for Medicare Advantage over the traditional fee-for-service model. While significant changes are unlikely in the near term, adjustments could be on the horizon for 2026 and beyond, particularly around spending inefficiencies and inpatient care costs. With Mehmet Oz still awaiting confirmation as head of CMS, any potential policy shifts remain in discussion.
Relative Stability at the FDA
While the FDA is grappling with staffing reductions and return-to-office mandates, newly confirmed Commissioner Marty Makary is seen as a more traditional choice compared to other health organization nominees put forth by the administration. Although personnel challenges may lead to slower review times, major changes to the drug approval process are unlikely, particularly with the current PDUFA agreement in place through 2027.
One notable shift at the FDA is the push to accelerate food safety reviews, a priority that began under the previous administration and appears to be gaining momentum. However, legal challenges could hinder efforts to introduce mandatory safety labeling or other stringent requirements, making significant policy changes in this area unlikely in the near term.
HHS and Vaccine Policy Under RFK
Speculation around potential vaccine policy changes has been widespread following Robert F. Kennedy Jr.’s confirmation as head of HHS. However, any shifts may be more limited than expected. A key question is whether HHS will decline to ratify recommendations from the Advisory Committee on Immunization Practices (ACIP), which currently ensures mandatory insurance coverage for vaccines without patient cost-sharing. While this is a possibility, introducing new out-of-pocket costs for vaccines would likely be politically unpopular given broad public support for immunization access. A shift away from reliance on prevailing “expert opinions” in favor of alternative viewpoints is anticipated under the new administration. However, it remains unclear whether this will lead to any significant or material changes in federal vaccine policy.
Healthcare Policy 2025 Outlook – Looking Ahead
In today’s uncertain environment, companies and investors must stay agile as the healthcare policy 2025 outlook continues to evolve. The new administration has already demonstrated a willingness to enact sudden changes outside the formal proposal process, and it may take months or even years to determine which policies withstand legal scrutiny and which are overturned.
Meanwhile, a return to more traditional antitrust perspectives at the FTC is expected, signaling a shift away from the prior administration’s broad interpretations of competition law. This could create a more M&A-friendly landscape, offering companies an opportunity to reassess their strategic growth plans.
Conclusion
While key areas like NIH funding, Medicaid and Medicare, the FDA, and vaccine policy remain in flux, structural and legal constraints may temper the scope of potential reforms. Despite ongoing uncertainty, the healthcare policy 2025 outlook suggests that any drastic changes will likely face significant limitations. As the new administration continues to shape its healthcare agenda, companies and investors should remain agile, anticipating shifts while recognizing that significant regulatory changes will take time to materialize. Uncertainty will persist in the near term, making it essential to stay informed and adaptable as the landscape evolves.
The team at Gilmartin Group has deep expertise in navigating the evolving healthcare policy and regulatory landscape, working with both private and public companies across the Medtech, Biotech, Life Science Tools & Diagnostics, Digital Health & HCIT sectors. If you’re looking for strategic guidance in adapting to these changes and effectively positioning your company, contact our team today.
Authored by: Ethan Smith, Analyst, Gilmartin Group