Healthcare Policy Outlook: Navigating the Aftermath of the Midterm Elections

Democrats won control of both chambers in the November 3 midterm elections, shifting Republicans into the minority in the U.S. Congress. Although vote counting continues in some races, the overall balance of power is clear. The incoming Democratic caucus is expected to be more diverse, reflecting gains in areas that Republicans have traditionally held.

The midterm elections give Democrats a political mandate to focus on affordability. Voter concerns about inflation, healthcare and other household costs are likely to increase pressure on the new majority to deliver visible relief before the 2028 election. This effort will most likely unfold amid aggressive oversight and partisan conflict, although both parties will still have incentives to reach agreements on essential matters of governance.

Democrats have pledged dozens of oversight investigations into the current administration. Shortly after the election outcome became clear, incoming U.S. House Committee on Oversight and Government Reform Chair Rep. Robert Garcia (D-Calif.) issued a two-word statement: "Lawyer up." In healthcare, oversight is likely to examine the administration's most-favored-nation (MFN) agreements, tariff exemptions and vaccine policy.

Before the election, President Donald Trump said he would become "Mr. Veto" if Democrats won control of at least one chamber, while also expressing optimism that "at some point, we'll probably make deals." A meeting with the U.S. Senate Minority Leader Chuck Schumer (D-N.Y.) and House Democratic Leader Hakeem Jeffries (D-N.Y.) before year-end cannot be ruled out. Congress must also resolve government funding before the current short-term measure expires on December 11.

Once Democrats take control in January, they may use budget reconciliation to advance qualifying budgetary priorities. Reconciliation can allow certain legislation to pass the U.S. Senate by a simple majority, but it is subject to procedural limits and does not eliminate the prospect of a presidential veto. Democrats can use their majorities to pass legislation but enacting it will generally require the president's support, or a two-thirds vote in each chamber to override a veto.

Administration Action, Legislative Priorities and Fiscal Deadlines

Even where legislative options are constrained, the administration is likely to continue advancing its healthcare agenda through channels that don't require congressional action. Federal agencies, regulatory rulemaking and trade and tariff policy offer the White House tools to pursue priorities independent of legislative gridlock. Stakeholders should expect continued agency-driven activity even as Capitol Hill remains consumed by oversight and partisan conflict.

Healthcare is likely to feature prominently in Democratic legislative agenda, alongside tax, tariff, energy and other priorities. Congress will also likely need to address the debt limit in 2027. Those negotiations could create a broader fiscal-deal window, potentially alongside discussions of discretionary spending for fiscal years 2028 and 2029. Such packages can attract provisions from across the policy spectrum, including healthcare measures that might not advance on their own.

The annual appropriations process may proceed more smoothly in the House, and perhaps in the Senate, under Democratic control, but difficult negotiations may still prove difficult. Standoffs that lead to government shutdowns remain a real possibility, as does the prospect of bipartisan agreement if each side is willing to compromise. Defense spending may face greater constraints, while domestic spending – including funding for public health programs and medical research – could fare better. Disputes over grant policy, research administration and social issues will also need to be resolved.

Implications for Healthcare Stakeholders: Democratic control is likely to bring greater congressional scrutiny of healthcare costs, coverage, consolidation and industry practices. However, Senate rules and the president's veto power may make major legislative changes challenging, increasing the near-term importance of oversight, agency action and targeted bipartisan measures. Hearings, investigations and proposed legislation may also signal the issues likely to shape the 2028 campaign. Healthcare organizations should plan for multiple legislative scenarios, assess their exposure to potential changes and be prepared to explain how their own policy positions align with — rather than work against — affordability, access and quality.

House of Representatives Outlook

With Democrats winning control of the House, party leaders are expected to coalesce quickly around an agenda outlined in the Healthcare Working Group memo once the new Congress convenes in January 2027.

For context, presumptive House Speaker Hakeem Jeffries (D-N.Y.) created five working groups to shape the caucus agenda, with the Cost-of-Living Healthcare Working Group co-convened by Reps. Alexandria Ocasio-Cortez (D-N.Y.) and Terri Sewell (D-Ala.). Notably, Presumptive House Speaker Jeffries stopped co-sponsoring Medicare for All legislation after taking over as House Democratic leader in 2023 and reaffirmed this position as recently as August 2026.

The Healthcare Working Group memo outlines 32 named bills and policy proposals to enact within the "first 100 hours" of the new Congress, framed as reversing GOP/Trump policy actions, such as H.R. 1 Medicaid policies, the Wasteful and Inappropriate Service Reduction (WISeR) model and National Institutes of Health (NIH) executive actions. Others would advance new measures aimed at affordability, such as extending the Part D premium stabilization program and Medicare Drug Price Negotiation Program and creating a Medicare out-of-pocket cap, among others. Because the president retains veto authority and overriding a veto would require a two-thirds vote in each chamber, most of these proposals are unlikely to be enacted, regardless of how quickly the House acts.

Passing legislation without a realistic path to enactment has precedent and purpose. House Democrats passed bills authorizing Medicare drug price negotiation in 2019 and expanding the Affordable Care Act (ACA) Marketplace enhanced subsidies in 2020 despite little prospect of enactment under President Trump. Both later became law under former President Joe Biden's administration. Similarly, House Republicans passed a 2023 debt limit bill including Medicaid work requirements over then-President Biden's opposition, and comparable requirements became law in 2025 under unified Republican control. Beyond the "first 100 hours" plans, Democrats also have "first 100 days" and "first year" policy proposals prepared, focused on transformational reforms targeting market structures, pharmacy benefit managers (PBMs), vertical integration and the role of private equity in healthcare.

A Democratic agenda would likely start with reversing the Medicaid and ACA Marketplace cuts enacted in 2025 and restoring enhanced ACA premium subsidies. However, the appropriate scope of coverage expansion may spur intense intraparty debate. Democrats may also pursue cost-cutting measures, such as lowering hospital or drug prices or reducing payments to Medicare Advantage (MA) plans, both to directly lower consumer costs and to generate federal savings that could help finance coverage improvements.

Senate Outlook

With Democrats winning control of the Senate, the health agenda will run largely through presumptive Senate Committee on Finance Chair Ron Wyden (D-Ore.). As ranking member, Presumptive Chair Wyden released three requests for information (RFIs) this year on drug pricing in June, coverage reforms in July and long-term care in October.

Unlike the House's "first 100 hours" list of ready-to-move bills, Senate Democrats' work to date has been more of a drafting and feedback-solicitation exercise. That said, one introduced bill, the Health for the Commonwealth through Affordability, Reform, and Expansion Act (S. 5496) from Sen. Mark Warner (D-Va.), a member of the Senate Finance Committee, encompasses many Democratic policy proposals across seven titles – Title I: Restoring Health Care and Lowering Costs, Title II: Pathway to Universal Coverage, Title III: Strengthening Medicaid, Title IV: Lowering Drug Costs, Title V: Ensuring Quality Health Insurance and Removing Barriers to Care, Title VI: Lowering the Cost of Care, and Title VII: Reforming PBMs and Protecting Pharmacies.

This legislation could be reintroduced next year as the Senate Democratic policy plank. Also of note: Republican incumbents Sens. Roger Marshall (R-Kan.), Jon Husted (R-Ohio), and Susan Collins (R-Maine) lost their reelection bids, Sen. Bill Cassidy's (R-La.) his primary and Sen. Tommy Tuberville (R-Ala.) was elected governor of Alabama. As a result, leadership of the Senate Committee on Health, Education, Labor and Pensions (HELP) will be particularly in flux, with Sen. Josh Hawley (R-Mo.) potentially on track to become ranking member in the 120th Congress.

Lame Duck Outlook

Congress is not expected to make significant progress on healthcare during the lame duck session, although expiring healthcare provisions could provide an opening for a broader package. Several programs and payment policies are scheduled to expire at the end of 2026:

• Community Health Center Funding. Supports federally funded health centers that serve roughly 30 million patients – many of them individuals with low income – at more than 1,500 sites.
• National Health Service Corps. Provides scholarships and loan repayment to clinicians who agree to practice in designated health professional shortage areas.
• Special Diabetes Programs. Supports NIH research on diabetes prevention and treatment, as well as programs administered through the Indian Health Service. The programs are typically extended together and have bipartisan support.
• Medicare-Dependent Hospital Program. Provides enhanced inpatient payments to small rural hospitals that serve a high share of Medicare patients.
• Low-Volume Hospital Adjustment. Provides additional payments to hospitals with relatively few discharges, which have fewer patients across whom to spread fixed costs.
• Work Geographic Practice Cost Index Floor. Prevents the geographic adjustment for physician work from falling below 1.0, supporting payments to physicians in rural and other lower-cost areas.
• Advanced Alternative Payment Model (APM) Bonus. Provides incentive payments to clinicians who receive a sufficient share of their revenue through advanced APMs, encouraging participation in models that involve taking on downside risk.
• Clinical Laboratory Payment Provisions. Delay payment cuts and private-payer data-reporting requirements tied to the market-based pricing methodology established under the Protecting Access to Medicare Act.
• Medicare Hospice Survey Funding. Supports required inspections of Medicare-certified hospices at least once every three years. The inspection requirement is permanent, but the funding stream could lapse.
• No Surprises Act (NSA) Implementation Funding. Supports implementation of the law's balance-billing protections and independent dispute resolution (IDR) process.

The temporary 2.5 percent increase in Medicare physician fee schedule payments, intended to mitigate a scheduled payment cut, is also set to expire at year-end. Lawmakers could pair extensions with lower-cost provisions, but identifying offsets will be a challenge.

Lawmakers had planned to use the approximately $2 billion Medicare Improvement Fund to offset a package of healthcare extenders. Instead, the administration used the fund to provide eligible beneficiaries with one-time $90 rebates toward their October Part B premiums.

The next spending bill, which is needed before the current funding measure expires on December 11, 2026, is likely to be the year's final legislative vehicle. Funding and offset discussions are already underway and are expected to be contentious. Without agreement on offsets, lawmakers may pass a clean continuing resolution (CR) that extends government funding into early 2027 and postpones broader funding decisions until the new Congress is seated.

Changing of the Guard: Committee Leadership Shifts for 2027

Senate Finance Committee

Presumptive Chair Wyden: His recent endorsement of Medicare for All – announced in a statement on November 5, 2026 – is significant. However, Presumptive Chair Wyden's support for greater government intervention does not necessarily mean he will prioritize a single-payer transition over incremental coverage expansion, affordability reforms or a Medicare-like public option. A variety of healthcare policies will likely be considered as part of the overall legislative effort focused on healthcare affordability. Under Presumptive Chair Wyden, drug pricing reform is likely to remain a continued focus area for the committee, as he authored the Senate's Inflation Reduction Act (IRA) drug pricing language in 2022 and continues to champion drug affordability.

In February 2026, Presumptive Chair Wyden and Finance Committee Democrats laid out a drug pricing agenda proposing to expand Medicare negotiation authority (incorporating international pricing, additional drugs and an earlier negotiation start). He will most likely be a major advocate for MFN deal disclosure, having helped introduce the Drug Deal Disclosure Act, which would require the U.S. Department of Health and Human Services (HHS) to publish the terms of the administration's agreements with drugmakers and direct the Congressional Budget Office (CBO) and U.S. Government Accountability Office (GAO) to analyze their budgetary effects.

On healthcare issues beyond drug pricing, Presumptive Chair Wyden tends to be a moderating voice – noncommittal on site-neutral payment policy (due to rural impact concerns) and generally supportive of MA as a program. He also maintains a strong interest in nursing home reform. On October 16, 2026, he released an RFI workshopping a new Medicare home care benefit (or a universal Medicaid alternative), nursing home quality and the caregiving workforce. On MA specifically, his focus has centered on consumer protection and overpayments: He released a November 2022 report on deceptive MA marketing practices, led a 2023 secret-shopper study on "ghost networks" and co-led a May 2025 letter with other Senate Democrats urging Republicans to address MA upcoding.

Expect debate and legislative activity around restoring Enhanced Premium Tax Credits (EPTCs) – which he has previously supported – expanding IRA negotiation authority, reforming MA upcoding and advancing a 2027 long-term care and home care proposal.

Presumptive Ranking Member Mike Crapo (R-Idaho): He will most likely defend the Medicaid provisions of H.R. 1 and push to expand Health Savings Accounts (HSAs) and Individual Coverage Health Reimbursement Arrangements, while remaining open to deals on physician payment, MA reforms and rural health improvements.

Senate HELP Committee

Presumptive Chair Bernie Sanders (I-Vt.): He has served on the HELP Committee since joining the Senate in 2007, chaired the Committee from 2023-2024 and has served as ranking member since January 2025. He remains the Senate's leading voice for Medicare for All, having reintroduced the bill in April 2025 with 16 Senate and 104 House cosponsors.

Drug pricing remains a signature issue for Presumptive Chair Sanders. His Prescription Drug Price Relief Act (S. 1818) would end market exclusivity for drugs priced above the median price paid in other countries – effectively his own version of MFN.

With Sen. Amy Klobuchar (D-Minn.), who will be leaving the Senate after being elected governor of Minnesota, he has also pushed legislation requiring Medicare to pay the same prices as the U.S. Department of Veterans Affairs, and he has long championed importing lower-cost drugs from Canada. Presumptive Chair Sanders has noted that the IRA's negotiation provisions were based on his earlier bill. As HELP Chair, he previously brought pharmaceutical CEOs before the committee and has since turned his focus to insurance company profits, claim denials and prior authorization practices. In April 2026, he and Sen. Wyden jointly called for hearings with the CEOs of the largest health insurers. Despite his political posture, Presumptive Chair Sanders has a track record of bipartisan dealmaking, having worked with outgoing Sen. Cassidy (R-La.) on a PBM reform bill and with Sen. Marshall (R-Kan.) to move the $26 billion bipartisan Primary Care and Health Workforce Act (S. 284) through HELP in 2023.

Presumptive Chair Sanders is strongly critical of HHS Secretary Robert F. Kennedy Jr. and is expected to scrutinize the Centers for Disease Control and Prevention's changes to the Advisory Committee on Immunization Practices (ACIP) and the childhood vaccine schedule. With reauthorizations of the Prescription Drug User Fee Act (PDUFA), Medical Device User Fee Act (MDUFA), Biosimilar User Fee Act (BsUFA) and Generic Drug User Fee Act (GDUFA) due by September 30, 2027, Presumptive Chair Sanders will likely leverage the user fee package as a drug affordability and reform vehicle, potentially pressing for international reference pricing or launch-price transparency requirements. In addition, efforts to reauthorize PDUFA may include greater scrutiny of U.S. Food and Drug Administration (FDA) staffing following reductions in force pursued by the current administration, as well as additional focus on the Commissioner's National Priority Voucher Program, the RAPID Coverage Pathway and recent rare disease policy initiatives. On 340B, Presumptive Chair Sanders is likely to oppose the Health Resources and Services Administration's (HRSA) rebate model and frame any reform around protecting safety-net providers. Community health center and workforce funding remain his most likely bipartisan wins.

Presumptive Ranking Member Josh Hawley (R-Mo.): He is positioned to become the top Republican on HELP following Sen. Marshall's (R-Kan.) loss. Presumptive Ranking Member Hawley has been a strong advocate for rural health and has collaborated with Democrats on drug pricing and PBM reform, notably co-authoring an MFN bill with Sen. Peter Welch (D-Vt.) that would set a retail list price cap based on average prices across Canada, France, Germany, Italy, Japan and the United Kingdom. Presumptive Ranking Member Hawley also co-authored the Patients Before Monopolies Act (S. 4509) with Sen. Elizabeth Warren (D-Mass.), which would force PBMs to divest their pharmacies, as well as the Breakup Big Medicine Act (S. 3822), which would extend ownership bans to insurers and medical providers.

Sen. Rand Paul (R-Ky.), a physician and the committee's most senior Republican, could also contend for the ranking member position. However, he currently chairs the U.S. Senate Committee on Homeland Security and Governmental Affairs and has not publicly indicated whether he would give up that leadership post for the top Republican seat on HELP.

U.S. House Committee on Ways and Means

Presumptive Chair Richard Neal (D-Mass.): He has held the Ways and Means Committee leadership since January 2019. As chair, he has strongly advocated for restoring EPTCs, steered Democrats away from Medicare for All in 2019 and generally prefers incremental ACA and Medicare changes. He helped craft the NSA's arbitration model and later pressed the Biden Administration to rewrite rules he believed favored insurers. He is reliably hospital-aligned and has opposed site-neutral payment policy. Presumptive Chair Neal has also focused heavily on long-term care, leading reauthorization of the Elder Justice Reauthorization and Modernization Act (H.R. 8060) in March 2026 and co-leading the Nursing Home Improvement and Accountability Act of 2021 (H.R. 5169) with Rep. Frank Pallone (D-N.J.), which included minimum staffing requirements, a 24-hour registered nurse mandate and strengthened inspections. He requested the GAO's review of hospice home care, and its June 2026 report is now being used to support the Hospice CARE Act (H.R. 7966) payment overhaul led by Rep. Linda Sánchez (D-Calif.). Notably, Presumptive Chair Neal does not support Medicare for All, setting up a potential intraparty debate over the policy in the committee and within the caucus. As chair, he is expected to make EPTC restoration his priority, building on momentum from the three-year extension the House passed in January 2026. The committee will also oversee MA coding and overpayments, as well as the tax provisions of H.R. 1.

Presumptive Ranking Member Jason Smith (R-Mo.): He is the current chair and focuses on fraud, waste, and abuse, rural access, physician payment and price transparency. He opposed the EPTC extension that the House passed in January this year.

House Committee on Energy and Commerce (E&C)

Presumptive Chairman Frank Pallone (D-N.J.): He is a lawyer and former New Jersey state senator who entered Congress in 1988. He is not a clear Medicare for All supporter but helped develop the ACA and has led committee work on drug pricing, opioid treatment and consumer protections. He has been the top Democrat on E&C for 12 years, including as chair from 2019 to 2022. He helped write the NSA and co-architected the IRA's drug pricing provisions. Unlike Rep. Neal, Presumptive Chairman Pallone supports hospital site-neutral payment policy and is expected to push those reforms, given the potential budgetary savings involved.

Presumptive Chairman Pallone co-led the Lower Costs, More Transparency Acts of 2023 (H.R. 5378) and the Lower Costs, More Transparency Act of 2026 (H.R. 9393) with Republicans, which included site-neutral payments for drug administration in off-campus hospital outpatient departments, as well as 340B reporting provisions opposed by the American Hospital Association, signaling that he is more open to hospital transparency measures than his Ways and Means counterpart. He has also criticized the federal IDR process under the NSA, arguing that it has not functioned as Congress intended and is adding significant costs to the healthcare system. He has sent oversight letters to some of the arbitrators who handle IDR decisions and has asked the CBO to analyze the IDR process's overall effects on private health insurance premiums and federal deficits. He has also introduced legislation that would effectively end the IDR process for services on or after January 1, 2028, and instead base out-of-network payments on a recalculated qualifying payment amount. On MA, under his leadership, the Subcommittee on Health advanced a bill this summer to streamline prior authorization for MA plans.

Presumptive Chairman Pallone will most likely focus on healthcare price transparency, affordability and coverage for Americans who lost insurance due to ACA and Medicaid changes and will continue to support site-neutral payment policy. He may push aggressively on incremental drug pricing reforms and coordinate with Senate Finance Committee Democrats on related policies that may have a path to passage. He is expected to use subpoena authority to probe the MFN deals and scrutinize H.R. 1's Medicaid work requirement rollout, state eligibility systems and HHS Secretary Kennedy's changes to ACIP. The PDUFA, MDUFA, BsUFA and GDUFA reauthorizations will be the year's must-pass legislative vehicles, negotiated with the new HELP Committee chair and the FDA, to attach drug-related reforms. Significant discussion is anticipated on potential policy riders, such as those related to maintaining adequate FDA staffing, potential domestic and foreign inspections enhancements, and clinical trials, as well as a revisiting of drug supply chain and shortage provisions that were pursued but ultimately not advanced during negotiations over the Pandemic and All-Hazards Preparedness Act. He's also likely to put surprise billing benchmarking back on the table, which could pose a direct risk for private-equity-backed provider groups.

Presumptive Ranking Member Brett Guthrie (R-Ky.): He is expected to serve as the top Republican on E&C. As chair, he made Medicaid fraud oversight a committee focus and advanced the Lower Costs, More Transparency Act of 2026 – a major healthcare transparency package – on a unanimous 45-0 committee vote.

Sector Outlook

Clinicians and Hospitals

Delaying or modifying the Medicaid cuts under H.R. 1 is unlikely to happen before the 2028 presidential election. The odds of H.R. 1 being relaxed within the next two years are relatively low given the cost involved, although adjustments at the margins are possible – more feasible through rulemaking and regulatory flexibility, such as "self-attestation" for frailty and recent state movement toward flexibility. The Medicaid provisions in H.R. 1 generate significant federal savings, so any delay in implementation would likely need to be offset – a difficult proposition in the current fiscal environment. Democrats will probably argue for restoring EPTCs, which will likely lead to a broader discussion of ways Congress can improve health insurance coverage rates. Restoring and strengthening ACA subsidies is the more realistic near-term path, while Medicare for All remains an aspirational 2028 presidential goal.

Healthcare affordability remains a bipartisan theme and smaller-scale policies are more likely to bear fruit, including greater transparency, HSA expansion, direct primary care, additional medical loss ratio requirements and prior authorization transparency. Hospital site-neutral payment reforms are more likely to come through Centers for Medicare & Medicaid Services (CMS) rulemaking than through Congress.

Medicare Advantage

With Democrats in control, plans will likely continue to face scrutiny over overpayments and cost containment. The Lower Costs, More Transparency Act of 2026, passed by the House E&C Committee under Rep. Guthrie (R-Ky.) by a 45-0 vote, contains MA prior authorization, supplemental benefits and encounter data reporting provisions. Democrats are also likely to frame MA upcoding as a source of savings that could help offset priorities such as delaying H.R. 1's Medicaid cuts. This could revive the No UPCODE Act (S. 1105). With Sen. Cassidy (R-La.) departing, however, the bill's future likely rests with co-lead Sen. Jeff Merkley (D-Ore.) and incoming Democratic committee chairs rather than a Republican sponsor.

Separately, CMS could cure the notice-and-comment defect going forward by publishing the disputed measures – identified in certain litigation as either exceeding CMS's statutory authority or bypassing required rulemaking procedures – in the MA/Part D Technical Rule at any time. That fix would only operate prospectively. However, it would not resolve the disputed rating years already in litigation.

MA risk adjustment is separately shifting from coding intensity toward inferred risk. Through the CMS Innovation Center long-term enhanced accountable care organization design demonstration, CMS will shadow-test artificial intelligence (AI)-inferred risk scores in 2028, move to a blended methodology in 2029-2030 and complete a full phase-in by 2031.

Life Sciences

On drug pricing, codifying MFN pricing into law could be a priority for President Trump, allowing him to reach across the aisle on an issue that affects nearly all Americans. Drug pricing is also likely to remain a central focus for congressional Democrats, who may pursue legislation expanding the IRA's Medicare Drug Price Negotiation Program, for example, by adding more drugs, starting negotiations earlier than the current nine- and 13-year timelines, or adopting policies that more directly affect intellectual property (IP) rights.

A Senate vote on FDA Commissioner nominee Dr. Heidi Overton may not occur before year-end. During the lame-duck session, the Senate HELP Committee has a narrow 12–11 Republican majority. If Democrats oppose the nominee as a bloc, a single Republican defection or absence could prevent the committee from advancing her nomination. If she is not confirmed by the end of December, her nomination will return to the White House. It remains unclear whether the White House would resubmit it given likely opposition from the incoming Democratic majority, which could delay the confirmation of a permanent FDA commissioner and increase the likelihood that an acting commissioner, such as Kyle Diamantas, remains in place.

Senate Finance Committee Democrats have floated a range of affordability ideas, including policies intended to bolster the U.S. biotechnology and pharmaceutical industry and ensure U.S. leadership in light of China's growing clinical trials industry, as well as IP, 340B, PBMs and expanded negotiation authority proposals. PDUFA reauthorization – which must be completed by September 30, 2027 - may bring anti-China provisions and additional biopharma reforms, such as limitations on approvals of drug products with clinical trial data only from China to limitations on the use of certain Chinese entities during the drug development process. Additional policies on the FDA's framework for reviewing and approving therapies for rare diseases are also likely to be discussed, particularly following the October 13, 2026, release of the FDA's Rare Disease Framework Initiative. The FDA must send the final negotiated user fee package to Congress by January 15, 2027, setting up a must-pass legislative push through mid-2027.

PBM and 340B

PBM reforms passed by Congress in 2026 were not particularly aggressive, with U.S. Federal Trade Commission (FTC) settlements generating more headlines. Recent FTC settlements with major PBMs were similar in structure and largely tracked reforms the companies had already undertaken voluntarily, anticipating the direction of regulatory pressure. Settlements with major healthcare insurers remain pending. More recently, the U.S. Department of Labor's final PBM rule, released on October 29, 2026, is more consequential, although it applies only to large, self-insured plans and gives PBMs a runway to adapt to new reporting requirements. 

340B reform remains top of mind, and legislation could advance following the average sales price (ASP) minus 28 percent policy and other reforms. Most existing legislative proposals are definitional and focused on data collection. Still, the ASP minus 28 percent policy and the revamped HRSA rebate model – now the subject of litigation – are likely to chart the course for future reform. Senate Democrats released a white paper in June outlining drug-focused healthcare priorities for 2027 and beyond, with priorities including expansion of the Medicare drug negotiation program, additional PBM reforms, biopharma innovation and premium affordability.

Devices

The announcement of a medical device tariff is anticipated before year-end, likely in the 10 percent to 25 percent range, with significant exemptions. Congressional Democrats are also expected to press the administration for a full accounting of the various tariffs it has rolled out.

Meanwhile, MDUFA reauthorization has a September 30, 2027, deadline like PDUFA and could attract modest policy reforms. Clinical labs are seeking another delay of Medicare payment cuts of up to 15 percent, scheduled to take effect January 1, 2027, before the new Congress is seated. CMS's Comprehensive Regulations to Uncover Suspicious Healthcare proposed rule, which is intended to curb waste, fraud and abuse in areas such as durable medical equipment and diagnostic lab testing, is imminent and may address a nationalized Molecular Diagnostic Services Program and some form of prior authorization.

AI

We expect Democratic control of Congress to bring greater scrutiny of AI. The House E&C Committee and the Senate HELP Committee are likely to examine patient-data privacy, algorithmic bias, differences in performance across demographic groups, clinical validation, interpretability, ethics and AI's effects on access to care. Oversight may focus on whether developers and deployers use representative datasets, test performance across race, sex, age, disability, geography and socioeconomic status, as well as monitor outcomes after deployment. Lawmakers may also revisit FDA and the Office of the National Coordinator for Health Information Technology authorities, transparency requirements and potential reimbursement pathways for health AI.

Major legislation could face resistance from the administration, particularly if it focuses on bias and equitable processes. Several clinicians in the incoming Congress may influence these debates, including physician and Sen.-elect Abdul El-Sayed, who has called for strict AI guardrails, interpretability standards, independent safety testing and incident reporting, and pediatrician and Sen.-elect Annie Andrews, who has publicly supported regulating AI tools that may discriminate or be abused.

Democrats may also connect AI oversight to their broader affordability agenda, examining whether AI-enabled pricing or automated decisions affect patient costs or access to care. They may press companies to explain how consequential AI-assisted decisions are made, how patients can challenge them and how responsibility is divided between AI developers and the healthcare entities that deploy their tools.

The CMS Innovation Center's WISeR Model could provide a case study. Launched in 2026, WISeR uses enhanced technologies, including AI and machine learning, alongside human clinical review to assess selected services in Original Medicare across six states. Congressional oversight could examine the transparency and accuracy of the review process, safeguards against inappropriate denials, effects on access and administrative burden, and how patients and providers can challenge decisions.

Congressional Democrats will likely call major technology executives to testify about AI development and deployment, particularly if a company's safety practices draw significant scrutiny or a major privacy, cybersecurity or data-use incident occurs. Hearings and investigations could probe companies' pre-deployment testing and red-teaming, handling of sensitive health data, security safeguards, processes for identifying discriminatory or disparate outcomes, and representations about model safety and performance.

Committee assignments will also be important to watch, particularly for newly elected Democrats who campaigned on stronger AI restrictions or safeguards. E&C and the Senate HELP Committee are highly sought-after committees, and seniority, party priorities and limited openings can make them difficult assignments for freshman members. As a result, some incoming members who are vocal on AI may have to influence the debate through other committees, caucuses, legislation or oversight requests rather than as members of those committees.

Business Considerations

Though the legislative outlook remains uncertain, healthcare organizations can take practical steps to prepare for increased scrutiny and potential policy changes:

• Payers. Review exposure to potential MA payment and oversight changes. Strengthen consumer-facing information on pricing, coverage and service, and prepare for scrutiny of affordability, plan quality and coverage practices.
• Providers. Assess exposure to oversight of consolidation and pricing. Stress-test financial plans against potential coverage and reimbursement changes and strengthen price-transparency and affordability efforts.
• Pharmaceutical and Life Sciences Companies. Scenario-plan for changes to drug pricing, MFN policy and 340B. Document clinical and economic value and monitor opportunities to shape FDA and drug-development policy.
• Medical Technology Companies. Assess reimbursement and market-access risks, demonstrate clinical and economic value, and track potential FDA modernization and user-fee legislation.
• AI and Technology Companies. Take inventory of AI tools used or deployed across the organization, including third-party systems. Review governance, privacy and cybersecurity safeguards, clinical validation, performance across relevant patient populations, and processes for monitoring and reporting adverse outcomes. Be prepared to explain how consequential AI-assisted decisions are made, how patients can seek review, and how responsibilities are allocated between developers and deployers.

Across sectors, organizations should review compliance and oversight readiness, anticipate questions about how their practices affect consumers, and monitor legislative proposals for signals of future policy priorities.

Looking Ahead

The months between now and the January 3, 2027, convening of the 120th Congress will set the tone for the next two years. Watch for three near-term signals: how the lame-duck session resolves the December 11funding deadline and whether a healthcare extenders package rides along; how committee leadership races shake out in the House and Senate, which will shape the specific bills and oversight priorities that move first; and how the Trump Administration responds to an emboldened Democratic majority – whether through early deal-making on affordability and drug pricing or through the veto-heavy posture the president has signaled.

Beyond the opening weeks, the 2027 legislative calendar includes several forcing events that will shape the health policy landscape regardless of which party controls the agenda, such as the FDA user fee reauthorizations (PDUFA, MDUFA, BsUFA and GDUFA), which are due by September 30, 2027; the debt limit; and fiscal year 2028 appropriations. These larger negotiations may also create opportunities to attach healthcare provisions that would be difficult to advance on their own.

We will continue to track these developments closely, including committee assignments, leadership elections, and early legislative activity in the new Congress, and will provide updates as the picture becomes clearer. In the meantime, please reach out with any questions about how these dynamics may affect your specific priorities.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.