President Trump could hit a trifecta regarding health care in the coming months by combining three of his priorities: lowering prices, improving efficiency, and empowering states. Here are a couple ideas on how to do that—alongside steps away from those goals being considered by Congress. Choices in the coming weeks and months could set the path toward or away from health care affordability for Americans.
Promises
In his 2024 run for a second term, President Trump made many promises to the American people. Below are three relevant to health policy.
Lowering Prices
“Starting on Day 1, we’ll drive down prices and make America affordable again.”
—Donald J. Trump, July 19, 2024
On his first day in office, President Trump directed his team to reduce prices for Americans. This includes prices for health care. Half of adults worry about paying medical bills. U.S. health care spending per person is twice as expensive as that in comparable nations—not because our residents use too much care (we use less) or too many people have health coverage (we cover fewer). Instead, it’s due primarily to high inpatient and outpatient service prices—and people with private insurance pay the most.
Increasing Efficiency
“A smaller Government, with more efficiency and less bureaucracy, will be the perfect gift to America on the 250th Anniversary of The Declaration of Independence.”
—Donald J. Trump, November 12, 2024
President Trump also created the Department of Government Efficiency (DOGE) to reduce unnecessary bureaucracy and wasteful processes. The U.S. health care system has higher administrative costs and complexity than comparable nations. Six in ten Americans report problems using health insurance due to complexity and most Americans worry about hidden fees.
Promoting Federalism
“Many states will be different. . . . At the end of the day it’s all about will of the people.”
—Donald. J. Trump, discussion of abortion policy, April 8, 2024
While the federal government has the tools to address high health care costs, President Trump has in the past looked to states on this topic, as he has recently on other topics such as abortion policy and national disaster response.
Toward Low-Price, Efficient Health Care through State Leadership and Choice
Trump could make good on his promises to lower prices, improve efficiency, and advance federalism in health care through numerous executive actions; below are two ideas.
Embrace Price-Lowing State Innovation Waivers
The Trump administration could embrace state-driven policies that lower health care prices. State Innovation Waivers (also called Section 1332 waivers) allow an administration to waive a large number of Affordable Care Act provisions to test state-developed alternative policies that meet four “guardrails.” These guardrails ensure that the program under the waiver would, when compared to what would occur without it, cover at least as many people, with as affordable coverage, and with as comprehensive coverage, without increasing the federal deficit. As of February 1, 2025, twenty states across the partisan spectrum had approved waivers. Waivers in states such as Washington State, Colorado, and Nevada include elements to reduce excessively high provider payment rates, the root cause of high health care costs. States have also implemented a range of policies to tackle medical debt of consumers that results from excessive prices, hidden bills, and underinsurance.
The Trump administration could dispel concerns that it will roll back state innovation that addresses health care prices through state action rather than private sector competition. A truly federalistic stance is to let states choose a path so long as it achieves the outcome of lower prices, all else held constant.
Support Efficiency in State Systems for Health Coverage Enrollment
The Trump administration could support states that want to lower delayed care, uncompensated care, hospital financial burdens, and medical debt by supporting efficient systems to get and keep people covered. In 2022, 60 percent of all uninsured people in the United States were eligible for either Medicaid or tax credits for a private plan through the Health Insurance Marketplace. President Trump could direct officials in charge of Medicaid and the Marketplace to continue and expand state options for continuous eligibility, simplified and streamlined eligibility policies, and use of existing secondary data systems to automatically verify eligibility.
President Trump could also direct DOGE to improve state eligibility and enrollment technology alongside federal systems. The executive order creating DOGE charged it with improving “the quality and efficiency of government-wide software, network infrastructure, and information technology (IT) systems.” Each state has its own Medicaid IT eligibility system—even though over 70 percent of Medicaid enrollment is the same across all states. Eligibility is even more similar across the twenty State-Based Marketplaces, yet none are able to truly share technology across state lines. The federal government could expand support for shared services across states, multi-state procurement, and advanced standards for efficiency, interoperability, data exchange, and account transfers between the Marketplace and Medicaid. This would reduce state bureaucracy and paperwork as well as the inefficient cost consequences of Americans being unnecessarily uninsured.
Similarly, DOGE could offer artificial intelligence (AI) policy, guidance, and support to state-run health coverage programs’ eligibility systems. With a tight labor market, states would especially benefit from AI that improves productivity of eligibility workers, call centers, and related staff.
Toward State Mandates, Higher Prices, and More Bureaucracy
The potential for the Trump administration to connect federalism to lower prices and improved efficiency would be countered by some of the proposals on a fifty-page document circulated by Congressional Republicans in January 2025. Policymakers aiming to support state flexibility to achieve lower prices and better efficiency should oppose policies such as several described below.
Prevent Taxing States through Cost Shifts
A number of proposals on the Congressional list would decrease federal spending simply by increasing state spending rather than by lowering overall health care prices or costs. This includes six different proposals that explicitly raise the state share of Medicaid cost to lower the federal share. These proposals’ cost shift to states totals over $1 trillion over ten years. This does not count the $900 billion per-capita cap proposal that would limit federal Medicaid spending per enrollee, leaving states on the hook for any excess costs from valid causes like new breakthrough therapies. No amount of state flexibility and federalism could enable states to maintain Medicaid coverage in the face of such large cuts in federal funding.
State residents would pay for such scaled-back federal financing, one way or another. If states cut what Medicaid pays for hospital care, chronic care, or prevention, such providers may limit services or be forced to close or consolidate, which would affect all residents, including those with private insurance who already pay higher prices for care. Alternatively, states may be forced to raise taxes to fund health care services since few have reserves given the constrained fiscal climate in states in 2025. The implications would extend beyond health care, potentially affecting states’ credit ratings.
Beware State Mandates that Increase Red Tape
Another proposal on the Congressional list would impose an across-the-board mandate for more staff and paperwork for Medicaid. All states would be required to implement work reporting requirements for enrollees. Past efforts have proven ineffective at the goal of promoting work: a study of Arkansas found that, after eighteen months of having the work requirement in place, there was no increase in employment—although 18,000 people lost coverage, 56 percent of whom delayed care because of cost. Additionally, nearly two-thirds of adults covered by Medicaid already work, with most of the other third disabled, caring for a family member, or otherwise likely exempt. The state cost of implementing such work requirements is high.
The federal savings from a Medicaid work requirement proposal are not from federalism, lower prices, or efficiency—but instead simply from shifting costs to states (over half the “savings” in a 2023 Congressional Budget Office analysis) and reduced health coverage due to the increased challenge of signing up and staying covered. As described earlier, more uninsured people in a state adds to its uncompensated care, delayed care, and medical debt. Additionally, according to a review of the research, while a work requirement in Medicaid does not increase employment, employment is increased by having Medicaid. Having health coverage is associated with worker productivity.
Looking Ahead
Most Americans agree that the federal government has a responsibility to ensure people have coverage. This includes President Trump, who said in a December 2024 interview, discussing the failure of his effort to repeal the Affordable Care Act in Congress, “I did the right thing from a human standpoint. But, you know, I’m sort of proud of my decision.” When asked about his concepts of a plan, he said, “If we come up with a better answer, I would present that answer to Democrats and to everybody else and I’d do something about it. But until we have that or until they can approve it—but we’re not going to go through the big deal.”
President Trump doesn’t have to wait on a national plan. States have experience, ideas, and interest in tackling high prices and inefficiency in health care, and the Trump administration can support them in doing so. However, it should oppose Congressional proposals that mistake federal spending reductions for health system savings, especially when they also would make Americans less healthy.
Tags: federalism, health care costs, health care reform, donald trump
Lowering Prices and Increasing Efficiency in Health Care through Federalism
President Trump could hit a trifecta regarding health care in the coming months by combining three of his priorities: lowering prices, improving efficiency, and empowering states. Here are a couple ideas on how to do that—alongside steps away from those goals being considered by Congress. Choices in the coming weeks and months could set the path toward or away from health care affordability for Americans.
Promises
In his 2024 run for a second term, President Trump made many promises to the American people. Below are three relevant to health policy.
Lowering Prices
On his first day in office, President Trump directed his team to reduce prices for Americans. This includes prices for health care. Half of adults worry about paying medical bills. U.S. health care spending per person is twice as expensive as that in comparable nations—not because our residents use too much care (we use less) or too many people have health coverage (we cover fewer). Instead, it’s due primarily to high inpatient and outpatient service prices—and people with private insurance pay the most.
Increasing Efficiency
President Trump also created the Department of Government Efficiency (DOGE) to reduce unnecessary bureaucracy and wasteful processes. The U.S. health care system has higher administrative costs and complexity than comparable nations. Six in ten Americans report problems using health insurance due to complexity and most Americans worry about hidden fees.
Promoting Federalism
While the federal government has the tools to address high health care costs, President Trump has in the past looked to states on this topic, as he has recently on other topics such as abortion policy and national disaster response.
Toward Low-Price, Efficient Health Care through State Leadership and Choice
Trump could make good on his promises to lower prices, improve efficiency, and advance federalism in health care through numerous executive actions; below are two ideas.
Embrace Price-Lowing State Innovation Waivers
The Trump administration could embrace state-driven policies that lower health care prices. State Innovation Waivers (also called Section 1332 waivers) allow an administration to waive a large number of Affordable Care Act provisions to test state-developed alternative policies that meet four “guardrails.” These guardrails ensure that the program under the waiver would, when compared to what would occur without it, cover at least as many people, with as affordable coverage, and with as comprehensive coverage, without increasing the federal deficit. As of February 1, 2025, twenty states across the partisan spectrum had approved waivers. Waivers in states such as Washington State, Colorado, and Nevada include elements to reduce excessively high provider payment rates, the root cause of high health care costs. States have also implemented a range of policies to tackle medical debt of consumers that results from excessive prices, hidden bills, and underinsurance.
The Trump administration could dispel concerns that it will roll back state innovation that addresses health care prices through state action rather than private sector competition. A truly federalistic stance is to let states choose a path so long as it achieves the outcome of lower prices, all else held constant.
Support Efficiency in State Systems for Health Coverage Enrollment
The Trump administration could support states that want to lower delayed care, uncompensated care, hospital financial burdens, and medical debt by supporting efficient systems to get and keep people covered. In 2022, 60 percent of all uninsured people in the United States were eligible for either Medicaid or tax credits for a private plan through the Health Insurance Marketplace. President Trump could direct officials in charge of Medicaid and the Marketplace to continue and expand state options for continuous eligibility, simplified and streamlined eligibility policies, and use of existing secondary data systems to automatically verify eligibility.
President Trump could also direct DOGE to improve state eligibility and enrollment technology alongside federal systems. The executive order creating DOGE charged it with improving “the quality and efficiency of government-wide software, network infrastructure, and information technology (IT) systems.” Each state has its own Medicaid IT eligibility system—even though over 70 percent of Medicaid enrollment is the same across all states. Eligibility is even more similar across the twenty State-Based Marketplaces, yet none are able to truly share technology across state lines. The federal government could expand support for shared services across states, multi-state procurement, and advanced standards for efficiency, interoperability, data exchange, and account transfers between the Marketplace and Medicaid. This would reduce state bureaucracy and paperwork as well as the inefficient cost consequences of Americans being unnecessarily uninsured.
Similarly, DOGE could offer artificial intelligence (AI) policy, guidance, and support to state-run health coverage programs’ eligibility systems. With a tight labor market, states would especially benefit from AI that improves productivity of eligibility workers, call centers, and related staff.
Toward State Mandates, Higher Prices, and More Bureaucracy
The potential for the Trump administration to connect federalism to lower prices and improved efficiency would be countered by some of the proposals on a fifty-page document circulated by Congressional Republicans in January 2025. Policymakers aiming to support state flexibility to achieve lower prices and better efficiency should oppose policies such as several described below.
Prevent Taxing States through Cost Shifts
A number of proposals on the Congressional list would decrease federal spending simply by increasing state spending rather than by lowering overall health care prices or costs. This includes six different proposals that explicitly raise the state share of Medicaid cost to lower the federal share. These proposals’ cost shift to states totals over $1 trillion over ten years. This does not count the $900 billion per-capita cap proposal that would limit federal Medicaid spending per enrollee, leaving states on the hook for any excess costs from valid causes like new breakthrough therapies. No amount of state flexibility and federalism could enable states to maintain Medicaid coverage in the face of such large cuts in federal funding.
State residents would pay for such scaled-back federal financing, one way or another. If states cut what Medicaid pays for hospital care, chronic care, or prevention, such providers may limit services or be forced to close or consolidate, which would affect all residents, including those with private insurance who already pay higher prices for care. Alternatively, states may be forced to raise taxes to fund health care services since few have reserves given the constrained fiscal climate in states in 2025. The implications would extend beyond health care, potentially affecting states’ credit ratings.
Beware State Mandates that Increase Red Tape
Another proposal on the Congressional list would impose an across-the-board mandate for more staff and paperwork for Medicaid. All states would be required to implement work reporting requirements for enrollees. Past efforts have proven ineffective at the goal of promoting work: a study of Arkansas found that, after eighteen months of having the work requirement in place, there was no increase in employment—although 18,000 people lost coverage, 56 percent of whom delayed care because of cost. Additionally, nearly two-thirds of adults covered by Medicaid already work, with most of the other third disabled, caring for a family member, or otherwise likely exempt. The state cost of implementing such work requirements is high.
The federal savings from a Medicaid work requirement proposal are not from federalism, lower prices, or efficiency—but instead simply from shifting costs to states (over half the “savings” in a 2023 Congressional Budget Office analysis) and reduced health coverage due to the increased challenge of signing up and staying covered. As described earlier, more uninsured people in a state adds to its uncompensated care, delayed care, and medical debt. Additionally, according to a review of the research, while a work requirement in Medicaid does not increase employment, employment is increased by having Medicaid. Having health coverage is associated with worker productivity.
Looking Ahead
Most Americans agree that the federal government has a responsibility to ensure people have coverage. This includes President Trump, who said in a December 2024 interview, discussing the failure of his effort to repeal the Affordable Care Act in Congress, “I did the right thing from a human standpoint. But, you know, I’m sort of proud of my decision.” When asked about his concepts of a plan, he said, “If we come up with a better answer, I would present that answer to Democrats and to everybody else and I’d do something about it. But until we have that or until they can approve it—but we’re not going to go through the big deal.”
President Trump doesn’t have to wait on a national plan. States have experience, ideas, and interest in tackling high prices and inefficiency in health care, and the Trump administration can support them in doing so. However, it should oppose Congressional proposals that mistake federal spending reductions for health system savings, especially when they also would make Americans less healthy.
Tags: federalism, health care costs, health care reform, donald trump