Years ago, the former director of the state Medicaid program and my colleague at the largest private health insurer in Massachusetts gave me the following advice to help guide my evaluation of venture investment opportunities:
“Whatever you do, don’t get ahead of the government.”
And if we’ve learned anything over the last decade, we know that election polls – while providing directional observations – don’t always align with election results. This perhaps makes my former colleague’s guidance that much more relevant today.
No one would argue – well they might, but they’d be wrong – that President Trump and the Republican-controlled Congress haven’t significantly changed the health care landscape. Whether through executive order, regulatory changes or Congressional appropriations, healthcare as we approach 2027 looks very different than it did back in 2024. Throw the AI tsunami in the mix and we are in a completely new environment when it comes to delivering and financing healthcare in the United States.
One logical question on everyone’s mind is what the impact of the midterm elections will be on the US healthcare system in the near and long term.
The midterms
There are three potential outcomes of the midterms: a true blue wave that gives the Democrats control of both houses of Congress and a majority of the governorships across the country; a split decision in which the Democrats gain control of the House but the Republicans maintain a majority in the Senate; and results that once again prove that those who participate in pre-election polls are not the same as people who actually vote – allowing the Republicans to maintain full control of the White House and Congress.
1. A blue wave
Democratic-controlled legislatures – at both the state and federal levels – typically focus on expanding access often through public coverage initiatives, increasing subsidies and ushering in higher levels of scrutiny on the healthcare sector. While significant movement in any of these areas at the federal level is unlikely unless the Democrats secure a super majority in Congress (highly doubtful) we can expect change – some perhaps counter intuitive.
- Additional reliance on executive orders and agency regulatory actions rather than spending bills (read HR1) to further enact the President’s agenda. Secretary Kennedy and his team at CMS and CMMI will likely become even more active in in this regard. This could be a boon to innovative companies bringing novel solutions to market that historically have been slowed down in a highly regulated healthcare ecosystem.
- A Democratic-controlled Congress would likely leverage its subpoena authority to hold the administration to count and undoubtedly would look to the courts when necessary to challenge the Administration’s actions.
- Net net, in the near term even with a blue wave, the likelihood that the environment changes dramatically over the next 18 months leading up to the 2028 election cycle is relatively slim.
- A blue wave, however, will preserve the ability of Congress through the power of the purse to stall the permanence of the Trump administration’s policy initiatives.
2. A split decision
This perhaps is the outcome where the impact is most unpredictable. Will a divided Congress be forced to work across the aisle (overly optimistic); will it ensure that nothing gets done and that we move into a period of ongoing continuing resolutions that make any meaningful change unlikely (sure); or will it place the most vulnerable populations at greater risk given the uncertainty that States will have on what the federal government will provide to support local efforts to deliver healthcare to those most in need (probable). Add to this the likely increase in the number of “divided” states where one party controls the governorship and the other controls the legislature and we’re in for a hot mess.
- Over the last 20 years healthcare policy in divided states has been characterized by vetoes, legal standoffs, and administrative friction exacerbating uncertainty.
- The uncertainty associated with this outcome will lead healthcare investors to sit on the sidelines as we know that investors don’t like uncertainty.
3. The polls are wrong
While the President’s approval ratings coupled with US House, US Senate and state gubernatorial polls don’t lend themselves to this outcome, it is possible that Republicans maintain control of Congress and the GOP’s gubernatorial advantage. This outcome leads to:
- Accelerated “deregulation” and reimbursement adjustments that reward those willing to take on risk-based arrangements.
- Likely attracts additional private investment in novel healthcare solutions
- Greater use of AI in the actual delivery of healthcare vs simply to drive greater administrative efficiency
In isolation and ignoring the long-term health, economic and ethical impact of the Administration’s policies, this may be the outcome that fosters real innovation in the US healthcare system.
What won’t change
Regardless of the outcome of the midterms, the rising cost of healthcare, prescription drug prices and issues of access will continue to dominate the discussion.
Unfortunately, we have a healthcare system that is unsustainable, is inefficient and is inequitable. And until our political leaders are ready to put partisan politics aside, we will continue to have this exact same conversation for years to come.
Photo: Jenny On The Moon, Getty Images
Jason Robart is the co-founder and managing partner of Seae Ventures, an early-stage venture capital firm. Prior to co-founding Seae, Mr. Robart served as the Chief Strategy Officer of Blue Cross Blue Shield of Massachusetts and President and CEO of Zaffre Investments, a wholly-owned subsidiary of Blue Cross Blue Shield of Massachusetts.
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