The Midterm’s Impact on Healthcare Policy: Five Key Questions Answered

BRG’s pre-midterm election panel delivered insights from the firm’s healthcare policy, operations, and performance improvement experts—plus health system leaders Gail Kosyla, CFO at AtlantiCare, and Matt Brown, president of CommonSpirit Health’s South Region

A few days before the midterm elections, BRG’s David Wildebrandt was clear about challenges facing health systems as a result of the One Big Beautiful Bill Act (OBBBA), threats to the 340B Drug Pricing Program, Affordable Care Act (ACA) subsidy reductions, site neutrality reforms, and other headwinds.

“Three out of four CFOs report margins of 2 percent or less, so these systems are running on very thin margins,” David Wildebrandt said during BRG’s midterm election panel. “With H.R.1 [OBBBA], it’s a dual threat: you’re losing on both the financing side and the reimbursement side, plus eligibility. So you have people already in Medicaid, which is a difficult payer to begin with, moving to fully self-pay. That’s what’s troubling, because health systems are already cutting into the bone.”

Will the Democrats’ win change anything? The promises are certainly there, but significant change may be harder to come by while President Trump remains in office. We draw on insights gathered at BRG’s panel to answer five critical questions healthcare stakeholders are asking in the wake of the blue wave.

What policy actions will Democrats take on healthcare?

With Democrats in control of Congress, it’s likely they will take aim at significant healthcare reforms: restoring ACA subsidies, reversing Medicaid cuts, and ramping up oversight of agencies like the Department of Health and Human Services, National Institutes of Health, and Food and Drug Administration. Some may even put Medicare for All on the agenda.

Though major legislative moves remain unlikely as long as President Trump holds veto power, Democrats’ efforts will not necessarily be for naught. According to BRG’s John Barkett, policy development when power is split sets the stage for future actions, much as Republican work requirement policies during the Biden era were later codified in the OBBBA.

“It allows the public to see what you as a policymaker are working on and provides you the type of feedback that—if you were to pursue those efforts when you were in control of Washington—would make it more likely to pass because you’ve addressed certain issues that might have otherwise been roadblocks.”

Barkett also noted that Congress might try to amend the law before Trump leaves office depending on how OBBBA implementation fares: “It’s not uncommon for big bills, including Obamacare and Medicare, to be amended within a couple of years of passage.” With that said, Trump will likely view changes that favor hospitals as a concession and demand something in return.

In any case, health systems shouldn’t count on immediate relief. “The bottom line here is that revenue pressure from the OBBBA isn’t a one-year problem,” said BRG’s David Brueggeman. “It builds over the next decade, and the systems that come out of it in the best shape will be the ones that start adjusting the revenue and cost strategies now.”

How will the Trump administration act on healthcare policy?

Conventional wisdom holds that legislation tends to be harder to pass in the last two years of a presidency as various players jockey for position.

At the same time, now is when most presidents begin to think about how they will be remembered on key issues, Barkett pointed out. “The question I’m thinking about is what signals the president is giving about what he wants his healthcare legacy to be.”

For instance, Trump might be emboldened to act through Centers for Medicare and Medicaid Services (CMS) rulemaking, even as the Supreme Court has been constricting what the executive branch can do when it interprets statutes creatively.

What healthcare policy might be enacted during the last two years of the administration?

A range of bipartisan initiatives could gain momentum in the next two years, such as 340B, drug pricing, the No Surprises Act, and pharmacy benefit manager (PBM) reforms. Other areas where stakeholders may see movement include increasing rural healthcare funding, modernizing drug development, regulating healthcare AI, and revamping prior authorization processes.

Spending packages could very well be the way in which these and other bills get passed into law, especially as the federal debt continues to mount.

“There are things outside Congress’s control that force it to act,” Barkett said. “I’m thinking about deficit reduction. I recently saw a clip saying we’re on track to end the year with a debt-to-GDP ratio of over 100 percent; the last time that happened was just after World War II. Will that force Congress to act? If so, it will likely implicate healthcare spending and federal programs. We’ve seen curveballs before—most recently COVID—and outside events like that can really jolt what Congress focuses on.”

What should health systems do to prepare heading into 2027?

Wildebrandt and Brueggeman laid out steps that health systems can take now to prepare for the year ahead:

1. Develop a financial exposure plan. Study your specific market, model a payer mix, and map out where exposure lies. Leading health systems like HCA, Tenet, and Community Health Systems, for instance, have sophisticated models for what will happen to charity and uncompensated care, the number of uninsured patients, and resulting EBITDA. But remember: one size does not fit all, and each hospital will require a different plan.
2. Protect eligible patients as work requirements take effect. Heading into January, you can now model many coverage losses related to new work requirements. Standing up outreach centers to help with work requirement documentation and education also can limit eligibility loss.
3. Focus on cost optimization. Many health systems will need an additional 5 to 7 percent reduction in costs, extending beyond areas like labor and supply chains. A transformational roadmap can help visualize return on investment (ROI) timelines and establish effective governance. Organizational structures will need to evolve, however; cost optimization cannot remain a siloed initiative.
4. Explore integrated care models. Health systems must strive to get patients into the right setting and keep self-pay and uncompensated patients out of high-cost emergency departments. Partnerships with Federally Qualified Health Centers (FQHCs) and other community health organizations can help, as can expanding ambulatory access and consolidating certain services. “This is a return to roots: relearning value-based care, managing the health of a population, and preventing hospitalization,” Wildebrandt said.
5. Monitor state-level regulatory activity. In addition to outstanding state guidance on work requirements, healthcare leaders should keep an eye on a burgeoning trend: “The state is becoming a third party at the negotiating table,” as Brueggeman put it. Washington, for example, will cap hospital payments for state and school employee plans at 200 percent of Medicare starting in 2027 and set a floor of 150 percent of Medicare for primary care, taking what would traditionally be negotiated and creating floors and caps instead. Brueggeman continued, “The question is how the savings reach patients and what happens to patient access and capital investment along the way.”

How are health system leaders preparing for 2027 and beyond?

Gail Kosyla, CFO at AtlantiCare, said that the challenge facing the industry right now goes beyond the balance sheet. “As a CFO, I come back to two questions as we respond. First, will this protect patient access? Second, will this change strengthen the underlying economics enough to preserve our ability to make long-term investments?”

AtlantiCare is taking several steps to address current headwinds, from expanding clinic access to, improving revenue cycle processes developing partnerships with universities to bolster the organization’s workforce pipeline. AtlantiCare is also developing a long-term financial plan alongside its strategic one because, as Kosyla noted, “We need an operating model that aligns our resources with expected demand in our service area and adapts as coverage, reimbursement, and the economics of care change.”

For his part, Matt Brown, president of CommonSpirit Health’s South Region, said that with reimbursement levels unable to keep up with rising costs, “We’re not going to be able to cut our way to profitability.”

Instead, CommonSpirit is taking a series of actions alongside driving best-in-class cost management. “We’re working to become less acute and more ambulatory to lower the cost of care, but that takes capital. And we’re doing everything we can with payers to maximize reimbursement,” Brown said. “We’ve had markets go out of network with Medicare Advantage [plans] and recently get back in.”

On the payer negotiation front, Brown added: “We have to do everything we can to leverage our scale in negotiations with payers and with states to ensure that we don’t get hit with provider fee problems in places like Kentucky, Colorado, and California to the extent that H.R.1 projects.”

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