White House Releases "Great Healthcare Plan"

Today, the Trump Administration released the Great Healthcare Plan, a legislative framework designed to lower health care costs and address the recently-expired enhanced Affordable Care Act (ACA) subsidies. The plan includes a number of provisions that would lower overall health care costs and generate modest fiscal savings, and one provision – related to the ACA subsidies – that could substantially increase borrowing, depending on its design.

By our rough estimates, the cost-reducing provisions could reduce primary deficits by about $50 billion over a decade. The ACA changes could generate modest additional savings or increase primary deficits by up to $350 billion, depending on the design.

To lower health care costs, the plan would:

• Codify Most Favored Nation (MFN) prescription drug price deals: In recent months, the Trump Administration has signed several agreements with pharmaceutical companies where they agree to set certain drug prices at the low price offered in some other countries, generally for Medicaid. The plan calls for Congress to codify these agreements into law.
• Authorize More Over-the-Counter Drugs: The plan calls for allowing more pharmaceuticals to be available over-the-counter to consumers, rather than requiring a prescription. This proposal would likely reduce premiums and federal subsidies in part by making these drug purchases fully out-of-pocket (insurance does not generally cover over-the-counter drugs) and by reducing doctor’s visits related to getting prescriptions. Additionally, it may reduce drug prices by increasing competition and consumer involvement.
• Implement Cost-Sharing Reductions for ACA plans: The Trump Great Healthcare Plan calls for funding Cost-Sharing Reductions (CSRs) under the ACA. Funding CSRs would reinstate payments to health insurance companies to cover their cost, ending “silver loading” and reducing gross premiums – and as a result premium subsidies – for plans on the ACA exchanges.
• Reform Pharmacy Benefit Manager (PBM) payments: PBMs are intermediaries that negotiate drug prices with manufacturers and pharmacies. The White House plan says it would “end the kickbacks paid by pharmacy benefit managers (PBMs) to the large brokerage middlemen.” Although details are unclear, PBM reforms could lead to modest savings and cost reductions.
• Price transparency for insurers and providers: The White House plan would require all providers who accept Medicare or Medicaid and insurers to present clearer pricing information and increase penalties to encourage compliance. Additionally, it would require all insurers to post clearer information, including “plain English” statements on rates and coverage, company profits and claims paid, and tallies of rejected claims, among other things. Providers and insurers would also be required to respond clearly to questions about prices. This additional price transparency could modestly reduce overall health care costs.

Taken together, we estimate these changes are likely to save about $50 billion – though the actual savings will depend on details. While most of the provisions would result in modest deficit reduction, the bulk of the savings – $36 billion according to the White House (and consistent with CBO) – would come from funding CSRs.

At the same time, the plan’s ACA proposal could theoretically come with significant cost. According to their fact sheet, the White House plan “stops sending big insurance companies billions in extra taxpayer-funded subsidy payments and [would] instead send money directly to eligible Americans to allow them to buy the health insurance of their choice.”

This idea appears to resemble several recent proposals to allow ACA subsidy money to be deposited into tax-advantaged health savings accounts (HSAs), Flexible Spending Accounts (FSA), or other mechanisms where the money could be spent on premiums or to cover out-of-pocket health care costs like co-pays and deductibles.

The fiscal impact of this provision depends heavily on what the White House means by “extra taxpayer-funded subsidy payments.” If this refers to some or all the current law “base” ACA subsidies, the provision could very modestly reduce costs through more consumer-driven care. On the other hand, if the proposal is to use funding that might otherwise go to “enhanced ACA subsidies” – which expired at the end of 2025 – doing so would cost the federal government up to $350 billion over ten years.

The White House’s Great Healthcare Plan contains some ideas that could help to modestly reduce health care costs for the federal government and consumers of health care. However, authorizing up to $350 billion of additional subsidies to cover premiums and out-of-pocket costs would be extremely costly, regardless of whether those subsidies go directly to the insurance company or to health consumers.

If policymakers choose to revive or introduce any health subsidies, they should be thoughtful and cost-efficient in their design and ensure they have enough offsets to both cover the costs and reduce overall health care spending and deficits.

Ideas such as adopting site-neutral payments, reducing overpayments to Medicare Advantage plans or implementing reference pricing could help reduce costs for consumers and taxpayers alike.