Earlier this month, the Trump Administration released its Proposed Budget for Fiscal Year (FY) 2027. The President’s Budget marks a significant shift in priorities by increasing military and defense funding by 42% while decreasing non-defense funding by 10%, including a 12.5% decrease—a $15.8 billion cut—to the Department of Health and Human Services (HHS). The President’s Budget is merely a request for funds from Congress, who has the discretion on appropriating the funds. The Administration frames these reductions as part of an effort to streamline federal health programs, eliminate duplication, and refocus on what it describes as “core public health functions.”  

Biomedical research is a major target for payment cuts in the budget. The proposal calls for a $5 billion reduction in funding for the National Institutes of Health (NIH), along with the elimination of several NIH institutes, including the National Institute on Minority Health and Health Disparities and the Fogarty International Center. Administration officials argue that NIH has become too diffuse and insufficiently accountable, while researchers and health organizations caution that the reductions could slow medical innovation and undermine efforts to address health inequities.  

Public health agencies would also see significant changes, including the creation of a new federal agency by consolidating others. Funding for programs across the Centers for Disease Control and Prevention (CDC), the Substance Abuse and Mental Health Services Administration (SAMHSA), and the Health Resources and Services Administration (HRSA) would be reduced, and a new federal agency would be created called the “Administration for a Healthy America” (AHA). The budget also proposes transferring responsibility for the 340B Drug Pricing Program from HRSA to CMS and creating a new National Center for Chemicals and Toxins within CDC. 

Funding for programs to assist rural providers is being reduced. This includes a $102 million decrease in funding for Federal Office of Rural Health Program (FORHP) programs and the elimination of core programs including the Medicare Rural Hospital Flexibility Program (Flex), the State Offices of Rural Health (SORH), the Rural Hospital Stabilization Program, and the Rural Hospital Provider Assistance Program. The budget does provide $316 million for grant programs and technical assistance at FORHP. 

Preparedness programs, including those housed within the Agency for Strategic Preparedness and Response, are also slated for $356 million in cuts. The administration frames the reduction as part of a broader effort to streamline federal health agencies and refocus spending on what it characterizes as core priorities, while critics argue the cut could weaken readiness for future public health emergencies, including potential cuts to hospital preparedness grants. 

The Budget seeks increased funding for nutrition. $19 million are requested to expand access to nutrition services and an additional $8 million for a Telehealth Nutrition Services Network Grant Program. Increased funding is also being requested for preventing fraud and abuse. $2.8 billion for fraud, waste and abuse prevention through the Health Care Fraud and Abuse Control and Medicaid Integrity programs. The budget invests in modernizing federal health infrastructure, including Medicare claims processing (e.g., ClaimsCore), identity verification systems, interoperability and data sharing. 

While the budget does not directly reduce mandatory spending for Medicare and Medicaid, it reflects a fundamental shift in federal health care policy priorities for the Trump Administration: from expansive coverage and centralized funding toward constrained spending and decentralized control.