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April 9, 2026 – On April 3, 2026, President Trump issued the fiscal year (FY) 2027 president’s budget. To support the request for the US Department of Health and Human Services (HHS), the administration released the FY 2027 Budget in Brief and agency/division congressional justifications. The budget represents the administration’s annual funding request to Congress for the following FY. It has traditionally been an opportunity for the administration to lay out its priorities and state publicly which programs and activities it wants to invest in and which it wants to cut. Congress can choose to accept all, some, or none of the funding recommendations. I recently wrote a Regs & Eggs blog post highlighting three things I was watching for in the budget submission, and now that the budget is out, let’s see whether it met or defied (at least my) expectations.
One major question regarding the FY 2027 budget was whether the administration would propose to restructure HHS as it did in the FY 2026 budget request (the first under the second Trump administration). Although Congress did not adopt the new framework in the Consolidated Appropriations Act, 2026, the HHS restructuring initiative remains an administration priority and represents HHS Secretary Robert F. Kennedy Jr.’s vision for how HHS can operate more effectively and best carry out his Make America Healthy Again agenda. Thus, I expected the FY 2027 president’s budget to re-propose the HHS restructuring and arrange the HHS budget as it did for FY 2026, with specific funding requests for all the new agencies and subdivisions that HHS plans to form and no such requests for existing agencies that HHS would like to eliminate.
I was mostly right. The FY 2027 budget assumes that the HHS restructuring will go forward. However, the budget includes a few tweaks to the initial restructuring plan. Here are some highlights of that plan, with the major changes from last year’s budget in bold.
| Agency office | Restructuring information |
| Administration for a Healthy America (AHA) | Like last year’s budget, the FY 2027 budget’s major restructuring initiative is the creation of AHA, which will combine the Office of the Assistant Secretary for Health, the Health Resources and Services Administration (HRSA), the Substance Abuse and Mental Health Services Administration, and several centers and programs from the Centers for Disease Control and Prevention (CDC) into a single unified entity. This consolidation is intended to reduce administrative duplication and improve coordination of health resources. |
| CDC | The National Center for Injury Prevention and Control, the National Center on Birth Defects and Developmental Disabilities, the National Center for Chronic Disease Prevention and Health Promotion, and the Ending the HIV Epidemic Initiative will be shifted to AHA. The National Center for Health Statistics will move to the Office of Strategy.
The FY 2027 budget proposes to establish the new National Center for Chemicals and Toxins within CDC. The center consolidates the following programs across HHS: the Agency for Toxic Substances and Disease Registry, the CDC’s National Institute for Occupational Safety and Health, the CDC’s National Center for Environmental Health, the US Food and Drug Administration’s (FDA’s) National Center for Toxicological Research, and the National Institutes of Health’s (NIH’s) National Institute for Environmental Health Sciences. |
| NIH | The budget proposes to consolidate the National Institute of Drug Abuse and the National Institute on Alcohol Abuse and Alcoholism into the new National Institute of Substance Use and Addiction Research. The National Institute for Environmental Health Sciences will move to the CDC. The budget proposes to eliminate the National Center for Complementary and Integrative Health, the Fogarty International Center, and the National Institute on Minority Health and Health Disparities. This contrasts significantly with the FY 2026 budget, which proposed to reorganize NIH’s institutes and centers into an eight-institute structure with realigned functions and streamlined research portfolios. The FY 2027 budget continues the policy to cap indirect cost rates at 15% to ensure that funds support direct scientific research rather than administrative overhead. |
| Centers for Medicare & Medicaid Services (CMS) | CMS will now be responsible for managing the 340B drug pricing program, formerly in HRSA. |
| Administration for Children, Families, and Communities | The budget assumes that the Administration for Community Living will be integrated into the Administration for Children and Families to create the new Administration for Children, Families, and Communities. |
| Office of the Secretary: Assistant Secretary for Civil Rights and Appeals | The office of the Assistant Secretary for Civil Rights and Appeals combines the Office for Civil Rights, the Departmental Appeals Board, the Office of Medicare Hearings and Appeals, the Office for Human Research Protections, the Office of Research Integrity, and the newly proposed Office for Animal Research Protections. HHS proposed a similar restructuring of these functionalities in last year’s budget, but called the new office the Assistant Secretary of Enforcement instead. |
| Assistant Secretary for Strategy | This new office will include the Assistant Secretary for Planning and Evaluation, the Agency for Healthcare Research and Quality, and the CDC’s National Center for Health Statistics. |
| Assistant Secretary for Consumer Product Safety | This new office will be responsible for overseeing all the responsibilities currently performed by the Consumer Product Safety Commission |
| Other changes | The budget reestablishes the Administration for Strategic Preparedness and Response (ASPR) and the Advanced Research Project Agency for Health (commonly known as ARPA-H) as their own divisions. Last year’s budget combined these entities into a new office called the Office of the Assistant Secretary for a Healthy Future.
The budget also separately funds the Office of the Chief Information Officer (OCIO) and the Office of the National Coordinator for Health Information Technology (ONC) within the Office of the Secretary. Last year’s budget proposed to establish a Chief Technology Officer, which would include OCIO and the Assistant Secretary for Technology Policy/ONC. |
The FY 2026 president’s budget request for HHS’s discretionary budget (funding that relies on congressional appropriations) was $95 billion, which represented an overall $32 billion (25%) cut from FY 2025 levels. While Congress did not accept these reductions (in fact, Congress provided a slight increase in funding for NIH), it was unclear whether the FY 2027 president’s budget would again propose these reductions in full.
HHS did include significant reductions in the FY 2027 budget, but not nearly as great as those found in last year’s budget. The budget requests $111.1 billion in FY 2027 in discretionary funding for HHS, which is a $15.8 billion (12.5%) cut from FY 2026 levels – so about half the reduction included in the FY 2026 budget request. Here are notable funding levels for key agencies (dollars in millions):
| Discretionary program (budget authority) | FY 2025 actual | FY 2026 president’s budget request | Cut proposed in FY 2026 president’s budget | FY 2026 actual | FY 2027 president’s budget request | Cut proposed in FY 2027 president’s budget |
| AHA | $20,202 | $14,058 | -$6,144 | $19,649 | $14,673 | -$4,976 |
| FDA | $3,576 | $3,167 | -$409 | $3,354 | $3,306 | -$48 |
| CDC | $4,666 | $4,116 | -$550 | $5,764 | $5,280 | -$484 |
| NIH | $44,470 | $27,506 | -$16,963 | $44,870 | $41,164 | -$3,706 |
| CMS | $4,137 | $3,464 | -$673 | $4,137 | $3,700 | -$437 |
While HHS still proposed cuts for each of these agencies compared to current levels, the department has decided not to cut as many activities within each agency (or to temper those reductions) and to make key investments. The starkest difference is NIH; HHS proposed a $3.7 billion reduction in this year’s budget, compared to the nearly $17 billion reduction proposed in last year’s budget. The main reason for this significant change is HHS’s decision not to proceed with a complete overhaul of NIH that would have combined all existing institutes into eight. Instead, HHS proposed fewer changes to NIH and would keep more of its overall structure intact.
Typically, president’s budgets include both discretionary budget requests and mandatory budget proposals (ideas for how to reform existing programs such as Medicare and Medicaid that do not rely on annual appropriations). Administrations have used budgets as opportunities to put options on the legislative menu for Congress to consider, and in some cases Congress has adopted some of the proposals.
The first Trump administration included numerous mandatory proposals in its budget requests. The FY 2021 budget, the last in President Trump’s first term, proposed several Medicare legislative reforms that, if they had been enacted by Congress, were projected to save Medicare approximately $756 billion over 10 years and to delay the Medicare Trust Fund’s expected bankruptcy date by more than 25 years. The proposals spanned many provider types and included reductions to both Medicare fee-for-service and Medicare Advantage spending. However, the FY 2026 budget only included discretionary requests. While recent legislation such as the One Big Beautiful Bill Act and the Consolidated Appropriations Act, 2026, included several modifications to Medicare, Medicaid, and the private insurance market, I anticipated that the administration might touch on other issues in the FY 2027 budget, including:
However, for FY 2027, the administration again decided not to include any Medicare or Medicaid proposals. Interestingly, the budget includes other legislative proposals across HHS. For example, the FDA’s request includes 27 legislative proposals to “advance the FDA mission, such as enhancing authority to provide oversight of critical foods to protect infants and children, and allowing FDA to strengthen enforcement authorities for tobacco and e-cigarettes.” There are also two legislative proposals for the CDC and a package of proposals for ASPR. Finally, the budget requests an additional $48 million in funding to support the ongoing implementation of the No Surprises Act.
Since this is the second year in a row in which the administration did not put forth any legislative ideas around Medicare or Medicaid in the budget, the administration may be shifting how it works with Congress on entitlement reform. Instead of putting ideas out through the budget, the administration might engage with Congress on various concepts behind the scenes. As with the release of the Great Healthcare Plan, the administration also could continue to announce new priorities and requests for legislative action outside of the budget process.
With the budget now out, it is time for the administration to “sell” it to Congress. Within the next few weeks, Secretary Kennedy will appear before various congressional committees six times to discuss the budget (although he could be asked questions on other topics as well during these hearings):
While it is unclear whether Congress will adopt any of the funding requests or plans for restructuring HHS, now that the budget is out, Congress should have a better idea of how programs currently operate and how HHS believes that they should run going forward. That is important information for Congress to consider as it determines final HHS funding levels for FY 2027.
Until next week, this is Jeffrey saying, enjoy reading regs with your eggs.
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