Proposed FY 2026 Budget Signals Major Cuts to HHS, Rural Health Programs

On May 30, 2025, the Trump administration released additional information about the President’s fiscal year (FY) 2026 budget request for Congress. Congress has begun the appropriations process in earnest, and though the President’s requested budget may not be fully embraced, this Republican-controlled Congress will likely attempt to implement big portions of the President’s preferences.

The budget proposes a restructuring effort and 25% spending cut for the US Department of Health and Human Services (HHS). Of relevance to hospitals, the proposed restructuring includes:

• Eliminating certain agencies, including the Health Resources and Services Administration;
• Moving management of the 340B program to CMS;
• Cuts to various agencies, including a 16% decrease for the Centers for Medicare and Medicaid Services;
• Creating a new Administration for a Healthy America (AHA), which would incorporate functions from several eliminated agencies, including HRSA and the Services Administration and Substance Abuse and Mental Health Services Administration;
• Eliminating several programs, including programs related to:
  • Rural hospitals, such as Rural Hospital Flexibility Grants, State Offices of Rural Health, and Rural Hospital Stabilization
  • Hospital strategic preparedness and response
  • HIV/AIDS, mental health, and substance use disorder prevention and treatment

Our partners at McDermott+, one of healthcare’s most trusted and respected policy and lobbying consulting firms, wrote a summary of the President’s FY 2026 budget request that provides an overview of the proposed funding changes and HHS restructuring.

The provisions included in this budget request will, if finalized, impact agencies that oversee and fund hospitals and eliminate programs that hospitals participate in and count on. Hospital leaders should be informed about the requested budgetary changes and the administration’s policy priorities.

McDermott+ offers valuable insights into what the FY 2026 President’s budget request means and how it could affect organizations. Read more to see what McDermott+ is saying about these proposals and how your organization could be impacted here.