Where We Agree With ChatGPT

• The White House submitted to Congress its recommendations on discretionary funding levels—which make up only 11 percent of federal healthcare spending and are separate from mandatory spending on Medicare and Medicaid—for fiscal year (FY) 2026 on Friday.
• The Department of Health & Human Services (HHS) would lose 26 percent of its discretionary funding under this budget framework, as part of a 23 percent cut to non-defense, discretionary spending across the federal government.
• Within HHS, the National Institutes of Health (NIH) face the largest cuts at $18B—a punishment for having “grown too big and unfocused”—while the Centers for Medicare & Medicaid Services would only be subject to a $0.7B cut to program management, with “no impact on providing benefits to Medicare and Medicaid beneficiaries.”
• The “Make America Healthy Again” initiative is budgeted $500M in order for HHS Secretary Kennedy to “tackle” a wide range of personal health and environmental issues.

TrustWorks Take: Congress usually views the White House’s annual budget request as more of a priority wish list than a formal policy demand, but the relationship between this Congress and the executive branch is far from usual. Congressional Republicans so far have been content to cede to President Trump their Constitutional power over taxation and spending levels, as exemplified by his tariffs and funding freezes. However, even this Congress, on track to be one of the least productive in modern history, must pass the annual appropriations bill at a minimum. With a three-seat majority in the Senate and a seven-seat majority in the House, Republican negotiators will have a difficult time resolving a growing number of “no-gos" demanded by members of their caucus. This “skinny budget” request doesn’t address mandatory spending on Medicaid or Medicare, but it still makes a point of saying, “This cut will have no impact on providing benefits to … beneficiaries.” To generate the kinds of savings House Republicans are targeting will require cuts to mandatory spending, starting with Medicaid benefits, which means Trump’s rhetorical commitment to “saving Medicaid” and the House Republican caucus’s deference to Trump will both soon be put to the test. 

2. CVS plans to stop selling Aetna plans in ACA exchanges.

• In its Q1 2025 earnings report last Thursday, CVS shared its decision to exit the Affordable Care Act (ACA) individual exchange business in 2026, in order to “focus” the company’s portfolio.
• Aetna’s ACA exchange business had been on a recent decline, now only making up 1M of its 27M covered lives, and is projected to generate significant losses this year.

TrustWorks Take: This decision by CVS is the intersection of at least three distinct trends: internal reforms at CVS, expected changes to the ACA market, and strategic shifts among payers. After a rough few quarters especially for Aetna, CVS announced a $2B cost-cutting initiative last August and followed with its dismissal of CEO Karen Lynch in October. The ACA exchanges are especially ripe for exit because the enhanced subsidies, in place since 2020, are set to expire at the end of this year. Without these subsidies, the exchanges could destabilize as risk pools shrink and enrollment skews towards less wealthy and healthy enrollees. Amid a declining market, payers with strong individual marketplace enrollment, like Centene and Elevance, will be eager to pick up the covered lives CVS is shedding. Save perhaps for UnitedHealthcare, most major payers are exiting markets and concentrating their efforts on business segments they can dominate—e.g. Humana exiting commercial for Medicare Advantage (MA), Cigna rolling back MA in favor of commercial growth, and now CVS leaving the exchanges behind. Ironically, this pursuit of segmented monopolies undermines the principle of market competition that inspired the creation of the ACA exchanges and justifies the existence of private insurance. 

3. Several states passing PBM reforms in absence of federal action.

• Last month, Arkansas Governor Sarah Huckabee Sanders signed a law that bans pharmacy benefit managers (PBMs) from owning or operating pharmacies in the state.
• In response, CVS Health shared that it is planning to close its 23 retail pharmacies across the state.
• While other states are considering similar bills, the Iowa Senate just passed a more technocratic PBM reform bill, imposing standards on pharmacy reimbursement levels and attempting to tie drug rebates to reduced insurance plan premiums.

TrustWorks Take: After stalled talks from Congress about PBM reform at the federal level, it’s refreshing to see Arkansas take direct action to address the roots of the issue. To be clear, there have been 186 state laws, at least one for every state, passed since 2017 that include provisions regulating PBMs. However, many of these laws resemble Iowa’s by trying to limit anticompetitive outcomes (e.g. by standardizing PBM payments or limiting patient cost-sharing), while Arkansas is addressing the source of anticompetitive behavior: vertical integration of pharmacies and PBMs. The relationship between pharmacies and PBMs is not reformers’ only area of concern—manufacturer rebates paid to PBMs also generate significant conflicts of interest—but banning this type of vertical integration means PBMs won’t have the same incentives to reward some pharmacies (which they own) over others (often independents). Unfortunately, as long as it’s just one small state with such a law on its books, companies like CVS will close or sell their pharmacies to preserve their PBM businesses—likely the more-profitable but potentially short-sighted decision, should PBM reform pick up steam. If enough states, let alone the federal government, adopt the policy that PBMs cannot own pharmacies, it would trigger a significant shakeup of the healthcare industry, as payers like CVS and Cigna would be forced to unwind their vertical integration strategies.

Listening to Your Physicians Before It’s Too Late
Sparked by credible rumors that a specialist physician group the next market over was debating secession from its health system network, physician disenfranchisement was elevated to be the “topic du jour” at a health system board meeting I recently attended. This system’s physician leaders were not in revolt—yet. Rather, they were demanding greater integration into and, crucially, say over the system’s strategic operations. The board was aligned on doing what it takes to retain their physicians, but some members expressed confusion as to whether their physicians wanted more freedom and autonomy or more organizational control and power. Weren’t these two things opposed?

This line of thinking reflects the attitude that physicians are merely employees to be managed, rather than governing partners at the system. The reality is that physicians, as varyingly unified groups, want more say over how much autonomy they, as employed individuals, should have. Many physicians want to be accountable partners in driving performance and improving care, yet they often find themselves without the strategic alignment, operational support, or shared authority needed to succeed. This disconnect is not about resistance to responsibility—it’s about the absence of a true partnership model between clinical leadership and the health system’s administrative structure.

With more physicians contemplating returning to private practice—despite the current environment where reimbursement pressures, operating costs and administrative complexities run high—health systems should see this as both a warning and a window of opportunity. Organizations that proactively reassess their physician enterprise strategy, invest in shared governance, and embed physician leadership can not only stem the tide but reverse it. Because when doctors start walking, it’s not just workforce disruption. It’s a sign your operating model may need a governance update and potential reboot.