Healthcare Under Trump: Navigating Tariffs & Policy Shifts
Following President Donald Trump’s inauguration in January 2025, the healthcare industry has faced significant changes driven by his administration’s policies, particularly the imposition of tariffs on imported goods and a continued push for deregulation. These policies, coupled with key nominations and market reactions, signal a transformative period for healthcare.
Medicare Advantage: Continued Growth Amid Tariff Exemptions
Medicare Advantage remains a cornerstone of Trump’s healthcare agenda, with the administration advocating for its expansion. On April 3, 2025, Dr. Mehmet Oz was confirmed by the Senate to be the head of the Centers for Medicare & Medicaid Services (CMS). His confirmation continues the focus on the managed care model, as Dr. Oz has previously pledged to expand Medicare Advantage access. However, the market reaction since Inauguration Day has shown pessimism across the insurance industry, with UnitedHealth Group and Humana, both with large exposures to Medicare Advantage, posting stock declines since Inauguration Day. From January 20 to April 28, UnitedHealth Group fell (20.00%), while Humana declined (7.54%).
Despite this, a factor that may potentially bolster Medicare Advantage is the exemption of finished pharmaceuticals from Trump’s initial tariff policies, announced in April 2025. This exemption, outlined in an executive order, shields key drugs and compounds, mitigating immediate cost increases for Medicare Advantage plans reliant on imported medications. However, the administration’s proposal to impose tariffs of up to 25% on pharmaceutical imports introduces a degree of uncertainty for the industry. According to an analysis from EY, if this 25% tariff is implemented, prices are expected to increase by 12.9%. However, the exemption currently supports Medicare Advantage’s cost structure, reinforcing its growth trajectory.
Medicaid: Strained by Budget Cuts & Tariff Pressures
Medicaid faces significant challenges under Trump’s second term. The Department of Government Efficiency (DOGE), led by Elon Musk, has introduced proposals to reduce federal Medicaid funding and tighten eligibility requirements as part of the administration’s broader effort to reduce government spending. These cuts could impact Medicaid’s coverage for low-income families and children, who comprise nearly half of beneficiaries through Medicaid and the Children’s Health Insurance Program (CHIP). Market reactions have been mixed, with the Centene Corporation seeing a stock decline of (6.58%) from January 20 to April 28, while Molina Healthcare has experienced a stock gain of 7.65% over the same period.
Additionally, tariffs increase the difficulty of reducing spending. While pharmaceuticals are currently exempt, tariffs of 25% on imports from Canada and Mexico and potentially up to 145% on select Chinese goods began in April 2025. Approximately 69% of U.S.-marketed medical devices are manufactured abroad, with Mexico being the top exporter of medical goods into the U.S. These cost increases could put pressure on the Medicaid program and potentially strain providers’ operational budgets.
Impact on Providers: Supply Chain Disruptions & Cost Pressures
Healthcare providers and facilities, including hospitals, ambulatory surgery centers (ASCs), and physicians also face a complex landscape due to recent tariffs and potential regulatory shifts. Trump’s tariffs on imported medical supplies could escalate costs and disrupt supply chains for providers. Market responses reflect this concern, with major hospital operators like HCA Healthcare, Community Health Systems (CYH), Tenet Healthcare (THC), and Universal Health Services (UHS) seeing various stock moves from January 20 to April 28:
- HCA: 4.25%
- CYH: (20.30%)
- THC: (7.83%)
- UHS: (8.41%)
Surgery Partners, Inc., a key ASC operator, experienced a gain of 5.32% over the same period, with expectations that reduced regulatory burdens could potentially foster activity in the ASC sector. Potential increases in medical supply costs due to tariffs may lead some providers to adjust pricing strategies, which could contribute to higher costs for payers and patients, including possible premium increases.
However, some providers may benefit from Trump’s deregulation push, which aims to streamline operations and encourage market-based care models, potentially improving efficiency and patient care delivery. It remains to be seen how these changes will impact providers in the long term.
Other Major Changes: Leadership & Antitrust Policy
Trump’s healthcare appointments have signaled a shift toward deregulation and market-driven policies. On February 13, 2025, Robert F. Kennedy Jr. was confirmed by the Senate as Secretary of Health and Human Services. Previously Congress had passed a law directing CMS to increase oversight of underperforming hospices in 2020. However, the Trump Administration paused implementation of the program on March 13, 2025, reflecting its broader deregulatory approach.
On Inauguration Day, Lina Khan resigned as the Federal Trade Commission (FTC) chair, ending a tenure where she worked to slow corporate mergers. President Trump has appointed Andrew N. Ferguson, a current FTC commissioner, to succeed Khan. It remains to be seen how this change will impact the agency’s approach to businesses.
Looking Forward
The Trump Administration’s healthcare policies in 2025 are still taking shape, with many only recently being implemented. It also remains uncertain whether future trade agreements will mitigate the financial and operational effects of global tariffs. However, despite this lack of clarity on future tariffs and policies, the healthcare industry has seen wide impacts already, showcased by broad declines across the board in stock prices.
Healthcare organizations have been weighing cost management strategies with investments in domestic supply chains and technology to navigate this evolving landscape. Providers and payers must adapt to tariff-induced disruptions while leveraging deregulation to enhance efficiency. The full impact of the evolving tariffs on the healthcare landscape remains uncertain. As the Trump Administration continues to establish its leadership, its policy direction and priorities are still taking shape.
