With a second Donald Trump presidency on the horizon, behavioral health providers are beginning to examine what that could mean for the industry.
The good news is that while the political landscape in the United States is sharply divided, measures to advance behavioral health forward remain a unifying issue.
However, I think it’s safe to say that the Trump and Biden administrations have starkly different approaches to addressing the behavioral health crisis in the country.
Still, this isn’t the first Trump administration, and there is a track record to look at regarding how his administration will handle behavioral health.
For example, the Trump administration approved a number of 1115 waivers, focused on work requirements for Medicaid beneficiaries and the payment for institutional behavioral health services, according to a recent Kaiser Family Foundation report. The Biden administration later withdrew the approval for work requirements.
Still, Trump’s often cavalier approach to governing means there are a lot of uncertainties about what exactly to expect. And so far, his picks for health care appointees have had unconventional–and in some cases unscientific–views on mental health, which are poised to stir up the status quo.
Despite the uncertainties, there are some indications of what could be on the docket. For starters, I think the deregulation of certain health care systems is a safe bet. This emphasis could mean less paperwork and oversight for behavioral health providers. Some industry groups hope that old regulatory requirements will be revisited and streamlined.
Additionally, the market saw a post-election bump, which could create a ripe environment for investors to resume dealmaking after a lull. However, it’s important to note that the post-election market boom has already begun to subside.
So while there are some indications of the direction that Trump would like the health care system to head, there are still many more uncertainties.
In this BHB+ update, I discuss:
How Trump’s emphasis on deregulations could impact behavioral health
The next administration’s potential impact on dealmaking
What an Robert Kennedy-led HHS means for mental health
Deregulation on the docket
The President-elect has made it clear that his administration will be looking to cut red tape–even proposing a new department focused on government efficiency. This focus could mean less paperwork and oversight for behavioral health providers in the future.
Some industry groups are optimistic about what fewer regulations could mean for providers.
“We anticipate the Trump Administration will focus more on reducing regulatory burden that does not improve access to quality care,” Debbie Witchey, CEO of the Association for Behavioral Health and Wellness, told BHB in an email.
“This means a higher likelihood that some issues still requiring regulatory attention, such as tele-prescribing and mental health parity, will be more appropriately addressed. There will likely be more focus on regulation that improves health outcomes and not just reporting of measures. Also, the recent Supreme Court Chevron decision in Loper-Bright gives more scrutiny to how agencies develop regulations and will likely affect how Congress writes legislation that would require regulatory actions.”
Shawn Coughlin, president and CEO at National Association for Behavioral Healthcare, said he foresees the Trump administration will renew its focus on regulatory relief.
Specifically, the administration can address older regulations that no longer serve the industry.
“The psychiatric hospital conditions of participation have not been revised since 60s,” Coughlin said. “There were small changes made to them in the 80s, but no substantial reworking or revisiting to see what is obsolete with the change in the delivery of medicine and the merit of services. So that’s one thing that we as an association will be putting on our priority list to share with the new administration.”
It’s not just provider regulations that could impact the industry. Trump’s focus on less oversight could mean that private equity, which has come under fire over the last few years, will have less federal scrutiny over its dealmaking during practices.
In late 2023, the Biden-Harris administration announced new initiatives to combat anti-competitive mergers and practices that could increase patient health care costs. Specifically, the initiatives made private equity firms, health insurers and health systems subject to additional surveillance to foster behavioral health-sector competition.
Some industry insiders have noted that these efforts have led to headline risk. But the potential decline in government oversight of deals, coupled with the market’s reception of the election results, could mean we see an uptick in behavioral health deals within the next few years.
Additionally, interest rates are coming down, which makes capital more affordable, and could spur on a new wave of M&A activity in the sector.
Still, the previous Trump administration emphasized bolstering competition in health care through transparency, which is aligned with these Biden-era efforts.
Medicaid could take a hit
Although the Trump administration is looking to deregulate most government areas, one area where we could see more requirements is Medicaid.
In his previous administration, Trump signed off on 13 Section 1115 waivers, which tied Medicaid eligibility to meeting work and reporting requirements. The Biden administration later withdrew these requirements, but I wouldn’t be surprised if they resurface under the new administration.
These efforts could mean that thousands of individuals lose their coverage. These moves could impact behavioral health providers that offer care to Medicaid populations. While providers have already weathered the storms of Medicaid redeterminations, this could lead to even more uninsured patients.
Additionally, Trump has previously discussed appealing and restricting the Affordable Care Act, though he has vowed to keep the act in place until he can find a better solution. During his debate with Vice President Kamala Harris, Trump said he had “concepts of a plan” for replacing the ACA, though further details remain sparse.
Since then, Trump has tapped daytime TV star Dr. Mehmet Oz to head up The Centers for Medicare and Medicaid (CMS). Oz has been a critic of the ACA in the past. Instead, he has previously proposed a “Medicare Advantage for All” plan. Though what an Oz-led CMS agency will look like is still unclear.
What a Kenedy-led health and human service department could look like
But Oz isn’t the only health care nominee that Trump has announced. Trump recently named Robert Kennedy Jr. as his nominee for secretary of the Department of Health and Human Services.
Kennedy hasn’t historically been a champion of the traditional behavioral health system. In the past, he has said vaccines are linked to autism–a rumor that has been debunked.
Additionally, Kennedy remains skeptical about common medications, such as SSRIs, used to treat behavioral health conditions.
Kennedy has advocated for “wellness farms”, funded through the taxation of legalized marijuana, where individuals with a slew of behavioral health conditions, including depression and substance use disorder, can go to recover without illegal drugs, such as opioids, as well as legal drugs such as SSRIs.
So, what does this mean for the behavioral health industry? While it’s hard to say exactly what a Kennedy-led health and human services agency will look like, I would anticipate a shift in funding away from traditional autism, mental health and substance use disorder research.
Instead, there could be an increased focus on alternative treatments for behavioral health conditions. Kennedy has frequently spoken about the connection between food and various behavioral health conditions, including autism. There could be an increase in funding for these efforts.
Psychedlics could also get more attention. Kennedy has said he will put an end to what he calls the FDA’s “aggressive suppression of psychedelics.” Earlier this year the FDA rejected Lykos Therapeutics’ application for its midomafetamine (MDMA)-assisted therapy for treating PTSD. If Kennedy’s nomination goes through he will be in charge of the FDA.
Additionally, there may be a renewed focus on addiction care that does not use medication-assisted-treatment (MAT). Kennedy, who is in recovery himself, has spoken extensively about the benefits of faith-based recovery programs, such as Alcoholics Anonymous.
MAT services are hailed as the gold standard of care for people with opioid use disorders.
Conclusion
While the industry insiders we spoke with here at BHB said there is still a lot of uncertainty about what Trump’s second term means for behavioral health, there are hints of what to expect.
Providers and payers can expect to see more regulatory relief and potentially some changes to older behavioral health policies.
Dealmaking could get a boost due to less regulatory scrutiny and softening interest rates.
Meanwhile, Medicaid could see cuts and likely more states will get 1115 waivers to drop more beneficiaries.
As for a Kenedy-led HHS, I’d say look out for more alternative treatments in mental health surfacing, and less funding for traditional behavioral health care.
