The Trump administration’s fiscal year 2027 budget released April 3 proposes a $15.8 billion cut to HHS, while requesting $1.5 trillion for defense, a 44% increase.
The budget would dramatically reshape federal spending priorities across healthcare and national security. It would also restructure the federal health bureaucracy, eliminating familiar agencies, cutting $5 billion in programs deemed wasteful and replacing them with a new entity called the Administration for a Healthy America.
The Trump administration’s proposed fiscal year 2027 budget signals a sweeping transformation of federal healthcare spending.
Released on April 3, the plan calls for a $15.8 billion reduction to the Department of Health and Human Services while directing $1.5 trillion, a 44% jump, toward national defense.
For ASCs, the implications are significant. Here’s are five things to know:
1. HHS takes a major hit
The administration is requesting $111.1 billion for HHS in fiscal 2027, down 12.5% from the prior year. Officials have characterized the reductions as a necessary step to eliminate inefficient and ideologically driven programs and refocus the department on core public health functions.
This budget follows the enactment of the One Big Beautiful Bill Act, signed by President Trump roughly nine months ago, which included close to $1 trillion in Medicaid cuts. That legislation introduced work requirements, increased redetermination frequency, and placed new restrictions on state-directed Medicaid managed care payments.
The president has gone further in recent remarks, suggesting the federal government can no longer sustain simultaneous funding of Medicare, Medicaid, and childcare, NBC News reported April 2, and that states should increasingly shoulder those responsibilities while Washington prioritizes areas like defense.
2. NIH funding slashed, three institutes on the chopping block
The National Institutes of Health would lose approximately $5 billion under this proposal, with total NIH research funding dropping to $41 million. The administration has leveled sharp criticism at the agency, alleging misuse of funds, the spread of misleading health information, and support for programs it views as ideologically problematic.
Three institutes are slated for outright elimination:
- The National Institute on Minority Health and Health Disparities
- The Fogarty International Center
- The National Center for Complementary and Integrative Health
While substantial, is far less aggressive than the $18 billion reduction proposed in last year’s budget that Congress rejected, as did a separate proposal to consolidate many of NIH’s 27 institutes.
3. Meet the administration for a healthy America
In place of several existing agencies, the budget introduced the Administration for a Healthy America, a new agency. This consolidated body would absorb functions currently handled by the Health Resources and Services Administration, the Substance Abuse and Mental Health Services Administration, portions of the CDC, and the Office of the Assistant Secretary for Health.
The AHA would centralize nutrition services, food safety, chronic disease prevention and behavioral health programs under a single organizational structure. The administration says the consolidation would eliminate $5 billion in duplicative or misaligned programs.
4. Hospital preparedness program faces elimination
The $240 million Hospital Preparedness Program, which has long served as the federal government’s primary vehicle for helping hospitals build surge capacity, coordinate disaster response, and develop healthcare coalitions, would be cut entirely. The administration argues these functions can be folded into the CDC’s Public Health Emergency Preparedness Program and handled more effectively at the state level. The timing is notable. Hospitals are still working through the operational and financial lessons of the COVID-19 pandemic, and healthcare preparedness experts have raised concerns about the sector’s readiness for future emergencies.
5. AHRQ largely dismantled
The Agency for Healthcare Research and Quality would face a $129 million cut — effectively gutting most of the agency’s current work. The administration contends that much of AHRQ’s research overlaps with NIH and has proposed transferring select statistical and data functions to a newly formed HHS Office of Strategy.The 92-page budget proposal is available here.
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