Impact of Federal Policies on the U.S. Care Economy

Federal policies greatly impact the U.S. care economy, where over 63 million adults provide care for other adults with serious medical conditions, and 91 million Americans care for children. This results in approximately 130 million individuals participating in caregiving activities, drawing significant investor attention. Since 2015, venture capital firms have invested $26 billion in over 700 companies focusing on pregnancy, childcare, disability, and aging services. An analysis by Beyond Ventures, Pivotal, and The Holding Co. underscores care as a robust investment opportunity driven by fundamental needs and structural gaps, highlighted by 13 unicorns and multiple multibillion-dollar exits in the sector.

Typically, care companies receive payments through third-party channels like insurers, employers, or government programs, rather than directly from consumers. Services such as maternal health platforms and home care are often reimbursed by third-party payers. This model offers stable revenue streams, with Medicaid, Medicare, and commercial insurers acting as crucial financial supports, particularly in long-term care and disability support sectors.

The Congressional Budget Office predicts that the proposed One Big Beautiful Bill Act might cut federal Medicaid spending by $911 billion over a decade, potentially increasing the uninsured population by 10 million by 2034. Other analyses suggest up to 17 million people, including children and those with disabilities, may lose coverage. Policy shifts could tighten eligibility for long-term services, adjust home equity limits, and remove federal nursing home staffing mandates, significantly affecting segments like elder care, which has seen $7.1 billion in venture capital funding.

Many care companies rely on public reimbursement systems, so changes in coverage or payment rates may compel adjustments in business models. Providers might shift costs to private insurance markets, possibly raising premiums and out-of-pocket expenses for consumers.

Medicaid remains the primary payer for long-term care services, while the Affordable Care Act's provisions have broadened coverage for prenatal and maternal healthcare. This has fueled the growth of companies like Maven Clinic, which attained a $1.7 billion valuation in 2024. Such growth illustrates that business expansion hinges not just on demand but also on seamless reimbursement mechanisms.

The potential lapse of enhanced Affordable Care Act premium tax credits could influence enrollment in commercial plans, essential revenue sources for care-oriented companies. FamTech.org, a network of over 400 companies, investors, and partners, aims to integrate innovation with tangible systems, focusing on childcare, elder care, women's health, and caregiver support.

Anna Steffeney, executive director of FamTech.org, stressed the need to connect innovation with healthcare and public policy as the care economy progresses. For over a decade, government healthcare spending has stabilized the care economy. However, anticipated changes to Medicaid, Medicare, and ACA provisions could shift this stability. Adjustments in reimbursement structures have implications not just for individual companies but also for the broader sector of over 700 venture-backed startups and the $26 billion invested, contingent on their adaptability to the evolving payment landscape.