Physician finances: Navigating the post 2024 election landscape

Klaus Gottlieb: ©Klaus Gottlieb

Former President Trump won the November 2024 presidential election, and the Republicans gained a majority in the Senate and are widely expected to maintain their majority in the House. This will give the future president a good chance of converting some, if not most, of his agenda into legislation. Moreover, there will be at least 19 physicians serving in Congress, with the possibility of up to 22 if physician candidates win the remaining close races. Interestingly, sixteen of the currently serving physicians are Republicans, and three are Democrats. In consequence, physician advocacy will be stronger in 2025 than it has been in the recent past.

Personal finances and taxes

According to the 2024 Medical Economics Physician Report, Internists earned an average of $270,000 (the top 5% of earners) and OB-GYNs $290,000 (the top 3-4% of earners), with the distribution skewed to the right towards higher incomes. To be sure, these percentages do not represent total household wealth. Nevertheless, the non-partisan but right-leaning Tax Foundation estimates that the net effect of Trump’s proposed tax cuts and tariffs benefits the highest-income earners more than other groups.

Figure 1: Over the next 10 years, the 95%-99% percentile would benefit the most if Trump’s tax proposals were enacted. Adapted from Tax Foundation.

Estate planning

Estate planners do not expect major challenges. This is in distinction to the Biden-Harris plans. However, the fate of Trump’s Tax Cuts and Jobs Acts (TCJA) from 2017 needs close watching. The current estate tax exemption of $13.61 million for individuals and $27.22 million for married couples is set to expire by the end of 2025 unless Congress acts. Some physician families will be affected if it reverts to approximately $7 million per individual (and twice that for couples). Approximately 9% of internal medicine physicians have a net worth above $5 Million, according to Medscape Physician Wealth & Debt Report 2021. The sunset is, however, unlikely as President Trump will make the continuation of the TCJA provisions and perhaps further tax cuts his priority.

Health care sector impact

The health care landscape faces potential restructuring, particularly regarding the Affordable Care Act. Efforts to reform “Obamacare” could include reducing funds for enrollment outreach, enabling consumers to purchase more health plans that don’t comply with ACA consumer protections, such as allowing insurers to charge sicker people higher premiums, and a complete repeal of the act. While the overall impact is unclear, reduced ACA enrollment could potentially decrease the number of insured patients seeking care from physicians.

On the other hand, physician advocates in Congress could dismantle some regulatory burdens, effectively reducing the hours spent on administrative work and thus increasing physicians' work productivity and job satisfaction. While Trump has been silent on the worsening primary care manpower shortage, Republican physician members of Congress will likely champion relevant legislation. The pharmaceutical industry will face an uncertain future. They may benefit from reduced regulatory pressures following the repeal of the Chevron doctrine (the court’s deference to regulatory rulings) and the generally regulation-averse stance of the incoming administration but may find drug price controls burdensome.

Monetary policy and inflation

President Trump can appoint at least two new governors to the Federal Reserve Board during his term and a successor to Jerome Powell in 2026. This, combined with his wish to exert more influence on the Fed, could have difficult-to-discern effects. At a minimum, this challenges the Federal Reserve's traditional independence.
Many economists predict that significantly increased tariffs will be passed on to consumers; this and increased federal borrowing, necessary due to the decreased tax revenue, will increase inflationary pressures. Physicians need to consult with their financial planners about options to prevent erosion of their savings and investments. Education for themselves or their family members is an effective but undervalued inflation hedge.

Education and training

Higher education is a significant expenditure for physician households. Trump has indicated he may seek to eliminate or significantly reduce the federal Department of Education. He is critical of the endowments of some of our largest universities and may roll back some loan forgiveness programs. Higher education at the most prestigious schools may become even more expensive, continuing a long trend of outpacing general inflation. An interesting idea is creating an online "American Academy" offering free college credentials. Physician families with young children should start their 529 college savings plans immediately. Unfortunately, “prepaid” inflation-protected tuition plans are now only available in a handful of states.

Looking ahead

The post-election landscape presents both challenges and opportunities for physician finances. Success will require careful monitoring of policy changes and proactive financial planning. Physicians should work closely with financial advisors, their CPAs, and estate planning attorneys to adjust their strategies accordingly.

Klaus Gottlieb, MD, JD, MBA is an estate planning attorney in San Luis Obispo, CA, who writes frequently about tax and estate planning matters for the National Law Review and other publications. He can be reached at www.WealthCareLawyer.com and works with clients throughout California.