Quote of the Day: On Leadership Behavior
Why You’re Seeing a PA or NP—But Not a Doctor
Try making a doctor’s appointment at your primary care provider’s office or an urgent care clinic, and often, it won’t be with an MD or DO. As more people need more care—and as more types of preventative care are available—offices are increasingly relying on nurse practitioners (NPs) and physician assistants (PAs) to see patients and save costs.
That’s not necessarily a bad thing; though they don’t have as extensive training as an MD or DO, both nurse practitioners and physician assistants can deal with many of the complaints someone would have at their primary care office.
“An experienced PA or NP can do most of what a primary care physician does,” says Perri Morgan, a professor in family medicine and community health at Duke University School of Medicine who focuses on PAs and NPs in the health care work force. “And many practices find them to be a welcome addition to the bottom line” because they cost less to employ than physicians.
Nurse practitioners and physician assistants are paid less than doctors are, but in some states they can generate nearly as much income for practices because they can bill at the same rate as doctors, says Dr. David Chan, a professor at the University of California, Berkeley who studies health economics. Doctors make, on average, $239,200 a year, according to the Bureau of Labor Statistics—nearly double what physician assistants and nurse practitioners make.
In 2023, the most recent year for which data are available, there were 340,319 primary care physicians in the U.S., according to the National Center for Health Workforce Analysis. By contrast, there were an estimated 374,970 nurse practitioners and 29,433 physician assistants working in primary care in 2024.
Estimates suggest that in a decade, there will be many more NPs and PAs than MDs and DOs across medicine. While the number of physicians in the U.S. is projected to grow by just 3% between 2024 and 2034, according to the Bureau of Labor Statistics, the number of physician assistants is expected to grow by 20%, and the number of nurse anesthetists, nurse midwives, and nurse practitioners is expected to grow by 35% over that time.
In some states, nurse practitioners and physician assistants must be supervised by a physician to practice. But groups that represent the interests of NPs and PAs are advocating for more independence. They have persuaded many states to pass legislation that allows them to operate without a supervising physician. The American Medical Association, however, has worked to defeat such bills, calling the practice “scope creep” and arguing that it makes patients less safe.
Here’s what patients should know about PAs, NPs, and what you might get from one type of provider vs. another.
What is a nurse practitioner (NP)?
The technical name for a nurse practitioner is an advanced practice registered nurse, or APRN. There are four main types of APRNs: nurse practitioners, certified registered nurse anesthetists, certified nurse-midwives, and clinical nurse specialists.
Nurse practitioners can diagnose and treat illnesses, prescribe medications, manage chronic conditions, order and interpret diagnostic tests, and provide preventative care, says Valerie J. Fuller, president of the American Association of Nurse Practitioners (AANP). Fuller says NPs are unique because they are trained in nursing and so are extremely patient-centered. “I think patients who choose a nurse practitioner are really looking for a clinician who can diagnose, treat, manage their health needs, but who also takes the time to listen,” she says.
To become a nurse practitioner, you need an undergraduate nursing degree and a registered nurse license. Then you must go back to school to pursue a graduate degree: either a master of science in nursing or a doctor of nursing practice. After your graduate degree, you must pass a national certifying exam; only then can you receive an APRN license. (Not all states issue a specific APRN license; some issue similar authorization but call it a certification or registry.)
Nurse practitioners have what’s called full practice authority in 27 states, meaning they can practice without being supervised by a physician. That’s up from just 14 states in 2010. And although some states have passed legislation that requires visits with nurse practitioners to be compensated at the same rate as physicians, that’s not the case in all states. Medicare reimburses nurse practitioners at 85% of what they reimburse for physicians, Fuller says.
Fuller argues that allowing NPs to practice without a physician’s supervision encourages them to open up practices, helping close gaps in care. When Arizona allowed full practice authority, she says, the nurse-practitioner workforce grew by more than 50%. Millions of Americans don’t have access to basic primary care services, she says, and nurse practitioners can step up to help if they’re allowed.
What is a physician assistant (PA)?
Physician assistants came about in the wake of the Vietnam War, when thousands of medics were returning from overseas and looking for a place to fit in the medical field, says Morgan, of Duke. Today, to recognize their independence, the American Academy of Physician Associates (AAPA) is advocating for PAs to be referred to as “physician associates” rather than “physician assistants.”
PAs help fill gaps in medical care, just like NPs do. “They are trained as core generalists,” says Chantell Taylor, head of advocacy at AAPA. “They’re attractive to employers looking to lower wait times and increase patient access, particularly in rural and underserved areas.”
To start a PA program, students must have a bachelor’s degree, complete prerequisite coursework, and enter PA school with more than 3,000 hours of patient-contact experience, Taylor says. PA programs usually last three academic years that include more than 2,000 hours of clinical experience.
That clinical experience includes rotations in family medicine, emergency medicine, surgery, pediatrics, and other specialties, and prepares graduates to evaluate, diagnose, and treat patients across a broad range of medical specialties and practice settings. PAs graduate with a master’s degree—usually a Master of Science in physician assistant studies or a Master of Clinical Health Services—and then must pass the physician assistant certifying exam to receive national certification and obtain a state license.
Some PAs practice in primary care, but others specialize in surgery, oncology, and other areas, assisting doctors and making them more productive, says Morgan. A PA could prep patients for surgery and close a patient up after surgery, for instance, allowing the surgeon to see more patients, she says. “PAs in specialties add at least as much value as ones in primary care,” she says.
The AAPA is advocating for states to lift the requirement that PAs be supervised by a physician; so far, nine states have done so. Five states have passed legislation to change the title of PA from physician assistant to physician associate.
Are NPs and PAs as effective as MDs and DOs?
Patients may be hesitant to see a NP or PA because they have less education and medical training than a doctor. There have been recent reports of poorly trained NPs missing key indicators of illness, most notably in a Bloomberg series about the rising numbers of nurse practitioners.
Both AAPA and AANP say that PAs and NPs are essential to provide care in rural and underserved areas with physician shortages, and that having more non-physicians providing care helps increase access for all Americans. The American Medical Association, on the other hand, says that while it supports the role of non-physicians, “they are not a substitute for physicians,” and that numerous studies show that patients want care led by physicians.
The training differences are stark. Physicians complete four years of medical school plus a three-to-seven year residency program, which can include 12,000 to 16,000 hours of clinical training. Nurse practitioners do not have a residency requirement and have about 500-720 hours of clinical training, and PAs are required to have about 2,000 hours of supervised clinical practice.
“The country is facing a health care workforce shortage, including shortages of both physicians and nurses,” the American Medical Association said in a statement provided to TIME. “One way to alleviate this shortage is by supporting physician-led care teams that leverage the skills of non-physician practitioners while ensuring that all members of the care team work together, under the direction of a physician, toward optimal care for patients.”
What does the research show about the effectiveness of each type of provider? It depends on the study, says Chan of UC Berkeley, who has examined the difference between NPs and physicians in an emergency-room setting. In one study, Chan looked at what happened in emergency rooms when the Veterans Health Administration began allowing nurse practitioners to practice without physician supervision in 2016. His work suggested that NPs ordered more external tests than did physicians, had more patients returning to the ER with infections than did physicians, and were more likely than physicians to prescribe antibiotics. But “the evidence is still kind of limited,” Chan says. Some doctors will have better patient outcomes than some nurse practitioners, but the reverse is true, too.
Other research suggests that both NPs and PAs can be as effective as doctors at taking care of chronic conditions in medically complex patients—and that they can help save money. One study of patients with diabetes seen at the VA found no clinically significant differences in diabetes outcomes of patients seen by a NP, PA, or physician.
Another study of VA patients with diabetes found that the health care costs were about 7% lower for NP and PA patients than patients who saw a physician, because patients who saw a doctor were more likely to use the emergency room and inpatient services. Morgan of Duke, the lead author of that study, speculates that this is because it might be easier for patients to reach their PA or NP than their physician, allowing their provider to help them address concerns or adjust medications quickly without having to go to the emergency room.
What’s most important, experts say, is that NPs and PAs work together with physicians to help fill care gaps and treat patients. Exactly how that team works together is still up for debate. Taylor, of the AAPA, calls the physician-led model “outdated” and argues that it “doesn’t fully leverage all provider types.” The AMA, on the other hand, argues that physician-led, team-based care is higher quality and more cost effective. And both have a number of studies to point to that prove their point.
“Increasingly, health care is about teams,” Chan says. “So the next question is: How do we best organize teams with NPs and doctors and others?”
Quote of the Day: On Leadership Integrity
Quote of the Day
What Presbyterian’s Medicare Advantage Exit Really Means
Presbyterian Healthcare Services’ decision to exit most Medicare Advantage plans and eliminate 150 positions underscores a growing reality for provider-sponsored health plans.
KEY TAKEAWAYS
Rising utilization, reimbursement pressure and regulatory scrutiny are forcing organizations to reassess participation in Medicare Advantage.
Presbyterian’s move reflects a decision to prioritize care delivery and long-term financial stability over maintaining an unprofitable business line.
Financial flexibility and access to capital increasingly depend on demonstrating disciplined balance-sheet management.
Albuquerque-based Presbyterian Healthcare Services has announced it will discontinue most of its Medicare Advantage (MA) offerings beginning in 2027, affecting roughly 30,000 members, while laying off approximately 150 health plan and administrative employees. The system will continue operating its Dual Plus Special Needs Plan serving Medicare-Medicaid beneficiaries. According to Presbyterian, remaining in the broader MA market would limit its ability to invest in care delivery, workforce development and access initiatives across New Mexico. The move is another indication that provider-sponsored health plans are facing mounting pressure as MA margins tighten nationwide.
Many health systems entered Medicare Advantage to create integrated delivery models, diversify revenue streams and capture greater value from population health initiatives. However, elevated medical utilization, changing reimbursement dynamics and increased regulatory oversight have altered the financial equation. Presbyterian’s decision suggests leadership determined that the returns no longer justified the capital and operational resources required to compete effectively in the market.
The regional implications are significant. Presbyterian is one of New Mexico’s largest healthcare organizations, operating hospitals, clinics, physician practices and a health plan across the state. While the layoffs are concentrated in health plan and administrative roles, the exit removes a major local MA option and will require thousands of seniors to seek alternative coverage. At the same time, Presbyterian argues the move will allow it to redirect resources toward direct patient care and workforce investments, potentially strengthening healthcare delivery capacity over the long term.
There’s a larger lesson centered on strategic focus. Organizations often face pressure to maintain market presence across multiple business lines, even when margins deteriorate. Presbyterian’s action demonstrates the importance of regularly evaluating whether each service line advances the system’s long-term mission and financial objectives. Exiting a business can be difficult, but preserving capital for higher-value investments may ultimately create greater organizational resilience.
The decision also highlights why credit ratings deserve ongoing executive attention. Strong ratings are not simply a borrowing metric; they influence an organization’s ability to finance facilities, technology modernization, workforce initiatives and strategic growth. Rating agencies increasingly scrutinize operating performance, liquidity, leverage, governance and management’s willingness to make difficult strategic decisions when market conditions change. Fitch continues to maintain coverage on Presbyterian Healthcare Services, underscoring the importance of external evaluation of health system financial strength.
Healthcare organizations that delay corrective action risk eroding margins, weakening liquidity and increasing borrowing costs. Conversely, systems that demonstrate disciplined portfolio management often preserve stronger credit profiles and maintain greater access to capital during periods of industry disruption.
Presbyterian’s Medicare Advantage could signal a move towards strategic capital allocation, a growing priority in today’s environment. As reimbursement uncertainty and utilization pressures continue across healthcare, CFOs should view the announcement as a reminder that financial sustainability sometimes requires difficult choices today to preserve organizational strength tomorrow.
3 Headlines And What They Really Means for Healthcare CFOs
These headlines point to a common theme for CFOs.
KEY TAKEAWAYS
Policy momentum continues to shift toward prevention, affordability, and population health, which is increasing the value of physician alignment and care management capabilities.
The biggest risk in price transparency isn’t fines—it’s how increased visibility into payer contracts and pricing structures could affect margins, negotiations, and market position.
One healthcare organization’s restructuring highlights a broader industry shift toward rewarding sustainable cash flow, liquidity, and financial flexibility over leveraged growth models.
Headline: Free primary care for all: Democratic think tank pushes the party on new health policy
Democratic strategists are promoting free primary care for all Americans as a more politically viable alternative to Medicare for All, aiming to address healthcare affordability and access ahead of the 2026 elections.
Why it matters: I do not think this proposal will become federal policy in the near future. However, it reflects a shift in healthcare reform politics. Instead of focusing on comprehensive insurance redesign, policymakers are increasingly exploring targeted affordability initiatives that can be more easily communicated to voters and potentially implemented incrementally. I have little doubt that primary care access, preventive services, and healthcare affordability are likely to remain prominent policy themes heading into the midterm election cycle.
The CFO Takeaway: This headline underscores the idea that primary care is becoming a strategic asset. If policymakers continue moving toward subsidized or universally accessible primary care models, health systems with strong employed physician networks, value-based care capabilities, and population health infrastructure could be positioned to benefit.
On the other hand, organizations that remain heavily dependent on downstream specialty and procedural volumes may feel the heat as policymakers and payers redirect resources toward prevention and early intervention. I say look at this as another signal that future reimbursement models may reward access, chronic disease management, and longitudinal patient engagement rather than episodic acute care. The question is not whether free primary care becomes law, but whether an organization’s capital allocation, physician alignment strategy, and care delivery model are prepared for a healthcare economy that places greater financial value on keeping patients healthy rather than treating them after they become sick.
Headline: Trump administration warns more than 500 hospitals to provide more price information or face fines
The Trump administration has intensified enforcement of hospital price transparency rules, warning more than 500 hospitals over alleged noncompliance. Hospitals that fail to disclose required pricing data could face penalties of up to $2 million annually, with officials signaling that additional enforcement actions are likely as the administration intensifies oversight of transparency requirements originally established during President Trump’s first term.
The CFO Takeaway: While hospitals have been required to publish machine-readable files and consumer-friendly pricing information for years, compliance has been uneven across the industry. Many CFOs have spoken to me about the difficulty in publishing usable pricing information; standardizing the masses of varying data is often just too complex and time consuming. This move is the administration’s latest shift from rulemaking toward active enforcement in this category. CFOs should focus on strengthening pricing governance, contract management, and payer negotiation strategies. The bigger risk is whether increased transparency exposes pricing weaknesses that could undermine future reimbursement, market position, and margins.
Industry POV: This headline is not fundamentally about fines, it’s about margin visibility and negotiating leverage. Price transparency is becoming a strategic financial issue. As payer rates and pricing differences become more visible, hospitals will face greater scrutiny from employers, insurers, competitors, and regulators.
Headline: GoHealth files for Chapter 11 to strengthen its position ahead of AEP 2026
GoHealth has filed a prepackaged Chapter 11 bankruptcy to reduce debt and strengthen its finances. The restructuring has strong backing from lenders and major stakeholders, allowing the company to continue normal operations, pay vendors, and maintain customer and payer relationships while emerging with a healthier balance sheet and lender-led ownership structure. The company expects to continue normal operations throughout the process, pay vendors in full, preserve relationships with health plans and consumers, and emerge from bankruptcy before the critical Medicare enrollment season begins.
Why it matters: While the announcement is framed as a restructuring, it is really the culmination of Medicare Advantage pressures. GoHealth has faced declining revenues, significant debt obligations, higher interest costs, and a challenging MA market with health plans increasingly focused on profitability, member retention, and tighter distribution economics.
The CFO Takeaway: This headline is ultimately unsurprising in today’s market. GoHealth’s restructuring shows how quickly leverage that seemed manageable during periods of growth can become a strategic constraint when industry economics shift.
GoHealth’s restructuring may ultimately be successful, but it highlights that healthcare organizations are increasingly being judged not just on revenue growth, but on their ability to generate sustainable cash flow and withstand prolonged reimbursement pressure. CFOs, is that shift influencing capital allocation decisions today?
The Margin Myth: Why One of the Insurance Industry’s Favorite Talking Points is Designed to Mislead You
Health insurers love to talk about profit margins. But return on equity — the metric investors actually use—reveals an industry generating outsized returns.
When UnitedHealth Group reported its first-quarter 2026 results, it disclosed something that didn’t make many headlines: an annualized return on equity of 26.2%.
That number — not the profit or operating margin — is what Wall Street uses to evaluate whether a business is making good use of the money investors have put into it. And by that measure, UnitedHealth wasn’t just profitable, it was posting returns that outpace the broader S&P 500, dwarf most of its sector peers, and rival industries that Americans actually regard as highly lucrative.
So why do we keep hearing about margins?
Because margins are the health insurance industry’s favorite misdirection. And understanding the difference between the two figures is essential to understanding why the health insurance business is far more profitable — and far more extractive — than its lobbyists want you to know.
What Margin Actually Measures
Profit margin measures how many cents of profit a company keeps for every dollar of revenue that flows through it. For a health insurer, revenue is primarily premiums and fees — the massive river of money that employers, individuals, and government programs pour in every month to pay for coverage.
That river is enormous. In 2025, UnitedHealth took in $447.6 billion in revenue — nearly half a trillion dollars. A 5% margin on $447.6 billion is still a lot of profit. But when industry defenders cite the 5% figure, they’re counting on you to hear “five cents on the dollar” and think health insurers are not all that profitable.
(Note: In its first quarter 2026 earnings press release, the company reported that in the first quarter of 2026, its insurance division, UnitedHealthcare, had an operating margin of 6.6% and that Optum, the division that operates a huge PBM and hundreds of physician practices and other clinical operations across the country, had an operating margin of 5.1%. The press release didn’t even mention return on equity. You have to look at the company’s 10Q filing with the SEC to find the 26.2% ROE disclosure.)
I know this tactic well because I used it myself. During my nearly sixteen years at Cigna, where I was vice president of corporate communications, one of my standard moves was to cite the most recent margin figure when talking to journalists or writing talking points for our Washington lobbyists to use with members of Congress and their staff. It was technically accurate yet deeply misleading — exactly the combination that makes for effective spin. The goal was to create the impression that Cigna was a low-profit business barely keeping the lights on, when the return on equity told an entirely different story. I never brought up ROE and can’t recall a reporter asking about it.
What Return on Equity Actually Measures
Return on equity — ROE — measures how much profit a company generates relative to the money its shareholders have invested. It is essentially a report card on management’s ability to turn the money shareholders have invested into earnings. Investors and analysts use it to evaluate whether a business is creating or destroying value.
By this measure, UnitedHealth’s performance is striking:
- Q1 2026: 26.2% annualized ROE
- Full-year 2023: 27.0% ROE
- Full-year 2022: 27.2% ROE
Even in 2025 — the year the Medicare Advantage cost crisis hammered earnings across the industry — UnitedHealth’s full-year ROE came in at 12.8%, which is still above the median for health care support services companies (roughly 9.9%, per the Stern NYU January 2026 sector database).
To put 26–27% in context: the S&P 500 long-run average ROE runs in the 14–18% range. The general and broader insurance sector average is around 19%. The health care support services sector average — the category that most directly captures managed care companies — sits at just under 10%. UnitedHealth, in its normal operating years, is generating returns nearly three times that sector median, making it one of the most capital-efficient, high-return enterprises in American corporate life.
How a Relatively Small Margin Becomes a Massive Return
Health insurers operate with enormous revenue bases relative to their equity. When a company takes in close to half a trillion dollars in revenue but only has around $100 billion in shareholders’ equity on its balance sheet, even a modest net margin generates a big return on the invested capital.
In the insurer’s case, the “borrowed” capital isn’t debt in the traditional sense — it’s the float. Premiums come in at the beginning of the month. Claims go out throughout the month and into the next. That gap — the time between collection and payment — allows insurers to invest billions in securities, real estate and other holdings, earning investment income on money that technically belongs to the people whose claims haven’t been paid yet. UnitedHealth consistently earns more than $1 billion in investment income every quarter. It made $1.1 billion on its investments in the first quarter of this year and $1.0 billion in the same quarter last year. In 2024, when the company made $34.4 billion in earnings from its operations, its investment income totaled $5.2 billion.
This means that the company’s business model compounds the ROE advantage at every level: high premium volume, leveraged equity base, investment float.
UnitedHealth’s ROE advantage is even clearer when you look across the sector. Humana — which has been savaged by Medicare Advantage losses and is now posting a last-twelve-months ROE of roughly 6.8% — shows what happens when the underlying business goes wrong. Elevance and Cigna, facing similar MA cost pressure through 2024 and 2025, have also seen their returns compress. (In a move that likely will boost ROE, Cigna last year sold all of its Medicare Advantage business.)
But here’s what’s important to understand about those compressed numbers: Not a single major insurer posted an actual loss for the full year 2024. As one observer noted, the investor panic of 2025 was triggered not by losses but by smaller profits than expected. Elevance’s stock dropped 20% in two days when the company announced it expected to earn $5.4 billion instead of $6.4 billion. In any other industry, $5.4 billion in annual profit would not be considered a crisis.
UnitedHealth’s annualized 2026 ROE of 26.2% — reported even as the company is under federal criminal investigation — suggests the underlying earnings machine remains intact beneath the turbulence.
What the Sector Data Actually Shows
The NYU Stern sector database, updated as of January 2026 using data across thousands of U.S. companies, puts the managed care picture in relief:
- Health care support services: 9.89% median ROE
- General insurance: 19.07%
- Property and casualty insurance: 18.71%
- Drugs/pharmaceuticals: 24.04%
- Financial services (non-bank/non-insurance): 28.82%
UnitedHealth’s historical 27% ROE places it at or near the top of all of these categories — not just its own sector, but across the American corporate economy (with the exception of some of the biggest tech companies, whose ROEs are consistently at the very top). The company that processes your prior authorization denial is generating returns that rival the most profitable financial services firms in the country and even has a greater return than most pharmaceutical companies.
A December 2025 analysis by Milliman, an actuarial firm, made explicit what the ROE data implies. Examining the spread between for-profit and nonprofit health insurers, the analysts found that for-profit companies hold less capital and surplus relative to their premium volume — and that this “additional leverage leads to an even higher return on equity than their nonprofit and not-for-profit counterparts.”
What that means is that for-profit insurers have engineered their balance sheets to maximize the return on every dollar of equity, using premium float and leverage, in ways that nonprofit plans structurally cannot replicate.
Why This Matters for Policymakers
The margin talking point is not merely misleading — it is strategically deployed to block reform.
When Congress considers capping insurer profits, or lowering Medicare Advantage overpayments, or modifying and strengthening the Affordable Care Act’s medical loss ratio requirements, the industry’s first move is to present itself as a low-margin business operating on thin ice.
The margin talking point says: don’t look at us, we’re barely getting by. The ROE data gives the lie to this. A company earning 26% on equity is not on thin ice. It is extracting premium value from the health care system at a rate that most American industries can only envy — and doing so while denying claims, managing risk scores, and fighting every form of regulatory oversight.
H.R. 1 Funding Cuts Will Overshadow Gains from the New Rural Health Transformation Program
Abstract
Issue: The 2025 budget reconciliation law (the One Big Beautiful Bill Act, or H.R. 1) reduces federal funding for Medicaid, Affordable Care Act (ACA) marketplaces, and the Supplemental Nutrition Assistance Program (SNAP) by about $1.3 trillion but adds $50 billion for the new Rural Health Transformation Program (RHTP). Additionally, the ACA enhanced premium tax credits expired on January 1, 2026.
Goal: To estimate the impact of H.R. 1 and the expiration of enhanced premium tax credits on state economies and employment levels, and state and local tax revenues in 2026, the first year of implementation, and 2029, when the legislation is fully implemented.
Methods: We estimate federal funding changes for the RHTP, ACA marketplaces, Medicaid, and SNAP, and use the IMPLAN modeling system to project economic and employment impacts.
Key Findings and Conclusions: We project that in 2026, the RHTP’s modest economic gains will be overshadowed by losses from budgetary cutbacks. The predicted combined national impact is 229,000 job losses, primarily affecting larger and more urban states. By 2029, 1.65 million jobs could be lost nationally, a 1.0 percentage point increase in the unemployment rate. Every state would experience substantial economic and employment losses, driven primarily by large Medicaid cuts.
Introduction
The Rural Health Transformation Program (RHTP), which provides five years of federal funding to help states improve health care access and quality in rural areas, was created through the 2025 federal budget reconciliation law known as H.R. 1 or the One Big Beautiful Bill Act. The law also made sweeping cuts to Medicaid, Affordable Care Act (ACA) health insurance marketplaces, and the Supplemental Nutrition Assistance Program (SNAP).1 Although the net result is deep reductions in health and nutrition funding, the federal deficit will rise by over $3 trillion because of large tax cuts also included in the law.2 H.R. 1 is expected to cause more than 10 million Americans to lose their health insurance due to the ACA and Medicaid reductions, 3 million people to lose food assistance because of SNAP cutbacks, and a potential 51,000 preventable deaths due to Medicaid cuts.3 On January 1, 2026, months after H.R. 1 was signed into law, enhanced premium tax credits for the ACA marketplaces expired, causing ACA premiums to rise steeply and leading to rapid coverage losses.
This brief estimates the economic impacts of these sweeping changes to the health care landscape. Using the IMPLAN economic modeling system, we examine the combined effects of H.R. 1 and the expiration of the ACA tax credits on every state’s economy and employment in 2026, the first year of implementation, and 2029, when the law’s changes are fully implemented (see “How We Conducted This Study”). It builds on earlier briefs that have examined the potential economic effects of the U.S. House of Representatives version of the H.R. 1 legislation and the expiration of the ACA subsidies.4
Timeline and Scale of H.R. 1 Cuts and Expansions
The Congressional Budget Office (CBO) estimated that H.R. 1 will reduce federal Medicaid spending by more than $900 billion between the 2025 and 2034 fiscal years, while federal funding for the ACA marketplaces and SNAP will each be cut by almost $200 billion over the next decade. The RHTP adds $50 billion in funding over the decade.5 The expiration of ACA enhanced premium tax credits means federal funding is about $335 billion lower over a decade compared to if they were extended.6
H.R. 1 changes are phased in, as illustrated in cumulative dollar changes in Exhibit 1 and percentage changes in Exhibit 2. While the RHTP began on January 1, 2026, alongside the expiration of ACA tax credits, Medicaid and SNAP cuts will largely be implemented later. By 2034, cumulative federal Medicaid reductions will total $904 billion, exceeding cumulative reductions in ACA marketplace and SNAP outlays. However, although the dollar amounts lost from Medicaid are much greater, the ACA marketplace and SNAP cuts are deeper when measured as a percentage of their annual baseline expenditures. In 2029, for example, federal Medicaid funding will be cut by 12.7 percent, while ACA marketplace funding will fall by 23.4 percent and SNAP funding by 19.7 percent. Additional losses from the expiration of the ACA enhanced premium tax credits means the combined impacts on the ACA marketplaces are even larger than shown in the exhibit. Key policies changes are summarized in Exhibit 3.
Economic Consequences in 2026: Funding Losses Eclipse Modest Economic Gains
In 2026, we project the RHTP launch and the expiration of ACA tax credits — both beginning in January of this year — to have a largely net negative impact on state economies, jobs, and tax revenues.
Rural Health Transformation Program. Ten billion dollars in RHTP funds have been distributed across 50 states, ranging from $281 million and $272 million for Texas and Alaska to $147 million for New Jersey. State economies, as measured by their gross domestic product (GDP), will be $13.8 billion higher as a result (see Appendix 1). The number of new jobs across the country will likely rise by 110,100, of which 51,600 are health-related, and economic gains will contribute to $847 million in additional state and local tax revenues. Relative gains will be higher in smaller rural states.
ACA health insurance marketplace. In 2026, the expiration of the enhanced premium tax credits and other H.R. 1–related changes will see federal funding for the ACA marketplace fall by $31 billion. State GDPs will fall even more, by $40.7 billion (Appendix 2), while state and local tax revenues will fall by $2.5 billion. This will lead to the loss of 339,100 jobs, of which 154,200 are health-related. Southern states, which generally did not expand Medicaid eligibility, tend to be more reliant on the ACA marketplaces. For example, the ACA cuts will lead to 83,400 jobs lost in Texas and 57,500 in Florida, both nonexpansion states. In comparison, Medicaid expansion states California and Louisiana are expected to lose 20,300 and 7,000 jobs, respectively. Overall, the average expected job loss is approximately 2,800 in expansion states, compared with 22,300 in nonexpansion states.
One potential economic effect not captured in our analysis: those who continue to get coverage through the ACA marketplaces will have to pay hundreds or thousands of dollars more for coverage or shift to ACA plans with higher cost sharing, undermining their financial security and reducing spending power on other goods and services.7
Combined Economic Impacts in 2026
While the infusion of $10 billion into state economies for rural health contributes to some economic growth, it is overshadowed by the $31 billion in federal funding cuts to ACA marketplaces.
Exhibit 4 presents combined national estimates for 2026, including the states with the largest employment losses and the largest employment gains. States with the greatest losses — Georgia, Texas, Florida, South Carolina, Mississippi, Alabama, Tennessee, and Louisiana — are Southern states that rely more on the ACA marketplace. Georgia, Texas, and Florida lose between 30,700 and 79,500 jobs, equivalent to a 0.5 percent to 0.6 percent decline in the employment rate. States with job losses also have substantial reductions in their GDP and state and local tax revenues. States with the largest job increases — Alaska, Vermont, Wyoming, Montana, North Dakota, Rhode Island, Hawaii, and Maine — gain 900 to 2,000 jobs each, equivalent to a 0.3 percent to 0.6 percent increase in the employment rate. States with job gains also will have GDP gains and increased state and local tax revenues (Appendix 3 shows detail for all states in 2026).
Exhibit 5 presents the national map of states gaining and losing jobs. Our analysis indicates that 22 smaller and rural states will have net positive gains and job growth, while the District of Columbia and 28 states, generally larger and more urban, will have net federal funding losses and lose jobs in 2026. Many of the states losing jobs are Southern states that did not expand Medicaid.
Economic, Employment, and Tax Consequences in 2029: All States Will Lose
In 2029, when H.R. 1 provisions are fully implemented, we project that all states will lose federal funding and suffer substantial economic and employment losses.
Medicaid. In 2029, federal Medicaid funding will drop by $90.9 billion, causing state GDPs to fall by $118.5 billion (Appendix 4). Medicaid cuts also mean 996,000 fewer jobs nationwide in 2029, half of which will be health-related, including in hospitals, clinics, pharmacies, or nursing homes. States with the largest job losses include California, New York, Pennsylvania, Illinois, Texas, Arizona, Ohio, and Michigan, which lose between 150,200 and 36,600 jobs. States that expanded Medicaid eligibility under the ACA will likely face deeper losses because H.R. 1 targeted them with policies like Medicaid work requirements, restrictive enrollment procedures, and higher cost sharing only in expansion states. Individual and business income losses will cause state and local tax revenues to fall by $8.8 billion nationwide.
SNAP. Federal SNAP funding will be cut by $21.8 billion in 2029, causing state GDPs to decline by an estimated $18.3 billion (Appendix 5). The SNAP cutbacks will cause 135,500 jobs to be lost in 2029, of which about 75,000 are food-related jobs. Other research has examined SNAP’s importance in supporting revenues and jobs at grocery stores that feed all Americans.8 States with the greatest job losses due to the SNAP budget reductions include California, New York, Texas, Florida, Illinois, Pennsylvania, Michigan, Georgia, and North Carolina, which will lose between 23,000 and 4,200 jobs. Under H.R. 1, states with higher over- and underpayment error rates must pay 5 percent to 15 percent of SNAP benefit costs, leading to drastic reductions in federal payments. The expansion of SNAP work requirements and the halving of federal funding for administrative costs will likely make it harder for states to implement operational changes to lower their error rates.9 State and local tax revenues will decline by approximately $1.9 billion nationwide because of cuts to SNAP.
Combined Economic Impacts in 2029
Exhibit 6 summarizes key results for the combined economic impact of the RHTP and ACA marketplace, Medicaid, and SNAP funding changes. In 2029, RHTP is expected to continue providing $10 billion in federal funding to states, but it will be eclipsed by ACA marketplace losses amounting to over $57 billion. Federal funding for Medicaid will drop by almost $91 billion and SNAP funding by almost $22 billion. Combined, these cuts will total $160 billion (Appendix 6 presents more detail for all states.) Our IMPLAN analyses indicate that these changes will reduce state GDPs by $197 billion in 2029, about 23 percent more than the federal savings due to funding cuts being magnified by the “multiplier effect.”
Overall, there will be 1.65 million fewer jobs in 2029 — almost half of which will be in health care — roughly equivalent to a 1.0 percentage point reduction in the national employment rate. State and local tax revenues will be more than $14 billion lower in 2029.
To illustrate relative losses, Exhibit 6 shows job losses as a percentage of state employment in the eight hardest-hit states, all of which have expanded Medicaid eligibility. The exhibit also highlights states with the largest number, rather than percentage, of jobs lost, ranging from 207,100 in California to 51,000 in Ohio.
Discussion
Over the next decade, funding cuts and changes to Medicaid, the Supplemental Nutrition Assistance Program, and Affordable Care Act marketplaces through H.R. 1, and the expiration of the ACA enhanced premium tax credits, have the potential to reshape the U.S. economy and health system. The $50 billion funding increase through the Rural Health Transformation Program will not offset the much larger losses in health insurance coverage, decreased access to care, and increased hunger caused by H.R. 1 cuts.
We focused on two years in this brief: 2026, the first year of the law’s implementation, and 2029, when the law’s changes are fully implemented. Economic and employment impacts across states will also occur in 2027 and 2028, though those interim years are not presented here. By 2029, federal funding cuts will total $160 billion, triggering 1.65 million job losses. Slightly less than half of the jobs lost would be in health care, the leading sector for job growth in recent years.10 Research suggests these cuts also could reduce the capacity of hospitals and community health centers to provide care.11 The RHTP might offset a small portion of these losses through 2030, but it will be eclipsed by larger losses, particularly in urban areas where most Americans live. The economic repercussions of jobs lost in other areas, including grocery stores and food-related industries, will likely ripple to sectors such as retail, real estate, and construction across the nation.
Under H.R. 1, cuts to health and nutrition programs largely harm Americans with lower incomes, while tax cuts primarily benefit those with higher incomes. The CBO estimates that Americans in with lowest 10 percent of incomes will lose about $1,200 per year (3.1% of their incomes), while those with the top 10 percent of incomes will gain $13,600 per year (2.7% of their incomes).12 Other analyses reached similar conclusions.13
This brief illuminates another aspect of the budget cuts: how they harm state economies. While the budget cuts create $160 billion in savings for the federal government in 2029, state economic losses will outstrip those savings: we project state GDPs will decline by $197 billion, or about 23 percent more than the federal savings.
Cuts to Medicaid and SNAP will directly shift costs from the federal government to states. However, H.R. 1 will also lower state and local tax revenues by around $14 billion in 2029, making it harder for states to offset lost funds. Federal funding and tax revenue losses will likely force states to make further cuts to assistance programs and other public services like education. Though not directly required by H.R. 1, states could be forced to scale back programs such as home and community-based services for disabled and elderly populations.14
Proponents of the law explained that the budget cuts were intended to exclude “undeserving” populations from accessing benefits, such as able-bodied people who choose to not work, claiming these changes would ultimately help them gain jobs and incomes.15 But evidence indicates that work requirement programs do little to increase employment because they fail to address underlying reasons for unemployment.16 Moreover, by reducing the number of jobs in low-income communities, the new law could make it even harder for people to find jobs.
How We Conducted This Study
Estimating State-Level Federal Funding Changes
An important element of this analysis is estimating changes in federal funding for each state, based on the many sections of the bill. We began by estimating state “baseline” federal benefit expenditures for each state, using state estimates of Medicaid expenditures for fiscal year 2025 and actual SNAP expenditures for fiscal year 2024. These were then inflated to 2029 levels, based on Congressional Budget Office baselines, using data and methods described previously.17 For the Affordable Care Act marketplace, we used data about state-level ACA premium tax credits in 2024 and inflated these to 2026 and 2029 levels.
To estimate the reductions in federal funding that would occur at state levels we relied on the following sources:
- We used Centers for Medicare and Medicaid Services Rural Health Transformation Program federal allocations to the 50 states in 2026.18 The total level of federal funding ($10 billion) will be the same in 2027 to 2030, although state allocations may differ slightly in future years. We assume that all $10 billion allocated in 2026 is spent that year; if actual outlays are lower, then the economic gains in that year will be reduced.
- For the ACA marketplace analyses, we relied on the Urban Institute’s estimates of the state-level effects of the expiration of the ACA subsidies, H.R. 1 policies, and the value of ACA subsidies.19
- State-level Medicaid funding reductions were based on detailed analyses published by KFF of the final version of H.R. 1, which included estimates related to the effect of work requirements, changes in provider taxes and state-directed payments, and shortened certification periods.20
- State-level Supplemental Nutrition Assistance Program funding reductions were based on a combination of estimates of the impact of expanded work requirements by the Urban Institute21 and SNAP payment error rates for 2024 (to predict state matching requirements).22 Adjustments were made to accommodate final compromises in the legislation, such as potential adjustments for states with very high error rates and for work requirements in noncontiguous states.
- Finally, all these state-level estimates were aligned with the CBO’s estimates of changes in federal funding for each of these programs based on the enacted version of H.R. 1, adjusting for programmatic budget interactions.23
Despite our efforts to use the best estimates available, we recognize that all projections are uncertain and that actual impacts may differ due to changing economic circumstances or state policy actions. Nonetheless, the analyses in this brief should provide conservative estimates of the approximate impact on federal funding levels and economic and employment effects.
Estimating Economic, Employment, and Tax Impacts
Our estimates of the economic, employment, and tax effects of reduced federal funding are produced using IMPLAN, a widely used input-output economic impact software system.24 The underlying logic of our analyses is that funding changes have “multiplier effects” that are felt initially in the health care and food sectors but soon spread out to other economic and employment sectors as well.
IMPLAN enables us to estimate three key impacts for states, their businesses, and residents: 1) changes in state gross domestic products (GDPs) caused by the reduction in federal funding; 2) changes in the number of jobs in the state, which are categorized as direct (health or food), indirect (other sectors) and total employment; and 3) changes in state and local tax revenues caused by the changes in household and business incomes. The definitions of these metrics were described previously.25
For Medicaid, we partitioned each state’s Medicaid loss in four health care sectors: hospital, ambulatory care, pharmaceuticals, and long-term care, based on estimated Medicaid spending in these sectors.26 The analysis of ACA marketplace changes was similar, although it did not include the long-term care sector, which is not covered by ACA plans. Our IMPLAN-based analysis of the cuts in SNAP funding was similar but focused on changes in food-related expenditures. As described in an earlier brief, households must blend SNAP benefits and their own income to purchase enough food; research shows that SNAP induces a marginal propensity to purchase more food. Thus, we allocated each state’s share of SNAP reductions in two parts: a 30 percent reduction in food purchases and a 70 percent reduction in other consumer goods purchased by low-income households.
Data about the types of organizations that will receive RHTP funding within states is not yet known, although CMS issued some guidelines for states, such as no more than 10 percent allocated for administration.27 Using the IMPLAN industry categories, we allocated each state’s allocation into funding for state health departments, hospitals, and ambulatory health clinics. In many cases, allocations may initially go to nonprofit organizations or businesses to help with health care staffing or health information technology; in the end we expect that the funds will ultimately be received by health care organizations.
All these analyses use IMPLAN’s Multi-Region Input-Output (MRIO) methodology to account for cross-state effects of the policies (sometimes called “leakages”).28 For example, some of the food purchased in Georgia may have been grown in Kansas or processed in Tennessee, so lower grocery purchases in one state may trigger losses in other states. For example, a nurse who loses her job in a Louisiana clinic might reside in Texas; thus, a job lost in one state could create economic losses in another.
How the Multiplier Effect Works
The figure below illustrates how the multiplier effect works for Medicaid and SNAP. For Medicaid, the reduction in federal Medicaid funds lead to reductions in state Medicaid programs’ budgets. In turn, the loss of insurance coverage lowers revenue to health care providers, like hospitals, clinics, pharmacies, and nursing homes. These are the direct effects.
In turn, health care providers must compensate for revenue losses by reducing how much they spend on staff and on goods and services from vendors (such as medical supplies, equipment, rent, and IT services). These businesses also must reduce spending on labor, goods, and services; the reductions in labor expenses means health providers and other businesses must lay off staff and reduce compensation. These are the indirect impacts of the policy change.
Finally, as employees lose income, they purchase fewer consumer goods and services (such as retail goods, transportation, groceries or rent). These are known as induced losses, which in turn lead to economic and employment losses. Falling personal and business income also lowers state and local revenue from income, sales, and other taxes, such as real estate taxes.
These principles also apply to the loss of federal SNAP funding. Although SNAP is administered by state agencies and benefits are distributed to recipients, the SNAP funds flow directly to grocery stores for food purchases, although as described above, economists recognize that consumers redeploy their available household income to purchase other goods and services. Parallel to the Medicaid example, these effects can be viewed as direct, indirect, and induced effects.
Why Our Estimates Are Conservative
We focus on the effects of changes in federal funding because they are exogenous changes (“shocks”) in the resources available to each state and its residents caused solely by the federal policy changes. States, businesses, or individuals may compensate for the reduction in federal funding by shifting resources away from other uses (for example, cutting services or raising taxes) which have similar economic repercussions. Focusing on the federal budgetary changes makes our estimates more conservative. Also, some economic multiplier studies report the effects on a broader measure of economic activity, sometimes called output, which may double-count losses in production, wholesale, and retail sectors. We present estimates of changes in state GDPs, based on the value added (or lost) within a state; these are much more conservative and consistent with standard approaches for measuring state economies.
Medicaid, ACA, and SNAP cutbacks could have other harmful effects on health, nutrition, and well-being. A large body of research has demonstrated how the expansion of Medicaid coverage under the ACA led to improved health access, better health, and greater financial and mental well-being.29 SNAP has also been associated with better health and lower financial strain.30 For example, one report estimated H.R. 1 could cause medical debt to rise by as much as $50 billion,31 while another estimated 51,000 preventable deaths.32 The loss of health and nutrition benefits could impair health or mental well-being, leading to additional losses in productivity or higher health care costs. Our analyses do not account for these other health and social costs; they are based entirely on the economic repercussions of federal funding reductions on state economies and employment.
The Good, Bad and Ugly in Healthcare all in One Week
Summer is here and its first week is in the books. Like politics, the economy and life in general, it brought the good, bad and ugly attention to healthcare in the U.S.
The good:
- At the American Society of Clinical Oncology (ASCO) meeting in Chicago, attendees heard about a breakthrough medication that dramatically improved results in pancreatic cancer patients (Revolution Medicine) and a gene editing tool capable of permanently lowering cholesterol (Lilly) with Chinese ascendence in the biotech science race a clear takeaway.
- The American Hospital Association issued a statement accepting responsibility—in part—for healthcare affordability concerns mounting nationwide, calling for collaboration with insurers, drug companies and others to pursue solutions. In tandem, AHA released “Making Health Care More Affordable: A Blueprint to Lower Costs, Improve Access and Enhance Quality.” which recommends 5 core strategies and 24 actions to address affordability in a broader context of its systemic reform.
- And the Bureau of Labor’s May jobs report brought a surprise: the labor market rebounded in May adding 179,000 jobs prompting speculation new Fed Chair Kevin Warsh might consider interest rate hikes to slow inflation (a policy that would encounter disfavor in the White House as Campaign 2026 looms).
The bad:
- The House Appropriations Committee mark-up of its FY27 budget Friday included a 4% cut to FY27 HHS’ funding—less than the 12.5% President Trump proposed in his proposed budget but no less sobering.
- The S&P 500 (-2.64%) and Nasdaq (-4.18%) each had their worst single-day drops of the year yesterday after the stronger-than-expected jobs report (BLS May) triggered a market selloff. Stocks fell across a broad range of sectors. The Dow Jones Industrial Average fell more than 1%, and the S&P 500 fell more than 2%. The tech-heavy Nasdaq composite sank more than 4%.
And the ugly:
Last Monday, CMS issued its work requirement directive to the 40 Medicaid expansion states detailing two new requirements they must meet to verify enrollment that begins in January: 1-
- States must use unspecified data that’s not more than a year old to make the eligibility determinations as much as possible.
- Starting Jan. 1, 2028, states must provide documentation proving medical frailty i.e. proof people have conditions that impair their ability to meet the requirements.
And these new stipulations come on top of administrative filing requirements that start at the end of this month and mandated twice/year eligibility verification oversight starting next year.
Per the CBO, the intensified policing of the Marketplaces (a legacy of the Affordable Care Act) is likely to shrink enrollment by 25% or more—that’s the point. The administration holds a view that states are ineffective in managing health programs like Medicaid, CHIP, the Marketplaces et al. contributing to un-attended fraud, waste and abuse.
Neither of the new stipulations from CMS is clear nor was either anticipated. They were an ugly surprise and none of 40 states is prepared.
My take
The promising breakthroughs in diagnostics and therapeutics like last week’s are the reasons most individuals in the U.S.—legal residents or not—believe our health system seeks to do no harm and provides dependable high-quality care, state of the art care (especially if you have insurance). They acknowledge it’s complex and expensive, but they accept it’s what we have for now.
But the bad and ugly news about healthcare seems to dominate media coverage, especially in social media where fact-checking is often shortcut.
For me, the highlight of the week was AHA’s statement committing itself to the pursuit affordability across the system by marshalling its peers to create meaningful solutions. Sign me up. Collaboration is the starting point. Transparency in its deliberations will be necessary to building trust in this process. Inclusion of all proposed solutions subjected to objective review will be its necessary start. And timing is key: election season tends to distort messaging and draw critics. The urgency of direction is no less key: ideally, meaningful direction and substantive recommendations should follow soon after but be independent of Campaign 2026 results in state and federal elections.
Paul
PS I am in DC this weekend celebrating HFMA’s 80th Anniversary at National Harbor. Now living away after 15 years in the nation’s capital, visits like this are bittersweet. There’s no doubt healthcare’s impacted by the laws, rules, administrative actions, executive orders, SCOTUS decisions and appropriations that originate here, but I’ve come to appreciate three realities since leaving here years ago:
1-U.S. healthcare is decreasingly controlled by DC-originated actions and activities. The corrosive impact of partisan brinksmanship in our elective politics has eroded faith and confidence in its purpose and intent, especially in federal government.
2 Changes to the system are increasingly the result of states forced to cope with health & social services programs and private capital seeking shareholder gain. How these align (or not) will be keys to U.S. healthcare’s future. Today, there’s more dissonance than consonance in their directions.
3-Only a few are planning for healthcare’s long-term future. The agenda for most in this industry-including the majority attending HFMA this week- is short-term survival and sustainability. Long-range strategic planning and meaningful assessment of future state scenarios are luxuries for most. Clearly, issues like affordability did not surface overnight.
Tim Cook’s legacy offers doctors a lesson in money & mission
https://www.linkedin.com/pulse/tim-cooks-legacy-offers-doctors-lesson-money-mission-pearl-m-d–qm8sc
In a 2015 commencement address at George Washington University, Apple CEO Tim Cook told graduates that their values should serve as their “North Star.” Work, he said, takes on new meaning when people feel pointed in the right direction. Otherwise, “it’s just a job, and life is too short for that.”
For generations, American medicine was built on a similar idea: that being a doctor was not just a job, but a calling rooted in service.
Doesn’t seem so long ago that most physicians practiced in small, independent offices, deciding for themselves which patients to see, how long to spend with each and how care would be delivered. Their identity and purpose were clear. They were doctors, trained through years of sacrifice to keep people healthy, relieve suffering and save lives.
That era of medicine has been replaced by one in which physicians increasingly struggle to balance mission and financial stability. In that tradeoff, most have chosen stability.
All but 38% of physicians have left or sold their practices. The majority now work for hospital systems, private equity firms or insurers in return for greater negotiating clout, administrative support and economic security. Among those who remain independent, a growing number have embraced concierge medicine, a model in which patients pay an annual fee (typically several thousand dollars, with some practices charging $20,000 or more) for enhanced access and personalized care. For physicians, the appeal is clear: fewer patients, more time per visit and higher income.
These choices are rational. For most doctors, they feel like the only way to protect their families, preserve their careers and survive inside an increasingly unforgiving system.
CFOs often say there can be no mission without margin. They are right. Financial stability matters in medicine, as it does in every profession. But the reverse is also true: without mission, medicine risks becoming, in Tim Cook’s words, “just a job.”
That is the danger many physicians may not fully recognize when they trade independence, access or autonomy for financial security. The gain is visible immediately. The loss only becomes clear only over time.
Cook’s recent retirement, and the debate over his legacy, offers a powerful case study in what happens when institutional optimization and personal values collide. His story helps illuminate the choices now facing medicine, and the consequences that follow when mission and margin move in opposite directions.
The tradeoffs behind Tim Cook’s success
By almost every measurable business standard, Tim Cook’s tenure as Apple CEO was a historic success. After succeeding Steve Jobs in 2011, he transformed Apple from a beloved consumer tech company into one of the most valuable corporations in history.
In the years that followed, Apple’s market capitalization rose from roughly $350 billion to nearly $4 trillion. Annual profits more than quadrupled. Products like the Apple Watch and AirPods became major revenue drivers, while Apple’s services business fundamentally reshaped the company’s economics.
Through this financial lens, Cook’s leadership received near-universal praise. But those metrics do not capture the personal compromises he made to achieve that level of performance or the price those choices likely carried. Cook’s public persona rested on discipline, restraint and values-based leadership. He framed privacy as a “fundamental human right” and argued that technology should be built around trust, accessibility and respect for users.
But his actions told a different story. And when the values people expound and the actions that they take deviate from one another, psychologists describe the result as cognitive dissonance: an uncomfortable internal conflict.
News articles and podcast retrospectives have questioned Cook’s $1 million donation to Trump’s 2025 inauguration, the custom glass plaque mounted on a 24-karat gold base he gave the president and his attendance at a private White House screening of Melania. There is nothing intrinsically wrong with cultivating a president’s favor, but it is hard to reconcile these actions with Cook’s public image and stated values.
From a financial and shareholder-value perspective, the strategy appears to have worked. As Trump ratcheted up tariffs on imports from India in 2025, the president exempted smartphones and semiconductors, sparing Apple significant costs.
A similar conflict between values and margin appears in Cook’s dealings with China. Over 15 years, he built one of the most sophisticated global supply chains in history, giving Apple a massive competitive advantage. But doing so tied the company to a government known for censorship, human rights violations and a manufacturing system long criticized for its working conditions. To critics, Cook’s willingness to accept those tradeoffs once again ran contrary to his public commitments to privacy, dignity and human-centered technology.
The leaders of publicly traded companies may view such compromises as essential to business success. But what happens when financial optimization pulls clinicians away from their “North Star”?
How financial incentives reshaped medical practice
In 1970, economist Milton Friedman famously argued that the social responsibility of business was to increase profits for shareholders, so long as companies followed the rules of the game. That idea helped define modern American capitalism and the expectations placed on corporate executives.
But medicine is not just another business. Here, the question is what happens to mission-driven doctors when they pursue a finance-first approach, either for their own financial benefit or for the benefit of the hospital, private equity firm or insurer that owns their practice?
Most physicians will never again have the combined autonomy and financial security of previous generations. Industry consolidation has shifted negotiating power away from doctors and toward large hospital systems, insurer-owned medical groups and private equity-backed organizations. These entities have the scale to negotiate higher reimbursement rates, spread administrative costs and operate more efficiently than smaller, independent practices.
Moreover, physician reimbursements from Medicare and Medicaid aren’t keeping pace with inflation. Prior authorization requirements alone force physicians and their staff to spend an average of 13 hours each week navigating approvals, time that could otherwise be spent caring for patients. Furthermore, these financial pressures come on top of the rising cost of staffing, technology, compliance and malpractice coverage.
It is no wonder more than 60% of U.S. physicians are now employed by hospitals, health systems or corporate entities, a dramatic shift from about 40% just a decade ago. Physicians know that joining one of these hospital systems can increase reimbursement rates by 8% to 10% on average, creating a level of financial stability they could not achieve on their own.
Private equity investment has accelerated as well, with roughly 8% of physicians now practicing in PE-backed groups, nearly doubling since 2022. Doctors hope that by selling their practice to private equity, they will receive operational support and long-term financial gain.
In parallel, concierge and direct primary care practices have expanded greatly in recent years. According to Health Affairs, the number of physicians practicing in these models more than doubled between 2018 and 2023, with continued growth since.
What is rarely discussed outside policy circles are the consequences of these financial choices on patient care.
Join a hospital system, and physicians may earn more, but healthcare becomes more unaffordable for both patients and small business owners. Sell a practice to private equity, and studies show the transition is followed by staffing reductions, higher utilization and declines in multiple measures of care quality. Become a concierge doctor, and a physician may earn more caring for 500 patients than previously earned with a panel of 2,000. But that decision also means telling the other 1,500 patients who cannot afford a multi-thousand-dollar annual fee to find another doctor.
The hidden cost of rational decisions
Just as Cook’s financial choices likely caused him cognitive dissonance, physicians who entered medicine with a mission to heal will experience a similar discomfort when their professional choices move them further from their purpose.
Although medical school applications continue to rise, fulfillment among practicing physicians is low. Nearly half of all U.S. physicians report feelings of burnout. Many prefer the term “moral injury” to describe their experience. The phrase, first introduced by psychiatrist Jonathan Shay in the context of war, gained traction in healthcare after physicians Simon Talbot and Wendy Dean argued in 2018 that doctors were not simply burned out, but constrained from delivering the care they knew was right.
However, moral injury implies a lack of agency. It suggests that clinicians are simply victims of forces beyond their control. But it often is applied in ways that obscure the consequences of the choices physicians make when they join a hospital system controlled by a non-clinical administrator, sell to a private equity firm or move into concierge medicine.
This analysis is not a condemnation of those choices. It is an acknowledgment of what has become standard in American medicine and a warning for future generations of physicians. Tim Cook’s story teaches that financial tradeoffs frequently come at personal cost. Legacy is not only about economic results or what others say about us in retrospect. It is built by the choices and decisions we make in real time.
The financial upsides of corporate medicine are clear, but the psychological consequences are rarely discussed. When doctors sell their practices to these entities, part of the quid pro quo is that they will abide by the incentives, constraints and values of the purchasers. And that comes at a steep price.
Caveat emptor: Buyer beware.
HENRY KOTULA 