Health Care Reform

How the “One Big Beautiful Bill” Impacts Health Coverage:
Medicaid and Medicare

July 25, 2025

On July 4th, the President signed into law the One Big Beautiful Bill Act (OBBB), a nearly 1,000-page bill that changes federal spending levels by stripping tens of millions of our most vulnerable neighbors of their health care and nutrition.

The OBBB slashes vital programs like Medicaid, Medicare, and the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) to pay for tax cuts that disproportionately benefit the wealthiest Americans. This blog looks at just some of the new law’s provisions, many of which will go into effect over the coming years, causing confusion about when and why people are losing their benefits.

Medicaid Cuts

Medicaid is the country’s single largest source of health coverage, insuring nearly 72 million, or 1 in 5. This includes children, pregnant people, parents, older adults with limited incomes, and people with disabilities. Medicaid covers essential care like doctors’ visits, hospitalizations, long-term care, maternity care, mental health treatment, and rural clinic services.

The OBBB makes the largest cuts to Medicaid in the program’s history. According to the latest estimate by the nonpartisan Congressional Budget Office (CBO), the law will cause 10 million more people to become uninsured by 2034.

Making it Harder to Enroll and Stay Enrolled in Medicaid

The new law will drop eligible people from Medicaid due to increased administrative burden. This is because the bill requires a significant amount of new paperwork that will likely result in eligible people being dropped due to missing mail, late submissions, states being overburdened, and more.

For the next decade, the OBBB blocks the implementation of the Centers for Medicare & Medicaid Services (CMS) Eligibility and Enrollment final rule, which was designed to streamline the process for people to enroll and stay enrolled in Medicaid and apply for the Medicare Savings Program. The Medicare Savings Program helps people with low incomes afford Medicare premiums and cost-sharing.

The OBBB also requires states to check the eligibility of Medicaid expansion enrollees (adults with incomes up to 138% of the federal poverty level) every six months instead of every 12 months.

Medicaid Job Loss Penalty

The new law requires Medicaid recipients who are able-bodied and 19-64 years of age to work, do community service, or participate in work training for at least 80 hours per month, or go to school part time. This includes people with children over 13 years of age.

Most Medicaid enrollees already work, and most who do not will be exempt from this new requirement. Thus, the OBBB will not increase the number of people who are employed but will drop more eligible people from Medicaid due to administrative errors and unexpected job loss.
Medicaid Cost Sharing Requirement

The new law requires states to impose cost-sharing of up to $35 per health care service for Medicaid expansion recipients. This means that for every medical service they seek, Medicaid expansion recipients — who are in the program due to their low-income status and are often chronically ill or disabled — will need to pay up to $35. Over time, these payments can add up to unmanageable costs.

Limiting Medicaid Funding

The OBBB will make it harder for states to raise Medicaid funds, which will decrease how much the federal government contributes to the program.

Medicaid is jointly funded by the federal and state governments, and the federal government “matches” state funding at a rate of 50-77% per Medicaid enrollee and 90% per Medicaid expansion enrollee. All but one US state raises some of its Medicaid funding through taxes on health care providers like hospitals, known as provider taxes. The new law prohibits states from imposing new or higher provider taxes and requires states with Medicaid expansion to reduce their provider taxes by 0.5% each year until they reach 3.5%.

A Medicaid Error Rate Penalty

The law also reduces federal funding for states with a more than 3% error rate for overpayment to eligible individuals and payments to ineligible individuals, including where there isn’t enough information to confirm someone’s Medicaid eligibility. Fear of losing federal funding due to payment errors could result in states denying eligible people coverage.
Medicare Cuts

Medicare is a public health insurance program for people 65 years of age or older and people with specific disabilities, insuring more than 66 million people. A CBO analysis estimates that the OBBB will cause a $45 billion cut to Medicare in 2026, growing to a $75 billion cut in 2034. These massive Medicare cuts result from the OBBB increasing the federal deficit by $3.4 trillion by 2034, as the 2010 Pay-As-You-Go (PAYGO) Act requires that legislation that increases the deficit must be paid for by tax increases or spending cuts.

Continue reading here.

What You Can Do

We can still oppose this harmful law. Our politicians work for us, so they must hear our voices.

• Contact your members of Congress during August recess.

• Check out our Unite & Rise 8.5 initiative and commit to helping us build a network of people taking nonviolent action from their homes or in the streets to protect and restore our democracy.

• Join your local League to learn about and support efforts to advocate for the needs of your community.

“Quality health care at an affordable cost”

Every US resident should have access to affordable, quality health care, including birth control and the privacy to make reproductive choices.

The US health care system should provide a basic level of quality health care at an affordable cost to all US residents. Basic care includes disease prevention, primary care (including prenatal and reproductive health), acute long-term care, mental health care, as well as health promotion and education. Health care policy goals should include the equitable distribution of services and delivery of care, advancement of medical research and technology, and a reasonable total national expenditure level.

Over the past 20 years, the League has lobbied for health care policy solutions, including the Affordable Care Act (ACA), to control costs and ensure a basic level of care for all. Throughout the health care debates of the past few decades, Leagues worked to provide millions of Americans across the country with objective information about the health care system and its significant reforms. This included organizing community education projects, holding public forums and debates, creating and distributing resource materials, and engaging leading policy makers and analysts.