FY27 HHS budget proposal includes rural health gains, CDC cuts

HHS discretionary funding in FY27 would decrease by close to 4% from current appropriations, according to a budget proposal that advanced out of the House Appropriations Committee this month.

The $110.8 billion allocation would be roughly $4 billion lower than FY26 enacted funding. The budget appears to preserve more funding for traditional programs, relative to a Trump administration proposal that would consolidate agencies. Among other changes in the administration’s proposal, the Health Resources and Services Administration, the Substance Abuse and Mental Health Services Administration, the Office of the Assistant Secretary for Health, and parts of the Centers for Disease Control and Prevention would be folded into the newly formed Administration for a Healthy America.

At this stage, all budget documents are merely recommendations that could undergo significant modifications before getting ratified. With the Senate reportedly making little headway on its version of the budget and the political constraints of the midterm elections looming, a continuing resolution could be needed to keep government departments funded when the new fiscal year begins Oct. 1.

Democrats on the House Appropriations Committee voted against the proposed budget, which also would fund the Departments of Labor and Education.

Health Resources and Services Administration

Although HRSA overall would contract by $873 million year over year, the Rural Hospital Provider Assistance Program would receive $100 million, according to a committee budget report, representing a $75 million increase from FY26. The program supports rural hospitals with 50 or fewer inpatient beds and a wage index below 0.9. Funds can be allocated to clinical workforce retention efforts, with a maximum of 10% for administrative expenses.

Rural health funding overall would be $576 million, nearly $160 million more year-over-year.

Workforce development programs would be funded with $1.44 billion for physician training, nursing workforce development and rural workforce initiatives, a small increase from FY26. Funding specifically would increase for maternity care shortage areas.

Supported primary care programs, including community health centers (CHCs), would receive $1.86 billion, a slight decline from FY26. CHCs also receive mandatory funding under the Affordable Care Act (ACA).

The National Health Service Corps would maintain funding levels for loan repayment programs and provider placement in underserved communities, including expanded support for Indian Health Service facilities.

Amid a nearly $900 million overall cut to the agency, some of the programs that would have to make do with less are Ryan White HIV/AIDS funding, maternal-child health grants, ancillary workforce development programs (e.g., academic training grants), and telehealth and rural-based innovation pilots.

Centers for Medicare & Medicaid Services

The Appropriations Committee approved an amendment defunding CMS’s Wasteful and Inappropriate Service Reduction Model, a six-state pilot that applies AI-based prior authorization to selected services in traditional Medicare. Scheduled to run through FY31, the pilot would be terminated in FY27 if the amendment language passes Congress.

The FY27 budget would allow CMS to transfer up to $455 million from the Medicare trust funds to support program operations. No such transfer was included in FY26 funding, suggesting that Congress wants to bolster CMS’s ability to carry out its operations, including efforts to reduce fraud, waste and abuse.

Transfers from the trust funds would be prohibited from applying to Affordable Care Act (ACA) implementation. The House appears to be looking to exercise increased oversight of the ACA marketplaces, with the budget including a clause requiring submission of detailed monthly figures during open enrollment.

In a new policy, Medicare Advantage (MA) health plans that decline to cover abortion services would be statutorily protected from defunding. Instead, CMS would have to make actuarily adjusted payment changes. Among other political priorities implemented via the budget, federal funds would be off limits for research into advanced gender transition interventions.

Centers for Disease Control and Prevention

With an allocation of $8.1 billion, CDC would lose nearly $1 billion year over year, including $800 million for HIV/AIDS research.

Part of the CDC apportionment would be $924 million for preparedness against biological, radiological, chemical and nuclear threats. Areas of emphasis for the agency also would include infectious disease surveillance, outbreak response capacity and emergency infrastructure.

Reductions would affect chronic disease prevention programs, injury and violence prevention programs, global health funding, health equity and social determinants of health programs, and public health infrastructure grants to states.

Although chronic disease prevention is a top priority of HHS Secretary Robert F. Kennedy Jr., policymakers have talked about moving funding away from CDC grant programs and more upstream into areas such as research at the National Institutes of Health, nutrition policy at the Food and Drug Administration, and prevention-focused value-based payment models at CMS.

Administration for Strategic Preparedness and Response

ASPR’s Hospital Preparedness Program would lose the majority of its funding, dropping from nearly $300 million to $70 million. The program covers emergency preparedness coordination, disaster readiness, hospital surge planning and regional emergency coalitions. National biodefense preparedness and chemical and radiological response capacity would receive prioritized funding through other programs.

Policy priorities are seen in provisions for domestic manufacturing resilience and supply chain security. For example, ASPR would be prohibited from using federal funds to procure medical equipment or pharmaceuticals from Chinese companies unless there are no alternatives.

National Institutes of Health

NIH would stay roughly flat at $48.8 billion, a notable increase relative to the Trump administration’s proposal of $41 billion. No institutes would be combined or eliminated in the House budget, whereas the administration proposes the closure or consolidation of five institutes.

Extramural research grants appear to be largely protected in the budget proposal, although restrictions on multiyear grant obligations would continue. The ceiling on new multiyear commitments in FY27 could not exceed the FY25 level, according to an amendment passed by the Appropriations Committee.

The budget proposal does not appear to cap indirect research costs, which NIH tried to do in 2025 before a court ruling overturned the move.