Project 2025: A Conservative Agenda to Reshape American Healthcare

Project 2025

A Conservative Agenda to Reshape American Healthcare

Project 2025 lays out a conservative roadmap to overhaul federal health policy, with proposed changes that could drastically reshape how healthcare is financed and delivered. Although president-elect Trump distanced himself from Project 2025, many of its architects are anticipated to hold influential positions in the upcoming administration, bringing these policy proposals closer to reality. Here’s a closer look at the Project 2025’s healthcare highlights and what they could mean for commercial and federal insurance programs carriers and consumers.

Direct Primary Care (DPC): Moving Away from Traditional Insurance Models

Project 2025 proposes to expand access to Direct Primary Care (DPC), a model where patients pay a monthly fee for expanded access to their primary care physician, bypassing traditional insurance for routine care. The plan encourages patients to maintain insurance for specialized and inpatient services only. This shift could reduce reliance on traditional insurance for basic healthcare, especially in regions that heavily promote DPC. For large employer group carriers, such as the Federal Employees Health Benefits Program, DPC’s expansion may shrink demand for traditional insurance products, presenting a strategic challenge to insurers who must navigate a landscape where primary care increasingly operates outside the insurance framework.

Federal Employees Health Benefit Program (FEHB)

The proposal to align FEHB benefits and government contribution towards premiums with private-sector standards -aimed at lowering federal employee compensation costs - suggests potential modifications to the FEHB structure. Coupled with Project 2025’s recommendation to make Medicare Advantage the default option for Medicare-eligible federal employees, these changes could reduce FEHB enrollment and premiums over time. For FEHB carriers, this could mean adapting to a new risk pool and revenue structure as the federal employee market undergoes these cost-cutting transformations. For consumers who are already experiencing steep increases in FEHB premiums, decreasing the portion of their premium paid by the government could mean fewer choose to enroll in FEHB and PSHB options. 

Medicaid: Tighter Controls and State-Level Flexibility

Proposed Medicaid reforms include stricter eligibility requirements, personal financial responsibility for healthcare costs, and the introduction of work requirements for able-bodied beneficiaries. By moving Medicaid financing toward a model like block grants, Project 2025 leverages reduced federal oversight and increased state flexibility. These changes may lead to varied Medicaid standards across states, potentially adding operational complexity for carriers involved in multiple Medicaid markets, especially if states take widely different approaches to benefits and eligibility.

Revisiting the No Surprises Act: Shifting Dispute Resolution Approaches

Project 2025 suggests modifying the No Surprises Act to emphasize transparency rather than mandated arbitration in billing disputes between insurers and providers. This shift from mandated arbitration to a “truth-in-advertising” approach could raise questions about fair provider reimbursement and consumer protection. If disputes over out-of-network billing are less regulated, carriers may encounter increased pressure to balance administrative simplicity with equitable payment practices.

Shared Savings and Reference Pricing Models: Cost-Control Mechanisms

The roadmap includes recommendations to promote reference pricing, where Medicare patients are rewarded for choosing lower-cost providers in value-based payment models. Additionally, Project 2025 recommends reversing recent drug pricing reforms that introduced price controls, particularly in Medicare Part D. While this may offer cost containment options, insurers with Part D offerings will likely face new regulatory and administrative challenges, especially if reference pricing mandates affect provider networks and limit patient choice - carriers may find themselves navigating the complexities of both increased patient control over cost choices and provider reluctance to participate in these new, often lower-reimbursement arrangements.

Splitting Subsidized and Non-Subsidized Affordable Care Act (ACA) Markets

The proposal to separate ACA exchange markets into subsidized and non-subsidized segments suggests a shift that could impact insurance carriers’ regulatory obligations. The subsidized segment would serve lower-income individuals who qualify for federal subsidies, while the non-subsidized segment would serve those who do not qualify. For carriers, this division could bring complexities in balancing regulatory requirements across distinct market segments, especially if compliance standards vary between them. If non-subsidized plans are exempt from certain ACA requirements, they may not need to include the essential health benefits mandated for ACA-compliant plans (e.g., mental health services, maternity care, etc.). With distinct regulatory environments, consumers could face a more complex decision-making process, as they weigh the lower premiums and flexibility of non-subsidized plans against the comprehensive benefits and protections of ACA-compliant plans. 

Project 2025 writers claim the subsidized and non-subsidized segmentation under the ACA is aimed to manage regulatory flexibility and affordability; distinct from state-based high-risk pools, designed to provide separate, funded coverage for individuals with pre-existing conditions and high medical needs. These pools required state subsidies and/or federal support due to the high costs associated with covering only high-risk individuals.

High-risk pools historically targeted individuals with pre-existing conditions who were often denied or charged higher premiums in the individual market, pre-ACA. These pools provided coverage for those with higher medical needs but typically faced high premiums and limited benefits due to the high cost of care for these individuals.

Hospital Price Transparency: New Costs for Carriers?

Project 2025 emphasizes enhancing hospital price transparency, with a call for clarity in cost and quality metrics. For insurance carriers, compliance with these transparency requirements could support cost management goals but also add layers of administrative effort. Adapting to new data standards and ensuring this information is accessible to beneficiaries could place further operational and technological demands on carriers.

Expanding Association Health Plans (AHPs), Short-Term Limited Duration plans (STLDs), and Health Reimbursement Arrangements (HRAs)

Within the world of commercial insurance, proposals to expand AHPs, STLDs, and HRAs reflect a move toward offering more options outside traditional ACA markets. 

Their historically limited coverage and gaps in essential services - such as mental health and maternity care - have often led to consumer dissatisfaction. Insurance carriers may face challenges in catering to these markets, as the demand for lower premiums competes with the need for robust, comprehensive coverage, potentially leading to higher administrative complexity and compliance risks.

Consumers have reported gaps in coverage and found AHPs limited in benefits compared to ACA plans. AHPs have faced regulatory scrutiny, especially under the ACA and more recently in federal courts, which restricted their expansion. 

STLDs have been criticized for limited benefits and exclusions for pre-existing conditions, with some consumers unaware that these plans do not cover essential health benefits mandated by the ACA. The industry has faced criticism for marketing practices around STLDs, with some regulators accusing insurers of failing to clearly disclose coverage limitations. 

HRA funds may not always cover all needed healthcare expenses, depending on employer contributions and eligible expenses. Administrative complexity for HRAs in employer sponsored coverage can be significant, as insurers often need to coordinate with employers on plan options and compliance with IRS rules. 

Telehealth and Rural Health Initiatives

Project 2025 calls for investment in telehealth and rural healthcare infrastructure, including broadband expansion to support virtual care. While these initiatives could improve healthcare access in underserved regions, the financial and operational burden on all carriers is non-trivial. Building and maintaining network flexibility, particularly in areas with lower service utilization, could drive up costs and demand significant investments in infrastructure adaptation.

Pharmacy Benefit Managers (PBMs): Drug Shortages and the Reliability of Generic Drug Manufacturing 

The plan suggests that PBMs, along with wholesalers, should identify and prefer drugs produced at more reliable manufacturing facilities. This recommendation comes alongside an FDA initiative to implement a graded inspection system to acknowledge facilities that exceed minimum reliability standards. While emphasizing reliability may enhance drug quality, it also implies higher sourcing costs, potentially impacting overall drug pricing structures. Carriers would likely rely on PBMs for enhanced quality control, which could increase administrative demands in vetting suppliers. Consumers, especially those reliant on affordable generic medications, may experience limited access or price hikes as PBMs and wholesalers adjust to the new reliability-focused sourcing model. However, enhanced reliability could lead to fewer drug shortages, potentially benefiting patient care in the long term.

Limiting Reproductive Healthcare

Project 2025 outlines significant restrictions on reproductive healthcare, aiming to reinforce limitations on abortion services and remove specific provisions related to contraception. The project suggests removing coverage for certain forms of emergency contraception, such as the “week-after-pill,” due to its classification as a potential abortifacient. The plan calls for eliminating federal funding for abortion-related services and enforcing strict guidelines on abortion-related training for medical professionals. It recommends that state medical schools adopt "opt-in" policies for any abortion training to respect individual providers' personal and religious beliefs. The document also calls for the withdrawal of guidance that directs pharmacies to stock and dispense first-trimester abortion medications, emphasizing a preference for policies that prioritize "conscience protections" over reproductive health access. The project also prohibits funding for transportation out of state for abortion services, seeking to prevent the use of federal resources to support such activities. This measure aims to deter "abortion tourism" by restricting travel-related assistance and removing policies that facilitate access to out-of-state abortion care. These restrictions disproportionately impact individuals living in states with limited abortion access following the overturn of Roe v. Wade. Consumers in these regions face heightened barriers to obtaining reproductive care, including increased financial and logistical challenges. The prohibition on covering out-of-state transportation adds an additional layer of difficulty, making it even harder for individuals to access timely and safe reproductive services. These policies exacerbate inequalities in healthcare access, particularly affecting low-income and marginalized communities.

Eliminating Gender Affirming Care 

Project 2025 promotes a rollback of federal support for gender-affirming care, including withdrawing guidance under the Ryan White HIV/AIDS Program that allows funds to be used for gender-affirming care, and re-establishing federal definitions of sex based solely on biological factors, thereby excluding gender identity as a protected category under anti-discrimination laws like Section 1557 of the ACA. This change would end federal requirements for health programs to provide gender-affirming treatments as part of their nondiscriminatory obligations. The removal of gender-affirming care and restrictions on reproductive health could restrict access to vital services for marginalized populations, impacting mental and physical health outcomes. 

Diversity, Equity, and Inclusion (DEI) Programs

Project 2025 features a strong stance against DEI initiatives, advocating for dismantling DEI frameworks within agencies like USAID, including the removal of DEI scorecards, DEI committee positions, and the Chief Diversity Officer role. This includes removing DEI compliance requirements from federal contracts and grants. This change could significantly impact government contractors, including health insurance carriers, by restricting their ability to discuss or maintain DEI initiatives while retaining federal contracts. Contractors may need to align their internal policies and practices with the new restrictions, potentially limiting innovation and outreach efforts aimed at addressing health disparities. The diminished focus on DEI could leave historically underserved communities with fewer resources to address their specific health challenges.

The plan's recommendations also risk diminishing federal funding opportunities for organizations that focus on racial and social equity in healthcare. This could further exacerbate health disparities, as historically underserved communities may receive fewer resources to address their unique health challenges.

While Project 2025 does not explicitly address the National Committee for Quality Assurance (NCQA) or its role in healthcare quality standards, the elimination of DEI-related requirements may indirectly affect NCQA's ability to promote equity-focused quality measures. Health insurers and providers may deprioritize initiatives aligned with DEI, potentially undermining comprehensive quality metrics that account for disparities in care outcomes​

Wrap Up

The healthcare reforms outlined in Project 2025 paint a stark vision for the future of health policy, pushing for aggressive cuts, deregulation, and a shift toward market-driven models that prioritize cost-cutting over comprehensive care. Marginalized groups, low-income individuals, and those with chronic conditions could bear the brunt of these changes, as coverage for essential health services may be reduced or eliminated in restrictive insurance offerings. For healthcare insurers, this plan introduces significant risks and burdens: insurers will face fragmented compliance requirements across subsidized and non-subsidized markets, heightened administrative costs to manage expanded consumer choice, and pressure to reduce benefits for vulnerable populations. In this harsh new environment, insurance companies must brace for complex operational challenges, potential declines in consumer trust, and a regulatory landscape that may sacrifice patient protections in favor of perceived economic gains.