The Host

Julie Rovner KFF Health News @jrovner Read Julie's stories. Julie Rovner is chief Washington correspondent and host of KFF Health News’ weekly health policy news podcast, “What the Health?” A noted expert on health policy issues, Julie is the author of the critically praised reference book “Health Care Politics and Policy A to Z,” now in its third edition.

Congress has mostly stood by as the Trump administration — spurred by Elon Musk and his Department of Government Efficiency, named and created by President Donald Trump  — takes a chainsaw to a broad array of government programs. But now the courts are stepping in to slow or stop some efforts that critics claim are illegal, unconstitutional, or both.

Funding freezes and contract cancellations are already having a chilling effect on health programs, such as biomedical research grants for the National Institutes of Health, humanitarian and health aid provided overseas by the U.S. Agency for International Development, and federal funding owed to community health centers and other domestic agencies.

This week’s panelists are Julie Rovner of KFF Health News, Jessie Hellmann of CQ Roll Call, Shefali Luthra of The 19th, and Maya Goldman of Axios.

Panelists

Jessie Hellmann CQ Roll Call @jessiehellmann Read Jessie's stories. Shefali Luthra The 19th @shefalil Read Shefali's stories. Maya Goldman Axios @mayagoldman_ Read Maya's stories

Among the takeaways from this week’s episode:

• Universities are reconsidering hiring and other forward-looking actions after the Trump administration imposed an abrupt, immediate cap on indirect costs, which help cover overhead and related expenses that aren’t included in federal research grants. A slowdown at research institutions could undermine the prospects for innovation generally — and the nation’s economy specifically, as the United States relies quite a bit on those jobs and the developments they produce.
• The Trump administration’s decision to apply the cap on indirect costs to not only future but also current federal grants specifically violates the terms of spending legislation passed by Congress. Meanwhile, the health impacts of the sudden shuttering of USAID are becoming clear, including concerns about how unprepared the nation could be for a health threat that emerges abroad.
• Congress still hasn’t approved a full funding package for this year, and Republicans don’t seem to be in a hurry to do more than extend the current extension — and pass a budget resolution to fund Trump’s priorities and defund his chosen targets.
• The House GOP budget resolution package released this week includes a call for $880 billion in spending cuts that is expected to hit Medicaid hard. House Republican leaders say they’re weighing imposing work requirements, but only a small percentage of Medicaid beneficiaries would be subject to that change, as most would be exempt due to disability or other reasons — or are already working. Cuts to Medicaid could have cascading consequences, including for the national problem of maternal mortality.

Also this week, Rovner interviews Mark McClellan — director of the Duke-Margolis Institute for Health Policy who led the FDA and the Centers for Medicare & Medicaid Services during the George W. Bush administration — about the impact of cutting funding to research universities. And Rovner reads the winner of the annual KFF Health News’ “health policy valentines” contest.

Plus, for “extra credit,” the panelists suggest health policy stories they read this week that they think you should read, too: 

Julie Rovner: Axios’ “Nonprofit Hospital Draws Backlash for Super Bowl Ad,” by Maya Goldman. 

Shefali Luthra: Politico’s “‘Americans Can and Will Die From This’: USAID Worker Details Dangers, Chaos,” by Jonathan Martin. 

Maya Goldman: KFF Health News’ “Doctor Wanted: Small Town in Florida Offers Big Perks To Attract a Physician,” by Daniel Chang.

Jessie Hellmann: NPR’s “Trump’s Ban on Gender-Affirming Care for Young People Puts Hospitals in a Bind,” by Selena Simmons-Duffin. 

Also mentioned in this week’s podcast:

• Reuters’ “USAID Families Have Their Lives Upended by Trump Move To Shut Agency,” by Jonathan Landay and Humeyra Pamuk.
• Newsweek’s “First USAID Death as Freeze Sees Oxygen Supplies Cut Off for Refugee,” by Theo Burman.

Click to open the transcript Transcript: Courts Try To Curb Health Cuts

[Editor’s note: This transcript was generated using both transcription software and a human’s light touch. It has been edited for style and clarity.] 

Julie Rovner: Hello and welcome back to “What the Health?” I’m Julie Rovner, chief Washington correspondent for KFF Health News, and I’m joined by some of the best and smartest health reporters in Washington. We’re taping this week on Thursday, Feb. 13, at 10 a.m. As always, news happens fast and things might’ve changed by the time you hear this. So, here we go. 

Today we are joined via videoconference by Shefali Luthra of The 19th. 

Shefali Luthra: Hello. 

Rovner: Jessie Hellmann of CQ Roll Call. 

Jessie Hellmann: Hi. 

Rovner: And we welcome to the podcast our first of two new panelists you’ll be hearing in the coming weeks, Maya Goldman of Axios news. 

Maya Goldman: Hi, great to be here. 

Rovner: Later in this episode we’ll have my interview with doctor and economist Mark McClellan, former commissioner of the Food and Drug Administration and administrator of the Centers for Medicare & Medicaid Services under President George W. Bush — though not at the same time. Mark now heads a research institute at Duke University, and he will try to explain what’s happening with NIH [National Institutes of Health] grants. We also have the winner of our annual KFF Health News Health Policy Valentine Contest, but first this week’s health news. 

So by the time you hear this, Robert F. Kennedy Jr. is almost certain to have been confirmed by the Senate as the next secretary of health and human services. But even before he gets sworn in, as we have been chronicling these past few weeks, things are changing fast and furious over at HHS [the Department of Health and Human Services], and, increasingly, courts are trying to stop or at least slow some of those changes. 

The thread running through all of these, which we will talk about, is growing doubt about whether this administration will comply with those court orders or touch off a constitutional crisis. So I admit I had to make myself a chart to keep track of all of these lawsuits challenging all of the actions the administration has taken just in its first three weeks. We’ll start with what’s going on — or not — at the National Institutes of Health, where last Friday night the agency announced that, henceforth, indirect costs as part of agency grants would be capped at 15%, including for current grants. We’ll have more on this and what it might mean in my chat with Mark McClellan later in this episode. But suffice it to say that I am old enough to remember when NIH was an untouchable jewel for both Republicans and Democrats. What the heck happened here? 

Hellmann: I think Elon Musk, in his crusade to find government waste, decided to hone in on NIH next. And this has been something that the conservative think tanks have been talking about for a little bit, that they think some of these universities are just ripping off the government with these indirect costs on NIH grants. Some of the universities get up to 60% or higher on their NIH grants to cover administrative costs, staffing, stuff like that. But it’s just become a target. [President Donald] Trump also tried to do something similar in 2017, but Congress said, No, we do not want to do that, and actually put a rider in appropriations bills to stop it. And that was kind of the end of it. But it seems like the strategy in this version of the Trump administration is to do something anyway and then take it through the courts. 

Rovner: Don’t skip over that too fast. There’s actual language in the spending bill that says you can’t do this. 

Hellmann: Yeah, there just doesn’t seem to be a lot of concern about this, even from people who have historically supported NIH, and Republicans are just kind of going along with what Elon Musk has been saying about, This is wasteful. We think 15% is fair. So it’s definitely been a big shift. 

Goldman: There have been some Republicans that have spoken out, though. I think Sen. Katie Britt from Alabama was one of the first voices to — I don’t know if you could necessarily say she spoke out against it so strongly, but she said, I value the research that the universities in my state do, and I’m talking to RFK Jr. I think, well, it’s not the same kind of response that we might’ve seen seven, eight years ago. There is a little bit of pushback, which is I think different than some other health changes that we’ve seen. 

Rovner: I did notice that [Sen.] Susan Collins had a strongly worded statement in which she buried the news that she was going to vote for RFK Jr., too, as HHS secretary but also saying that Jackson Labs, big biomedical research facility in Maine, thinks this is really important. I have sort of a broader question. This usually comes up in the context of Medicare. We talk about whether or not the federal government is a good or a bad business partner. Because if they keep changing the rules, you don’t want to rely on their word if it can change. I mean it’s one thing to say, Yes, going forward we’re going to cap indirect costs of 15% and you can decide whether to take it or leave it, but they’re doing this for current grant. They’re just saying: OK, that’s it. We’re not going to pay you this money that we gave you a grant and agreed to pay you for five years. One would think that could have longer-term consequences even if this is eventually reversed. And as I just said, there is language in the spending bill that says they can’t do this. 

Luthra: The other thing that I think is worth noting is that there is this sort of uncertainty that it has created at a lot of universities, similar to what we’re seeing in basically any institution that’s been touched by some sort of very sudden funding freeze or funding cut. A lot of universities really rely on these funds, and they don’t know whether they will come back, whether they’ll be losing tens of millions of dollars each year. And they’re trying to plan their budgets, and that means in some cases I’ve heard about universities canceling existing hiring cycles because they don’t think they can necessarily afford to pay for employees that two weeks ago they thought they’d be able to. And what we have seen in other institutions, which we’ll talk about later in the podcast, is coming up here in academia as well, and this will just have vast ripple effects throughout our country and our economy, given what a big role universities play. 

Rovner: And also, in the young scientist pipeline, that’s always been a concern that, who’s going to be the next generation. If graduate students and even undergraduate students see all of this uncertainty and people being suddenly laid off, are they going to think, Well, maybe I should go learn coding or do something else? Maya, you’re nodding. 

Goldman: Yeah, I talked to somebody yesterday who said she’s hearing from students that she mentors — she’s a professor — she’s hearing from students that she mentors that they’re, like, Maybe I should just go to the private sector and make some money. Which I think is actually maybe one of the underlying goals of DOGE [the Department of Government Efficiency] and Elon Musk, to get people to go to the private sector. 

Rovner: Although as we discover, and we will talk more about this, the private sector gets a lot of money from the federal government. 

Goldman: Absolutely. 

Rovner: That’s been kind of the Republican mantra for many generations, of Let’s partner more with the private sectors. Therefore, there’s a lot of partnerships between the public and private sectors. 

Hellmann: It’s also interesting because there’s been a lot of distrust from RFK Jr. about health research done in the private sector by pharmaceutical companies. So if you’re not doing this research or funding it through NIH and you don’t trust pharmaceutical companies to do it, either, then where does that leave you? 

Rovner: Well, moving on to the broader funding freeze that the Office of Management and Budget tried to impose, then tried to rescind, but apparently didn’t in many cases. A U.S. district judge ordered the administration to resume payments, and when officials didn’t, another judge in a second lawsuit ordered the resumption in much angrier terms and led Elon Musk and Vice President JD Vance, the latter of whom is a graduate of Yale Law School, to question whether judges even have the authority to tell the executive branch what it can and can’t do. I have not been to law school, but, I don’t know, I’ve been doing this for a long time, and my perception has always been that’s courts’ jobs, to tell the executive branch and Congress what it can and can’t do. Is it not? 

Luthra: It is, and any of us who has taken civics or American history could tell you that. But I do think it’s worth noting that this actually isn’t a new talking point for, in particular, the vice president, who frequently references Andrew Jackson, the president who famously said: “The courts have made their order. Let’s see them enforce it.” And to what you alluded to earlier, Julie, that is the question about whether we find ourselves hurtling toward some kind of very serious constitutional, if not crisis, then very serious concern about whether the separation of equal powers remains tantamount. 

Rovner: I think you can call it a constitutional crisis. I mean we’re not there yet— 

Luthra: Yes, but we could be hurtling toward one. 

Rovner: Yes. I think that’s very, very fair. 

Luthra: Excellent. 

Rovner: Well, also among the early Trump actions getting shot down by federal judges are the removal of various webpages and datasets at HHS, including a two-week delay of the release of the CDC’s [Centers for Disease Control and Prevention’s] Morbidity and Mortality Weekly Report, with a couple of key studies of bird flu, which by the way continues to spread from birds to cows to people in a growing number of states, most lately Nevada. In a case filed by the liberal groups Doctors for America and Public Citizen, a judge has given HHS until this Friday to restore the websites to the state they were in before they were taken down. I checked this morning, and the CDC website still says it’s being, quote, “modified” to comply with the president’s executive orders. Is this another of those judicial orders the administration considers optional to obey? 

Goldman: I am very curious to see that. I think it’s also hard to wrap my head around exactly what was taken down and changed, because there’s just so much information on the CDC’s website, on federal health websites. So I think it’ll be really hard to know unless you’re looking on a case-by-case basis to see if something has been restored or changed. 

Rovner: I did see, I think this was in The Washington Post, a researcher who said she had a paper on using mobile vans to distribute fruit and vegetables and healthier foods in remote areas and it was taken down because it had the word “diverse” populations in it. I can’t remember whether it was back up or not. But I mean, yes, the president gets to say, We’re not going to do DEI [diversity, equality, and inclusion] again, but this is like the NIH grant. It’s one thing to say we’re not going to do this going forward, and it’s another thing to say everybody who’s ever said this is now fired, which basically they’re saying in a lot of departments. 

Luthra: And that words have very vast meanings. You mentioned diverse populations. “Biodiversity,” a scientific term that may not be used in a lot of these papers anymore, just sort of creates a real chilling effect and makes it in some cases impossible to do accurate science. 

Rovner: Yes. And if you missed it in last week’s episode, I read out part of the list of the words that can no longer be used in federally funded research. Well, outside of HHS, but still inside of health care, the fight continues over the fate of the U.S. Agency for International Development, which Elon Musk has all but obliterated. This may be an example of court relief coming too late. We’re getting stories of rotting food in warehouses with no one to deliver it, a 71-year-old refugee from Myanmar dying because the hospital that had been providing her oxygen in Thailand closed suddenly, and pregnant USAID workers suddenly finding themselves ordered to change continents while in their third trimester of pregnancy. Is there a point to this? There’s so far been no real evidence of fraud in the program. It’s only spending that the new administration doesn’t agree with. 

Luthra: I think we could go even further than spending they don’t agree with. It’s hard to see that they’ve even reviewed it. A lot of the reporting coming out shows that people who work at USAID haven’t gotten any questions from the administration about, What work are you doing? There’s been process initiated to review all the grants that they have frozen, which suggests that maybe they won’t actually do that. This seems very arbitrary, very broad, and to your point, Julie, the health implications will be and are very immediate and very sweeping and risk setting Americans, but also people across the globe, back in terms of health progress by I don’t even know how much. 

Rovner: One presumes that USAID is a target because Americans in general don’t like foreign aid. This is foreign aid. Most people haven’t heard of it. It’s an easy target, if you will, and they can sort of, like, If we can do this with USAID, then we can go on and do it with things that might be a little more politically sensitive. Is that a fair interpretation? Maya, you’re nodding. 

Goldman: Yeah. I mean I think so, but it’s also a matter of national security in a lot of ways, and foreign aid, at least global health foreign aid, is a pretty small fraction of the federal budget. But I’ve been talking to some virologists who are really worried that the collapse of U.S. involvement in global health efforts, there’s going to be viruses that mutate and then come back to the U.S., and who knows if we’ll have the public health infrastructure in our country to fight them anymore. But it’s also just a good investment to fight these viruses, prevent these viruses abroad before they even get to the U.S. 

Rovner: Yeah, it’s better to control Ebola in Africa before somebody with it gets on an airplane. 

Goldman: Exactly, yeah. And there’s also the question that we’ve been talking about on my team of the collapse of U.S. soft power in some ways. You’re leaving a vacuum for another country like China, perhaps, to come in and exert influence in other countries. And I think that you could also see that in biomedical research if NIH funding continues to be cut. 

Rovner: So moving over to Capitol Hill, we’ll talk about efforts to launch the fiscal 2026 budget process and legislate President Trump’s agenda in a moment. But first, our weekly reminder that Congress hasn’t yet finished the fiscal 2025 spending bills, even though the fiscal year began last Oct. 1. And the temporary funding that Congress passed in December runs out March 14. So the new Congress must be about to get that all tied up in a bow, right? 

Hellmann: Yeah, it doesn’t seem to be a lot of urgency about that right now. House Republicans are now pushing for a full-year CR [continuing resolution]. Some Democrats are talking about potentially using a potential shutdown as leverage as they fight back against some of these unilateral spending cuts by Elon Musk. But yeah, most of the focus right now seems to be on the budget reconciliation package that Donald Trump wants to extend his tax cuts and do border spending and things like that. And the government doesn’t shut down for a month, which is a million years in Congress time. So— 

Rovner: It’s like the opposite of dog years. But still, when you say a, quote-unquote, “full-year CR,” that’s really a seven-month CR. That’s really just, Let’s continue what we’ve been doing and move on to fight the next battle. 

Hellmann: Yeah. 

Rovner: Which of course they could have done in December, but they didn’t want to, because I think they were going to come in and do exciting things for the rest of fiscal 2025. But Congress being Congress, they’re going to kick the can down the road. And while we’re on news from Congress, as I mentioned at the top, RFK Jr. will become the next health and human services secretary any minute, if it hasn’t already happened. They are literally voting as we tape this morning. This was a huge controversy — until it wasn’t. What happened to Republicans who were so worried about his anti-vax and potentially pro-abortion-rights views? It just all kind of melted away? 

Luthra: I think what happened is what’s happened with every Cabinet nominee with the exception of Matt Gaetz, which is that the resistance from Senate Republicans is simply not there anymore. I’ve been pretty surprised personally to see some of the lawmakers who are typically considered more moderate, the Susan Collinses of the world, Lisa Murkowskis, who in Trump 1 would vote against some of these types of picks but appear to have changed their perspective this time around. There was so much attention on [Sen.] Bill Cassidy during last week’s hearings, and he made a very public conversation about whether RFK Jr.’s views on vaccines would be deeply detrimental. 

And then he came back and said, I have gotten real reassurances that everything will be fine. And all of these lawmakers are citing these private conversations they’ve had and these commitments that they say they received, and at the same time you have Democrats like [Sen.] Patty Murray saying they have never had more disturbing conversations with a nominee than they had with this particular one. And it just really shows how stark the contrast is. You have the Republican Party largely saying yes to everything Donald Trump is proposing, and Democrats may be critical in cases like this one, but without really the power to stop it. 

Rovner: As we pointed out on the podcast, Kennedy showed an almost alarming lack of knowledge about the programs that he’s going to be overseeing as secretary. I mean, not just didn’t know but apparently just didn’t bother to do the basic homework that one would assume that a Cabinet nominee would do before coming before the Senate. Perhaps he knew that it didn’t matter, that Republicans are going to basically fall in line for whoever Trump wants, because that seems to be what’s going on right now. 

Hellmann: Yeah, he was asked about Medicare and Medicaid in his first hearing and didn’t have a very good answer, and then was asked about it in his second hearing and I think somehow gave a worse answer. So it’s like he didn’t go home and do any studying on it. And maybe he has since. 

Rovner: Yeah, we will see. 

Hellmann: Hopefully. 

Rovner: All right. Well, now onto next year’s budget. It’s not hard to see why President Trump is trying to do so much using his executive power, because the Republican Congress is so far looking unlikely to do anything approaching the president’s, quote, “big, beautiful bill” anytime soon. Just a reminder that in 2017 the Republican Congress just barely got its big tax bill over the finish line before Christmas, so it took them an entire year back then. Jessie, I know you’re following this, or trying to. First, why are the House and the Senate seemingly on different tracks? If they’re going to plunge ahead with the president’s agenda, shouldn’t they be trying to do the same thing at the same time? 

Hellmann: I think Trump just wants to let both sides go at it and see who gets it done fastest and who comes up with the best outcome, kind of like pitting them against each other a little bit. But I think Senate Republicans have a lot of doubt about how quickly the House can get this done. There’s been a lot of pushback on the House side from members of the Freedom Caucus, the really conservative members who would like to see deeper spending cuts. And I think House leadership knows that that’s going to necessitate some cuts that are going to be really unpopular for some moderate Republicans in competitive districts. So I think the Senate sees a sense of urgency. Ross Vought, the OMB director, was on the Hill today basically saying they’re running out of money to do some of these immigration things that they want to do, and [Sen.] Lindsey Graham is saying: We need to be more urgent about this. We need to get this done quickly. So I think that that’s why they’re trying to move. 

Rovner: Just to be clear: The Senate is trying to do a smaller bill first with a single budget resolution, and then they’ll do the tax bill later, and the House is trying to do all of it together. Is that basically where we are in the 15-second wrap-up? 

Hellmann: Yes. 

Rovner: Well, President Trump rather famously on the campaign trail said he would not cut Social Security or Medicare benefits, and just two weeks ago he said he wouldn’t cut Medicaid, either, except for fraud and abuse. How on Earth is either chamber going to pay for $4 trillion in tax cuts without cutting Medicare, Medicaid, or Social Security? 

Goldman: I think it’s important to note that Trump said that he’s going to love and cherish Medicaid and only make changes in fraud, waste, and abuse categories. But what does that mean? We don’t really know. There are a lot of ways that that could be interpreted. So I definitely don’t think that Medicaid and, possibly, I haven’t heard chatter about Medicare, but if you apply the same logic, possibly Medicare and Social Security as well are on the table. 

Rovner: Yeah. And Medicaid, I know that certainly everybody seems to be getting all excited about Medicaid work requirements. They seem to have forgotten what we learned before, which is that most people on Medicaid already work, and if they don’t, it’s because they can’t. They’re either disabled themselves, caring for someone who’s disabled, or for other legitimate reasons cannot work. And that when you do work requirements, generally what we discovered in Arkansas is that you knock eligible people off the rolls, not because they’re not working but because they’ve not been able to properly report that they are working. So we saw lots of people who were eligible and working who were still cut — which maybe that’s the idea of how you cut Medicaid and call it waste, fraud, and abuse? 

Goldman: Definitely possible. 

Rovner: Shefali, what’s the impact of a really big cut to Medicaid, besides the fact that it would save a lot of money? 

Luthra: I think it’s something that we don’t talk about enough, because Medicaid is such a tremendous payer for so many people’s health insurance. We’ve seen really meaningful efforts to expand Medicaid’s reach in the past. Even just a few years, I’m thinking about its role in covering pregnancy, in particular. About half of all pregnancies are paid for through Medicaid. A lot of people qualify for the program specifically when they become pregnant, because the income threshold is different. And we’ve seen a lot of states extend eligibility so that you can hold on to your Medicaid for six months postpartum, the period when you’re most vulnerable, in an effort to reduce pregnancy-related mortality. And obviously insurance is not the sole silver bullet toward improving health, but it makes a very big difference. And so when we talk about cuts toward Medicaid, we talk about cuts toward very vulnerable people. We also do talk about backtracking in an effort to undo one of our most significant reproductive health problems, which is that we really trail other wealthy nations when it comes to maternal mortality, and jeopardizing Medicaid means that we could continue to do that. 

Rovner: An administration that pushes not just the pro-life position, but the pro-family position and the pro-natal, the Let’s have more children position, that seems to be something that gets lost, I think, in a lot of this fiscal discussion of, Let’s cut Medicaid to save money so we can have tax cuts. But obviously we will be talking more about this, because this is just the very beginning of it. 

All right. That is the news this week, or at least as much as we have time for. Now we will play my interview with Mark McClellan, and then we will come back and do our extra credits. 

I am so pleased to welcome to the podcast health economist and doctor Mark McClellan, who is the only person to have led both the Food and Drug Administration and the Centers for Medicare & Medicaid Services, both in the George W. Bush administration. Mark now leads the Duke-Margolis Institute for Health [Policy], which conducts interdisciplinary health policy research across Duke University and its affiliated health care system. Mark, welcome to “What the Health?” 

Mark McClellan: Julie, great to be with you. That was a mouthful and nice to be talking about. There’s so much to discuss on these kinds of topics right now. 

Rovner: I know. You’re really in the right place. So I listened to a podcast that you taped all the way back in January talking about some of the policy changes you were expecting in a second Trump administration. Is it safe to say that what’s happening now over at HHS is not what you were expecting? 

McClellan: Well, maybe it’s a matter of degree and timing, but I think the Trump Version 2 here is, they said themselves, it’s different than Version 1. There are some common themes — tax cuts, deregulation — and some new themes, though, as well — “Make America Healthy Again,” bigger emphasis on finding ways to prevent chronic disease and reduce disease burden than deal frankly with a big frustration of Americans. The first Trump administration was more about repealing the ACA [Affordable Care Act]. This is a different approach here. And also the president promised not to cut Medicare benefits. But then, Julie, I think you’re referring to the third part, which may be the DOGE part, which is a more aggressive approach. As President Trump said, “I’ve learned a lot” over the last eight years. I think he and the people who are advising him have come away from that thinking they can be more aggressive if they want to get more changes done in the direction that they feel like they were elected to pursue. 

Rovner: Well, my main reason in asking you to join us today was to explain this big fight going on at the National Institutes of Health, one of the few major agencies at HHS that you have not led, at least not yet. I assume that many of the researchers you work with have NIH grants, right? 

McClellan: Yeah. So at Duke University, very heavily dependent on federal function, a big federal grant support for its research functions, lots of programs, from gene therapies to cutting-edge AI. All of the efforts to translate that from basic science to impacts on making Americans healthier depends on the NIH. 

Rovner: So how’s the grant process supposed to work? I live near NIH, and I think most people think, Oh, it all goes on there. It’s like the vast majority of it does not go on there. 

McClellan: No, the vast majority is grants that go out to academic institutions and other researchers. And that goes back to the post-World War II era when the United States was trying to figure out what kind of biomedical science policy would work best. And the decision then was we’re not going to have just government institutes run and executed under direct government oversight. We’re going to do this as a public-private partnership with the federal government providing a lot of support, especially for the basic research, what us economists call a public good. Something that benefits everybody is therefore kind of harder for an individual company to support by itself. We’re going to support private academic institutions, nonprofits, sometimes state-affiliated, and we’re going to do that through the grants themselves and also for the infrastructure that’s needed to sustain that research base and grow it out and strengthen it over time. 

Rovner: And that’s what these indirect costs are, right? 

McClellan: Yeah, the indirect costs also date back to the early days, and over time, just like everything else that where federal funding is involved, you’ve got to be careful about how to do it. So in order to do research, you not only need cutting-edge technology and equipment, the funding for the researchers who are the best trained in the world and have the most promising ideas out there, but also funding for increasingly advanced and sophisticated medical equipment, gene sequencers, advanced microscopes. 

And not only the equipment themselves, but maintaining all of this. I work with a lot of these labs and researchers in them. They are also having to spend a lot of resources and time and effort making sure that they’re handling data and samples securely and appropriately, that they’re maintaining all this equipment and the buildings and the other infrastructure supports that they need. And also making sure they’re documenting and complying with all the requirements for what you can and can’t do with federal grant money. That’s where all the overhead goes, and there’ve been, over years, a lot of agreements worked out that have a whole process for figuring out what’s an appropriate cost and what’s not that factors into the resulting overhead rates that academic institutions get for their grants. 

Rovner: So the Trump administration says that, Why should the federal government be paying these indirect costs, particularly to big institutions like Duke that have big endowments? Why can’t Duke just use its endowment to pay for these indirect costs? 

McClellan: Well, Duke does have an endowment, but most of the organizations that are conducting research don’t have an endowment that would cover the kinds of costs that we’re talking about here. We’re talking about, like, biosecure materials, sensitive patient information, very complex equipment put together at scale for major research projects. And that’s something that historically has been part of what governments do best, just like paying for the development of the good research ideas to see if they really pan out and can be advanced to be used effectively in humans. Also, the supports for those increasingly complex research projects that are needed. And the private foundations, Julie, that pay for some additional projects and things, they’re really operating off of this base publicly supported infrastructure that’s had tremendous contributions — you look at the data — tremendous contributions in terms of value for money for the research spending, including the overhead spending that goes into it. 

I should say that that’s not to say that we’ve got all this right. These programs get established and you need to keep looking at them. So do we really need as many NIH institutes as we have today? We’ve learned that a lot of underlying biological processes work across different diseases, not only different types of cancer, but say, as we’ve seen with some of the obesity drugs, obesity and cardiometabolic diseases also have implications for heart and kidney disease, maybe even cancer. Are we doing enough big moonshots on these, kind of understanding fundamental biologic processes? Are we set up to do that? And are these really the most efficient ways to set overhead to support modern technology and research where AI and cloud-based data infrastructure are a much more important part? So it’s important to keep looking at these questions, but they are important issues to deal with if you want to have effective research infrastructure. 

Rovner: What happens, though? At the moment, this is on hold. Judges ordered it stopped. I believe NIH had said they will go back to issuing grants. But if this were to happen — I mean, you’re an economist, also — this would have an enormous economic effect, and in addition to the impact that it would have just on— 

McClellan: Yeah. And I’ll leave it to the universities and the research advocates who have made a very clear case about — these are billions of dollars in funding, collectively. It would have a big impact on the biomedical research infrastructure. And I think, Julie, that’s why you’ve seen two things have happened since this proposal went out. The first was the proposals faced judicial restrictions, temporary restraining orders, both on the ground. This was a very broad decision that might not be consistent with the congressional requirements to spend money on these research priorities. But second, what they call in government regulatory speak an arbitrary and capricious government decision, one that wasn’t tied to a look at. And the NIH does have the authority to set and adjust rates, but it has a well-established set of processes for figuring out what is an appropriate rate. It can update those processes, but it has to go through the effort, essentially what the temporary restraining orders on these cases have put in place. So those are not moving forward right now. 

The other thing that’s happened has been a lot of these research advocates and others, patient groups, affected cancer patients, etc., have talked to their members of Congress, and you’ve seen a bipartisan swell of concern about this. This is not a new thing under the sun. The Trump administration in 2018 actually proposed in its legislative budget proposals to limit overhead costs. The response to that in Congress was not only continuing the NIH budget where it was, but restricting reductions in overhead rates without a due-process approach. So we’re seeing some of the same thing playing out here. 

Rovner: Last question. This is really for you. You’ve worked as a high-level HHS official in a Republican administration. What advice would you give those who are about to walk into the jobs that you once had? 

McClellan: Well, I would advise them to, and I hope would advise the administration, to help those people get there soon. So these kinds of policy approaches, some further proposals for NIH and, for that matter, FDA and CDC reforms, are on the books, but we don’t have confirmed leaders in any of those agencies right now, and also some very thin staff. Julie, often in addition to the Senate-confirmed leader of the organization, there’ll be some other senior leaders who can carry out the administration’s policy agenda, but also have a lot of experience with the agency or with the organizations that the agency is dealing with. 

And the NIH, the FDA are pretty thin on those people right now. I’d contrast that with CMS, where my other successor, Dr. [Mehmet] Oz, is not there yet. He hasn’t been confirmed, but he has a whole team of seasoned political appointees and actually some really good career appointees who have come back who are trying to implement policies effectively there. That’s what I’d really encourage, getting a team on board so we can look at these issues, find ways to do research more efficiently and effectively. Those are the kinds of goals that I think a lot of people would share. 

Rovner: Well, we will all be watching. Mark McClellan, thank you so much. 

McClellan: Great to talk with you. 

Rovner: OK, we’re back. It’s time for our extra-credit segment. That’s where we each recognize the story we read this week we think you should read, too. Don’t worry if you miss it. We will put the links in our show notes on your phone or other mobile device. Jessie, why don’t you go first this week? 

Hellmann: My story is from NPR. It’s called “Trump’s ban on gender-affirming care for young people puts hospitals in a bind.” It’s about an executive order basically ordering hospitals not to provide gender-affirming care if they want to continue receiving Medicare and Medicaid funding and other kinds of federal funding. Obviously, Medicare and Medicaid are huge revenue sources for hospitals, and so they really feel like they have no other option but to comply with his executive order. And the story looks at the impact that that has. Hospitals have been canceling appointments that people have already made to receive this care. And then on the other hand, you have states telling hospitals that they can’t stop providing this care if they’ve been doing it already. And it just really shows how there’s no playbook for this and hospitals and patients are left in a really tenuous position. 

Rovner: Shefali. 

Luthra: My piece is from Politico, by Jonathan Martin. The headline is “‘Americans Can and Will Die from This’: USAID Worker Details Dangers, Chaos.” And it’s a really great Q&A that he’s done with a longtime USAID worker whose name he withholds for privacy concerns. And they talk about how this employee feels and how he’s processed the past several days of USAID being virtually abandoned by the federal government. What I love about this is how frank the conversation is and how I think it does a really important job of putting a very human face on the kind of people that we have heard really criticized by Elon Musk and by Donald Trump, described as fraudsters and disloyal and criminals. 

And what we see in this piece is that the people who work for USAID and work in this industry, they could be making more money elsewhere, but they are risking their lives and often facing threats of kidnapping, of violence in their work because they think it means something and they really care about doing this work. I just hope that more people read pieces like this to understand who exactly is being hurt, workers and also the people whom they help, the lives they save every day, when we talk about the decimation of USAID that we are currently experiencing. 

Rovner: Yeah, it’s quite a moving piece. Maya. 

Goldman: My extra credit is a story published by KFF Health News on CBS’ website called “Doctor Wanted: Small town in Florida offers big perks to attract a physician.” And I think it’s important for a couple reasons. One, it’s a good reminder that while there is so much chaos happening in Washington, there are other issues that have been going on since long before the election, like health care worker shortages and primary care shortages that are still really important to pay attention to. But I also love that this takes a really big issue, provider shortages in rural areas, and humanizes it, like Shefali said, and shows a really poignant example. There’s this small town. They had one doctor for many years, and that doctor retired. And now, what do you do? It’s just, I think, a good look at that problem. 

Rovner: It is. Right, my extra credit is actually by Maya, and it’s called “Nonprofit hospital draws backlash for Super Bowl ad.” So between those ads for movies and Dunkin’ Donuts and new cars and beer was one for NYU Langone Health, a giant academic medical center in New York City. It’s not the first hospital ad to air during the Super Bowl, and it’s not even NYU’s first. But a supposedly nonprofit system dropping a cool $8 million while the long knives are out for health spending, as we’ve been discussing for the last half an hour, is maybe not the best look. I don’t know. I personally prefer the Budweiser Clydesdales. 

OK, so before we go, as promised, I am honored to announce the winner of this year’s KFF Health News Health Policy Valentine Contest. It’s from Sally Nix of North Carolina, and it goes like this. “Roses are red, our system is flawed. Surprise bills and denials leave us all feeling odd. They promise us care, yet profits come first, leaving patients to suffer and wallets to burst. But know that voices stand by your side, doctors and advocates who won’t let this slide. Love should mean coverage that’s honest and kind, not loopholes and jargon designed to blind. This Valentine’s Day, let’s champion care, and demand a system that’s honest and fair.” 

Congratulations, Sally. I hope the rest of you also have a very happy Valentine’s Day. OK, that is this week’s show. As always, if you enjoy the podcast, you can subscribe wherever you get your podcasts. We’d appreciate it if you left us a review. That helps other people find us, too. Thanks as always, to our producer and editor, Francis Ying, and our editor, Emmarie Huetteman. As always, you can email us your comments or questions. We’re at whatthehealth@kff.org. Or you can still find me occasionally at X, @jrovner, and increasingly at Bluesky, @julierovner. Where are you guys hanging on social media these days? Maya? 

Goldman: I’m on Twitter [X] and Bluesky, @Maya_Goldman_, I believe. And been a little more active on LinkedIn recently, so find me there. 

Rovner: I’m hearing that a lot. Shefali, where are you? 

Luthra: I am on Bluesky, at @shefali.bsky.social, and that’s about it. 

Rovner: Jessie? 

Hellmann: I am at X and Bluesky, @jessiehellmann. 

Rovner: Great. We will be back in your feed next week. Until then, be healthy. 

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