Project 2025 Privatization and the Vanishing Safety Net Overview

With the healthcare landscape now firmly under the influence of President Donald Trump’s second term, Project 2025 has moved from think tank blueprint to executive action. For healthcare IT executives, developers, and payers, the transformation carries high stakes—some presenting new opportunities, others signaling profound disruption.

At the center of the administration’s reforms lies a potent mix of privatization, regulatory rollback, and restructuring of longstanding federal programs. While conservative leaders have championed these changes as a liberation from bureaucratic excess, healthcare IT and services organizations now face a fragmented ecosystem with increasing legal, financial, and operational complexity.

Project 2025: From Rhetoric to Reality

Originally published by the Heritage Foundation, the 922-page Mandate for Leadership lays out a sweeping vision for federal governance that includes scaling back the National Institutes of Health (NIH), privatizing Medicare, reducing Medicaid eligibility, and eliminating “woke” terminology such as gender identity and health equity from federal documentation.

Despite campaign trail denials, the Trump administration has rapidly embraced large portions of the plan. One of the earliest moves—slashing billions in NIH funding—was temporarily blocked in court following lawsuits from 22 states and dozens of academic medical centers. More cuts and program rollbacks are expected in upcoming budget negotiations.

Privatizing Medicare: A Default to Advantage

One of the most consequential changes is the quiet default enrollment of new Medicare beneficiaries into Medicare Advantage (MA) plans—commercially administered alternatives to traditional Medicare. This shift, if widely implemented, could significantly realign incentives for IT vendors, claims processors, and payer-focused analytics firms.

“It essentially restructures the Medicare program through the backdoor,” warned Robert Weissman, co-president of Public Citizen, in a KFF Health News interview. “It’s about shifting power and resources to private insurers, often without beneficiaries fully understanding the implications.”

For healthcare IT vendors, this may drive increased demand for utilization management tools, preauthorization systems, and claims adjudication platforms. But it also raises compliance challenges, especially with growing bipartisan scrutiny over MA plan denials and algorithmic decision-making.

Medicaid at Risk: Enrollment Churn and Automation Trouble

Project 2025 also calls for new Medicaid requirements including work documentation, time limits on coverage, and premiums for some enrollees. The Congressional Budget Office (CBO) estimates that these changes could save over $100 billion in 10 years—but would also remove hundreds of thousands from the program.

Automated eligibility systems and redetermination algorithms—many powered by legacy rules-based engines—have already created chaos in states like Arkansas and Georgia, where eligible beneficiaries were incorrectly removed during post-pandemic unwinding.

“The irony is that many of the systems used to determine eligibility are themselves underfunded or outdated,” said Larry Levitt, EVP for health policy at KFF. “The technology is becoming a barrier, not a solution.”

Health IT firms offering eligibility verification, enrollment platforms, and benefits navigation tools may find opportunities amid the churn—but only if they can navigate a more fragmented, state-driven Medicaid environment.

Equity, AI, and the Rescinding of Guardrails

Another sharp departure from the previous administration involves the removal of health equity as a guiding federal principle. In January 2025, Trump revoked the Biden-era executive order on artificial intelligence and deleted federal requirements for AI governance roles across agencies. As a result, AI policy for healthcare is now emerging at the state level in a patchwork of disconnected rules.

The revocation also has chilling implications for the ethical deployment of predictive analytics, especially in clinical settings. Researchers have already reported the Centers for Disease Control and Prevention (CDC) removed LGBTQ+ health information from its websites—only to be forced by a court to reinstate some of it in February.

“When you begin suppressing public health data and redefining basic identity constructs in law, the integrity of population health analytics comes under threat,” said Jennifer Geetter, partner at McDermott Will & Emery, during an April panel on AI ethics.

Impact on Vendors, Providers, and Investors

The combination of policy volatility and deregulation is pushing many vendors and providers into defensive planning mode. Some health systems are reviewing their telehealth platforms for compliance with shifting CMS guidelines, while others are reevaluating DEI programs that might run afoul of federal funding rules.

For investors, especially those backing startups in Medicaid-focused care delivery or population health analytics, the risk landscape is now more fluid than at any point since the ACA’s early days.

“You have to plan for both high-growth and high-whiplash scenarios,” said Maya Corbin, partner at Venrock, a healthcare venture capital firm. “Everyone’s watching how deep these cuts go and what, if anything, gets walked back during litigation or budget reconciliation.”

Preparing for a Reshaped Market

Despite the political turmoil, demand for automation, eligibility intelligence, and clinical AI solutions continues to grow. The companies best positioned for this moment are those that can toggle between compliance regimes, respond quickly to state-level changes, and support both fee-for-service and value-based models.

But the real litmus test will be ethical: Can the health IT sector remain committed to protecting access, improving quality, and reducing disparities—even as the federal agenda moves in the opposite direction?

Sources:

Project 2025, Privatization, and the Vanishing Safety Net: Healthcare IT’s Role in a Rapidly Changing System