Congress passes healthcare spending package, funding critical health programs

The Buzz This Week

On Tuesday, President Trump signed a $1.2 trillion government funding package that brings an end to the partial government shutdown that began Saturday. Narrowly passed by the US Senate and House of Representatives, the spending package includes $116.6 billion for the Department of Health and Human Services (HHS) for FY 2026.

As part of the deal, funding for the Department of Homeland Security (DHS) was split out from the larger appropriations package, a key demand by Democrats. DHS will be temporarily funded through a two-week continuing resolution (CR) while Congress seeks agreement on accountability measures for the Immigration and Customs Enforcement agency (ICE) and federal immigration enforcement.

Key healthcare provisions in the appropriations package include:

$116.6 billion to HHS in discretionary funds, including $49 billion to the National Institutes of Health (NIH) for research into cancer, Alzheimer’s, and other diseases.
Extension of Medicare telehealth flexibilities for an additional 2 years, through 2027.
Hospital at home program waiver is extended for 5 years through 2030.
Elimination of Medicaid disproportionate share hospital (DSH) cuts until FY 2028 and extension of Medicare-dependent hospital programs. 
Steps toward site-neutral Medicare payments. Health systems will be required to establish separate Medicare identification numbers for outpatient departments.
Physician payment enhancements for physicians participating in alternative payment models. 
Pharmacy benefit manager (PBM) reforms to increase PBM transparency, change compensation practices, and limit incentives tied to drug list prices.
Additional funding of key rural health, healthcare workforce, maternal and child health, and behavioral health programs.

Notably, the bill reduces HHS departmental “bureaucracy” spending by more than $100 million. It also formally removes dedicated funding for the Centers for Disease Control and Prevention’s (CDC’s) social drivers of health (SDOH) programs.

The agreement does not extend enhanced Affordable Care Act (ACA) subsidies that expired at the end of 2025, which resulted in premium increases and loss of coverage for more than 1 million Americans.

Why It Matters

The 2026 funding package reflects successful bipartisan efforts to move a major spending initiative through Congress and fund critical healthcare programs. This followed months of contention and uncertainty, including the administration’s moves to sharply cut HHS spending and lay off staff.

The final bipartisan agreement gives HHS an increase of $210 million over 2025 funding levels and $20 billion more than the Trump Administration requested. The agreement rejected White House proposals that would have reorganized the department, eliminated several agencies and institutes, and slashed the NIH. The final version ultimately retained funding for all 27 NIH institutes and centers and more than 200 health programs.

Several bipartisan healthcare priorities focused on costs and access are addressed in the bill, including flexibilities for telehealth and hospital at home programs and PBM pricing reforms. However, some broader reforms (such as Medicare physician payment restructuring and renewed ACA marketplace subsidies) remain unresolved as major policy differences persist between the parties.

Extension of Medicare telehealth flexibilities and waivers for acute hospital at home care are a relief to providers—especially following the partial shutdown last week, and the previous disruptions and service lapses during the historic 43-day shutdown in the fall that forced health systems to return hospital at home patients to facilities. 

Multi-year funding of these programs creates greater certainty for providers, payers, and patients alike who have had to rely on short-term extensions and temporary waivers over the past several years. For health systems, this enables operational scaling of programs to expand access and capacity with virtual health as a permanent access pathway.

Provisions in the bill to remove Medicare’s geographic requirements for telehealth and expand the types of practitioners allowed to provide telehealth services further expand opportunities for virtual-first access. However, they may also lead to increased operational complexity and greater regulatory and compliance scrutiny as these programs scale.

With the healthcare funding battle over for now, many questions remain regarding HHS policy directives and funding allocations across HHS departments and programs, given contentious debates around vaccine schedules, autism studies, and grant funding. Healthcare policy and its impact on individuals and communities will remain at the center of national conversation as the country moves toward midterm elections.