Deep Cuts to NIH Funding Would Raise Long-term Health Care Costs

As the Trump administration proposes a 40% reduction to the National Institutes of Health (NIH) budget for 2026, a new analysis warns that these cuts could undermine scientific progress, weaken the biomedical workforce, and raise long-term health care costs.

The study, published July 25 in JAMA Health Forum, uses systems modeling to highlight feedback loops that may turn short-term savings into long-term setbacks.

Looking Beyond the Budget Line

The NIH supports over 2,500 research institutions and funds the vast majority of U.S. biomedical research. But recent moves to cap indirect costs, cancel grants referencing diversity and public health issues, and delay new awards have disrupted the agency’s core mission. According to the authors, the real danger lies not just in the immediate effects but in how these cuts could trigger a chain reaction across science, medicine, and the economy.

How Budget Cuts Ripple Through the System

The study’s authors—Dr. Mohammad Jalali and Zeynep Hasgul—used a causal loop diagram to map out the interlocking dynamics. Their model suggests that the cuts may do more than shrink the NIH’s footprint; they could reshape the entire landscape of biomedical research. Here are four reinforcing loops the analysis identifies:

• Slower Scientific Progress: Reduced funding for fundamental research could delay or prevent major discoveries, such as the genomics work that led to cancer immunotherapy.
• Workforce Erosion: With fewer training grants, labs may lose talent. A 40% increase in unemployment was observed in labs with even one canceled NIH grant.
• Rising Treatment Costs: As private firms step in, innovation may shift toward high-profit drugs, potentially inflating health care costs.
• Lost Public Health Savings: Fewer investments in prevention and early screening could mean more expensive, late-stage interventions in the future.

“Short-Term Cuts, Long-Term Costs”

“Without NIH investment in fundamental research, breakthrough discoveries might have been considerably delayed or deprioritized due to the lack of immediate profitability,” the authors note. They point to the Human Genome Project and the NIH’s Brain Initiative as examples of long-term public investment yielding transformative results.

NIH funding doesn’t just support lab science—it drives economic activity. In 2024 alone, it generated an estimated $94.58 billion in new output and supported more than 400,000 jobs. Cutting that engine back could weaken regional economies and reduce future tax revenue, the authors warn.

Shifting the Innovation Model

There’s also a deeper ideological shift at play. The analysis questions whether these budget decisions reflect a temporary austerity measure or a permanent pivot away from public funding of science. If the latter, the U.S. may move toward a more fragmented system reliant on venture capital, philanthropy, and market priorities—an ecosystem less conducive to high-risk, high-reward research.

“Public investment in biomedical research is not merely a budgetary decision; it is an investment in human health, longevity, and quality of life,” the authors write. They caution that scaling back now could cede scientific leadership to countries that maintain stable public funding.

What’s Next?

The framework provided by this study doesn’t prescribe specific policy solutions, but it does offer a road map for understanding the trade-offs. By outlining the hidden feedback loops, the authors hope to help policymakers, researchers, and economists anticipate unintended consequences of NIH disinvestment.

Whether the proposed cuts go through or not, this research urges a broader conversation about the value of public science—and the price of losing it.

Journal Reference

Jalali MS, Hasgul Z. Potential Trade-Offs of Proposed Cuts to the US National Institutes of Health. JAMA Health Forum. Published online July 25, 2025. 2025;6(7):e252228. doi:10.1001/jamahealthforum.2025.2228