Leaked HHS budget signals $40B in cuts, assumes ACA subsidies expire

Title

Leaked HHS Budget Proposes $40B in Cuts, ACA Subsidies to Expire, Major Agency Overhaul

Keywords

HHS budget cuts 2026
ACA subsidy expiration
Trump administration health policy
NIH funding cut
health agency reorganization
health care workforce reductions
public health program eliminations
CMS enrollment decline
health insurance premium increases

Key Facts

$40 Billion Budget Cut
- The leaked proposal would reduce the Department of Health and Human Services (HHS) budget by approximately $40 billion, slashing it to a bit over $80 billion—a reduction of about one-third from fiscal 2025 levels1 2 7.
- Major health agencies face drastic downsizing, with the National Institutes of Health (NIH) budget dropping 40% from $47 billion to $27 billion and Centers for Disease Control and Prevention (CDC) funding cut by 44%1 2 3 10.

Expiration of ACA Premium Subsidies
- The plan assumes enhanced Affordable Care Act (ACA) premium tax credits will expire at the end of 2025, leading to higher insurance premiums and millions losing coverage1 5 8.
- States could lose $34 billion in GDP and $2 billion in tax revenue, with rural hospitals and providers hit especially hard. Job losses could total 286,000, concentrated in Medicaid non-expansion states5.
- The Congressional Budget Office projects a 4.3% increase in premiums and 3.8 to 4 million more uninsured people annually if subsidies lapse1 8.

Health Agency Reorganization
- The proposal consolidates or eliminates several agencies, including the Health Resources Services Administration (HRSA), Administration for Community Living (ACL), Substance Abuse and Mental Health Services Administration, Agency for Healthcare Research and Quality, and others1 2 7.
- Many program functions would be shifted to a new agency, the Administration for a Healthy America (AHA), with a $14–$20 billion budget—significantly less than the combined budgets of the eliminated agencies1 2 4 7.

Elimination of Public Health and Safety Net Programs
- The budget ends programs such as Head Start, community mental health clinics, HIV/AIDS prevention, teen pregnancy prevention, and initiatives for rural health care and minority populations4 7.
- The Food and Drug Administration (FDA) would end routine food facility inspections, relying instead on state-level contracts, and cut funding for several public health journals and disease programs1 2.

Workforce Reductions and Administrative Changes
- HHS Secretary Robert F. Kennedy Jr. has already overseen approximately 20,000 staff departures (layoffs, buyouts, retirements) as part of the department's streamlining efforts2 7.
- The reorganization aims to consolidate HHS functions and infrastructure, including a restructuring of the NIH into eight institutes and shifting various agency responsibilities to the new AHA1 10.

Potential Impacts
- If enacted, the proposal would significantly narrow the federal government’s health care role, reducing capacity for research, public health initiatives, and social safety net programs2 3 10.
- Expiration of ACA subsidies would make coverage less affordable, increase premiums sharply (sometimes doubling for certain enrollees), and cause widespread loss of insurance, with the harshest impacts in states that did not expand Medicaid and rural areas5 8.
- The cuts are expected to have cascading effects on hospitals, providers, state budgets, and the broader economy, with lower health care employment and potentially greater health disparities1 5.

Political and Legislative Context
- The proposal is preliminary—no final funding decisions have been made. Congress will ultimately determine whether these cuts and structural changes become law1 2 4.
- The OMB says the cuts are intended to fulfill legal obligations and help balance the overall federal budget2.

Summary Table:
Major HHS Budget Proposal Changes

| Area/Agency | Proposed Change | Estimated Impact |
|--------------------------|-------------------------------------|-------------------------------------|
| HHS overall budget | Cut by ~$40B (to ~$80B) | 30%+ reduction in capacity |
| NIH | Cut 40% (to $27B) | Fewer research grants, layoffs |
| CDC | Cut 44% (to $5.2B) | Narrowed focus, program eliminations|
| ACA subsidies | Expire end of 2025 | 3.8–4M more uninsured, premium hikes|
| HRSA, SAMHSA, ACL, AHRQ | Eliminated/merged into new AHA | Loss of programs, reduced services |
| AHA (new agency) | $14–$20B budget | Less than combined old agency budgets|
| Head Start, HIV programs | Eliminated | Loss of services, higher disparities|
| FDA | No routine food inspections | States take over, journal cuts |
| Workforce | ~20,000 staff reductions | Decreased agency expertise/capacity |

These leaked budget priorities indicate the most extensive overhaul of federal health policy in decades, signaling major funding and programmatic shifts if enacted1 2 3 4 7 10.