What healthcare sales professionals need to know.
By Maggie Davis, Director of Government Relations, Health Industry Distributors Association
Uncertainty has been the key theme of 2025, especially within the healthcare industry. From tariffs to the One Big Beautiful Bill Act (OBBBA), federal policy changes are reshaping the healthcare landscape. Four key trends are expected to shape healthcare heading into 2026.
Cuts to federal healthcare spending
The President signed OBBBA into law in July 2025, setting up sweeping changes to the health insurance landscape. Over the next 10 years, the Congressional Budget Office estimates that the federal government will spend $1 trillion less on Medicaid. Those cuts won’t happen right away. The reductions in Medicaid spending are scheduled to start in late 2026, with most of the spending cuts taking effect after 2028. Pending Medicaid cuts could have a disproportionate impact on healthcare sales because Medicaid accounts for a significant portion of national healthcare expenditures. Over the next several years, each state will be adjusting their Medicaid programs to account for lower federal spending as they balance their budgets.
Rural health providers are expected to be impacted by Medicaid cuts. OBBBA included a $50 billion Rural Health Transformation Program, which will provide $10 billion annually for five years for states to improve rural healthcare access and outcomes. It is not, however, expected to make up for the loss of Medicaid funding.
Multiple market forces pressure margins
Multiple market forces, including rising labor costs, are driving down healthcare providers’ operating margins. A July 2025 analysis by the Advisory Board projected an 8-18% decrease in operating margins among health systems by 2028 based on the OBBBA healthcare spending cuts, cuts to federal grant funding, and modest tariff rates of 10%. This margin squeeze makes it harder for providers to persevere in the face of high tariff rates, potentially leading to reduced purchasing power and tighter budgets for medical supplies and services.
Most Medicare reimbursement rates remain stable
Most healthcare providers are expecting a modest increase in Medicare reimbursement rates for 2026. Although the portion of Americans with Medicare is relatively small – but growing – Medicare reimbursement rates are often used as a benchmark for private insurance companies that provide the majority of insurance coverage nationwide. For Fiscal Year 2026, CMS announced modest payment increases for inpatient hospital stays (2.6%) and skilled-nursing facilities (3.2%). There are similar modest increases expected for hospital outpatient and ambulatory surgical centers (2.4%) and the physician offices (3.8%). These modest increases are a positive sign for providers, but may not be sufficient to meet rising costs.
Worsening workforce shortages
The U.S. healthcare system faces widespread and significant workforce shortages, with an estimated 75 million people living in a primary care Health Professional Shortage Area in 2024. These healthcare workforce shortages are expected to continue, or increase, without policy interventions that support the education and training of healthcare workers. Changes to federal student financial aid programs may exacerbate these shortages.
Healthcare sales professionals should stay informed about the evolving healthcare landscape. It’s the best way to support healthcare customers through an increasingly complex and constrained environment.