RFK Jr. officially becomes HHS secretary as pressing healthcare policy questions mount

Robert F. Kennedy Jr. was sworn in Feb. 13 as the new secretary of HHS, and current events in healthcare policy make clear that he’ll be busy in the role.

With the Senate having confirmed him by a partisan vote of 52-48, Kennedy faces urgent matters aside from generating momentum for his signature policy of addressing what he calls the “epidemic” of chronic disease in the U.S.

To help advance that policy, President Donald Trump followed Kennedy’s confirmation by signing an executive order affirming that the federal government will “aggressively combat the critical health challenges facing our citizens, including the rising rates of mental health disorders, obesity, diabetes and other chronic diseases.”

Policies articulated in the order promote transparency in healthcare research and a focus on “gold-standard research on the root causes of why Americans are getting sick.” HHS agencies also are instructed to examine the nation’s food supply.

In the provision that applies most directly to the healthcare regulatory infrastructure, agencies are directed to “ensure the availability of expanded treatment options and the flexibility for health insurance coverage to provide benefits that support lifestyle changes and disease prevention.”

Trump also said Kennedy, as HHS secretary, will chair a new Make America Healthy Again Commission that includes various cabinet-level roles and, initially, will look to advise the president on how to address the prevalence of childhood chronic disease. A first report on that issue is due within 100 days.

Kennedy also is believed to be aligned with the ongoing effort of Elon Musk’s Department of Government Efficiency to shrink the size of the federal workforce. There was no initial news of mass layoffs at HHS agencies.

Feb. 14 update: According to reports, roughly 5,200 layoffs are taking place among the 80,000-strong workforce across HHS agencies. The layoffs mostly affect probationary employees, meaning those in their first or second year in their position. At CDC, the Epidemic Intelligence Service was said to be a specific target for the workforce cuts.

Tightening purse strings

Kennedy also will be responsible for overseeing the application of healthcare spending cuts stemming from the FY25 budget reconciliation process.

House Republicans formally started that process Feb. 12, releasing a resolution that was amended the next day. The amended version formally sets a target of $2 trillion in 10-year spending cuts to partially offset trillions in tax cuts and a debt-limit hike.

Specifics of the spending cuts remain to be determined. The House Energy and Commerce Committee, which oversees the lion’s share of federal healthcare spending, is tasked with trimming at least $880 billion through FY34.

In a Feb. 11 news conference, Speaker Mike Johnson (R-La.) said probable cuts to Medicaid will not be draconian. Among potential policies he said could be implemented are work requirements for able-bodied beneficiaries and intensified efforts to root out fraud, waste and abuse. Comparatively drastic steps such as per capita caps and slashed federal funding for the expansion population are not pending, he said.

That outlook conceivably would change if staunch deficit hawks on the Republican side gain more influence over the process. For example, Rep. Ralph Norman (R-S.C.), a member of the House Freedom Caucus, said Feb. 12 that per capita Medicaid caps should be in the mix. Norman’s support may well be needed, given the slim Republican majority in the House.

Another wild card is that Senate Republicans were set to release their own budget resolution with a focus on border security and defense spending. The tax-cut extension, which will cost an estimated $4.5 trillion over 10 years, would wait until later in the year under that scenario, allowing initial spending cuts to be less substantial.

A Medicare-related policy that received a mention in preliminary discussions about the budget would implement comprehensive site-neutral payment requirements.

Teaching hospitals take a hit

A key budgetary development that took place before Kennedy’s confirmation was a payment cut to research grants made to academic medical centers through the National Institutes of Health (NIH), an HHS subsidiary agency.

As of Feb. 10, the grants are supposed to include a 15% cap on indirect costs such as overhead-related spending. That amount traditionally has been negotiated between NIH and the individual institution, and the new cap represents a significant reduction. Across the agency, indirect costs in FY23 came out to roughly 27%, and at some institutions the rate is well over 50%.

The cap applies not only to future grants but to upcoming payments through existing grants.

“NIH is obligated to carefully steward grant awards to ensure taxpayer dollars are used in ways that benefit the American people and improve their quality of life,” the agency stated. “Indirect costs are, by their very nature, ‘not readily assignable to the cost objectives specifically benefited’ and are therefore difficult for NIH to oversee.”

The policy change could have a significant impact on hospital finances.

“This announcement will mean less research,” the Association of American Medical Colleges (AAMC) said in a written statement. “Lights in labs nationwide will literally go out. Researchers and staff will lose their jobs.”

AAMC and several co-litigants obtained an injunction from a Massachusetts federal judge, preventing the new policy from taking effect. More than 20 states lodged a separate lawsuit over the matter in the same court. That filing cites the example of the University of Michigan, which would lose an estimated $181 million in annual funding.

“This would impact 425 NIH-funded trials currently underway [at the university], including 161 trials aimed at saving lives,” the lawsuit states.

All eyes on Kennedy

Kennedy’s confirmation essentially was guaranteed after Sen. Bill Cassidy (R-La.), a key vote on the Finance Committee, agreed to put aside misgivings over the new secretary’s views on vaccination policies. Sen. Mitch McConnell (R-Ky.) joined all 47 Democrats in opposing Kennedy.

In remarks Feb. 4 on the Senate floor, Cassidy, a physician who once practiced at a government-run hospital, said he received assurances from Kennedy in private conversations following the confirmation hearings.

“Mr. Kennedy and the administration reached out seeking to reassure me regarding their commitment to protecting the public health benefit of vaccination,” Cassidy said. “To this end, Mr. Kennedy and the administration committed that he and I will have an unprecedently close, collaborative working relationship if he is confirmed. We will meet or speak multiple times a month.”

Cassidy said Kennedy committed to maintaining the CDC’s Advisory Committee on Immunization Practices and to preserving posted CDC statements disavowing a link between vaccines and autism. He also pledged to consult with the Senate before making changes to federal vaccine-safety monitoring programs.

Kennedy’s goals for Medicare and Medicaid are murky, including because he at times seemed to conflate the two programs during his confirmation hearings. He talked about better targeting Medicaid to the poorest Americans and said he’s happy with his own Medicare Advantage plan. He also said improving the state of rural healthcare access will be a focus area, with telehealth as a key mechanism.

That approach seemingly would require Congress to extend Medicare telehealth waivers that have been in place since the pandemic and most recently were extended through March 31.

More information about the administration’s plan for Medicare and Medicaid is expected to be forthcoming during the confirmation process for Dr. Mehmet Oz, the nominee to lead CMS. The Senate has yet to schedule Oz’s confirmation hearing.