H.R. 1, the One Big Beautiful Bill Act (OBBBA), was passed into law by Congress on July 4, 2025. This major spending act will add $3.4 trillion to the federal deficit over the next decade. OBBBA will fund tax cuts while making cuts to essential programs like Medicaid, a joint federal-state health insurance program administered by the states and relied on by millions of disabled and low-income Americans.
78 million adults and children are enrolled in Medicaid’s programs, and around 15 million people will lose health insurance, including roughly 17% of Asian Americans who are enrolled. While most of the legislation’s provisions target Medicaid, other health insurance programs will also be affected.
Here is what to expect.
Stricter paperwork and work requirements for Medicaid
The OBBBA will require states to conduct Medicaid eligibility redeterminations every six months instead of the current 12, as well as verify enrollees’ income, residency, and death records more frequently. Medicaid enrollees will also receive just two months of retroactive coverage, which covers events or services that occur before the policy’s official start date, instead of the current three months.
Starting on December 31, 2026, able-bodied adults with children aged 15 and over will need to work or volunteer at least 80 hours a month. Those who are pregnant, caregivers, students, parents of a child who is 14 or younger, and those who are “medically frail” are exempt but may still lose coverage because of bureaucratic obstacles when verifying employment and income, such as overlooked forms and incomplete paperwork. The process will be even harder for those without internet access or a reliable device to submit documents.
The OBBBA will also cut provider taxes from 6% to 3.5% by 2032. These state-imposed taxes on healthcare providers like hospitals and ambulance services allow states to generate matching federal funds to finance Medicaid programs.
The act also bans federal funding for abortion providers receiving $800,000 or more in Medicaid funds, which primarily targets Planned Parenthood. A federal judge temporarily blocked this provision in July 2025, but this decision was overturned in September, allowing the Trump administration to go forward with the ban.
Medicaid cuts also hurt Medicare beneficiaries
30% of Medicaid dollars directly support Medicare recipients.
Cuts to Medicaid are cuts to Medicare, the federal health insurance program for people aged 65 or older. 30% of Medicaid dollars directly support Medicare recipients, covering premiums for 1 in 6 Medicare enrollees, out-of-pocket costs for 8 million enrollees, and Medicaid is the primary payer of nursing facility care.
Starting January 1, 2026, there will also be a one-year increase of 2.5% to the Medicare Physician Fee Schedule, a list of payment rates for Medicare services. A nine-year ban on improvements to Medicare Savings Programs (MSPs), which help low-income beneficiaries pay for premiums and out-of-pocket costs, will also make it more difficult for enrollees to access care.
ACA coverage will be harder to keep
24 million people are enrolled in health insurance through the Affordable Care Act (ACA) Marketplace, informally known as “Obamacare”. The OBBBA requires that income and eligibility be checked closely and more often, and potential enrollees will have to wait for the government to verify their information before getting coverage and premium subsidies. This is a shift from previous policies that allowed temporary premium assistance for up to 90 days while verification was being completed.
Annual automatic re-enrollment will also be restricted, and the enrollment window will be shortened from two and a half months to six weeks. Some enrollees will be charged a fee of $5 per month if they do not verify their household and income during the annual enrollment period.
Cuts to CHIP will hit rural children the hardest
Although the OBBBA provides $50 billion for a rural health fund, rural areas are projected to face $137 billion in federal spending cuts.
Nearly half of U.S. children rely on Medicaid or the Children’s Health Insurance Program (CHIP). Similar to Medicaid, CHIP enrollees will be limited to two months of retroactive coverage instead of three. The OBBBA also requires that state funding requests for rural health must be used solely for that purpose and not go toward their share of Medicaid or CHIP costs. Although the OBBBA provides $50 billion for a rural health fund, rural areas are projected to face $137 billion in federal spending cuts, creating a large funding gap.
Rural children are more likely to rely on Medicaid or CHIP than urban children, so budget constraints and more limited retroactive eligibility could leave many uninsured, interrupt critical care, and place a financial burden on families in rural areas. However, existing protections for children, including bans on waiting periods, lockouts for non-payment, and dollar limits, are still in effect under the Eligibility and Enrollment (E&E) rule for CHIP despite the OBBBA’s attempts to block them.
Rollback in coverage for immigrants
Under the OBBBA, federal funding for both Medicaid and CHIP will exclude previously eligible populations such as refugees, asylees, and abused spouses and children. Medicare will see similar changes, excluding refugees and asylum seekers.
For states that use their own tax dollars to fund programs open to residents regardless of immigration status, the OBBBA initially included a provision that would reduce federal Medicaid funding for all residents from 90% to 80%. Three states had planned to limit their programs for immigrants due to the funding uncertainty. However, despite the provision being removed from the version of the OBBBA signed into law, all three states have continued to follow through with the restrictions they had proposed.
How will access to essential services be impacted?
When federal funding for Medicaid decreases, states may be forced to cut back on optional benefits first, which are often essential to disabled and older people.
Mandatory benefits through Medicaid currently include inpatient and outpatient hospital services, rural health clinic services, and family planning services. Optional benefits include some prescription drugs, certain outpatient services, dental services for people aged 21 and over, and home- and community-based services (HCBS), programs that allow those with long-term needs to live in their own home or a community-based setting rather than an institution.
When federal funding for Medicaid decreases, states may be forced to cut back on optional benefits first, which are often essential to disabled and older people.
Effect on people with disabilities
For those who qualify for both Medicaid and Medicare, often because of a disability, it will be harder to apply due to the rollback of Biden-era rules that streamlined the enrollment process, such as requiring states to automatically enroll people if they qualify for supplemental income because of a disability. Stricter paperwork requirements could also cause eligible individuals with disabilities to lose Medicaid coverage.
Unless they are exempt, recipients must also prove they are working, doing community service, or enrolled in school part-time for at least 80 hours per month. They will also need to renew their coverage at least once every six months, making it more difficult to enroll and stay enrolled.
The OBBBA expands funding for HCBS waivers to those who do not need institutional-level care, but this funding is limited and will likely increase wait times for services, making it more difficult for those with disabilities to get the support they need.
Effect on seniors
The federal government is now blocked from enforcing national minimum staffing standards in long-term care facilities. Although states can still set their own standards, this mandate is a reversal of the Biden administration’s aim to improve the quality of care in nursing homes. Senior citizens will also be affected by stricter paperwork and eligibility requirements.
The OBBBA also weakens the Medicare Drug Price Negotiation Program and its ability to negotiate prices for certain drugs. This will lead to higher out-of-pocket costs for seniors on expensive, brand-name medications and “orphan drugs”, medications used to treat rare diseases. The decrease in Medicaid provider taxes will also make it harder for states to fund nursing homes and home-care programs.