Federal legislation almost always creates winners and losers. The One Big Beautiful Bill Act, now before the Senate, is no exception. Overall, the OBBBA as passed by the House will redistribute resources from the poorest children and families (the losers) to the wealthiest (the winners). That’s according to an analysis by the nonpartisan Congressional Budget Office and the Joint Committee on Taxation that takes into account both the tax cuts and the cuts to Medicaid and other social programs. But what about the Medicaid provisions standing alone? Who wins and who loses?
Since the House-passed bill would cut federal Medicaid payments to states by $863 billion over the next ten years, and since only two of the bill’s 26 Medicaid provisions would increase federal Medicaid spending, it is hardly surprising that the playing field is littered with losers. (As we explained here, the version of the OBBBA released by the Senate Finance Committee on June 16 likely increases the cuts to federal Medicaid payments and puts children and families in an even more precarious situation).
The list of losers under the House bill is too long to present in its entirety in this blog. Let’s start with the 7.8 million Americans who CBO projects will become uninsured as a result of the bill’s Medicaid provisions. The majority of these—4.8 million—are estimated to be low-income adults without dependents who do not meet the work reporting requirements that the bill imposes upon expansion states. Analysis by multiple trusted researchers indicates that most who will lose coverage are working but will not be able to navigate the red tape. Another 2.2 million are projected to become uninsured because of other Medicaid provisions in the bill, including the requirement that states reverify the eligibility of expansion adults every 6 months. Those expansion adults who manage not to lose their Medicaid coverage altogether due to work reporting requirements and 6-month redeterminations will also face copayments on most services of up to $35 per visit—inviting the resurgence of medical debt that Medicaid expansion was intended to help them avoid.
Although Medicaid expansion adults are the top targets of the OBBBA, many low-income populations are at risk for loss of Medicaid coverage under the bill. These include: children and families; women, especially those of reproductive age living in small towns and rural areas; people with disabilities; low-income seniors on Medicare; veterans; and legal immigrants, including refugees, victims of domestic abuse, and people seeking asylum.
A wide range of providers will lose Medicaid revenues under the bill, including safety net hospitals, rural hospitals, children’s hospitals, and community health centers. The bill would also prohibit federal Medicaid matching funds on the costs of care provided by Planned Parenthood clinics. Many community clinics are among the small businesses that the bill will affect, and not in a good way.
Finally, under the bill, all states lose, but the 40 states (plus DC) that have taken up Medicaid expansion lose big. All states would, among other things, be subject to a moratorium on imposing new taxes or increasing existing taxes on health care providers. As a result, they would no longer have access to a potential revenue source for financing their share of Medicaid program costs going forward, as their populations age and health care inflation continues its upward climb. (The version now under consideration in the Senate would impose even harsher restrictions on the ability of expansion states to raise revenues from provider taxes).
In addition, the bill targets the 40 Medicaid expansion states (plus DC) for additional savings through multiple provisions. These include: a mandate to impose work reporting requirements on expansion adults; a requirement for recertification of expansion adults every 6 months; a requirement to impose cost-sharing up to $35 per visit on expansion adults with incomes above the poverty level for most services; a reduction in the 90 percent federal matching rate (FMAP) for the costs of emergency medical care provided to expansion adults who are undocumented immigrants; and, in a remarkable overreach, a reduction in the 90 percent FMAP for expansion states that pay for health care for undocumented immigrants exclusively with their own state dollars.
It’s not subtle; the House bill is designed to drive millions of low-income adults in expansion states off of Medicaid and to shift their costs of care from the federal government onto the providers and localities still willing to serve them. Those 40 states (as well as DC), their citizens, their providers, and their communities are the biggest losers under the bill. Their losses in federal funds and enrollment—much higher than those of non-expansion states—will translate into more uninsured, more uncompensated care, and more medical debt.
The only clear winners that we can identify are firms like Deloitte that contract with state Medicaid agencies to design and operate eligibility and enrollment systems. They can look forward “a vast market opportunity” helping expansion states meet the burdensome and costly administrative demands of operating a work reporting requirement regime. In fact, the available Senate language doubles the funds set aside for implementation of the work reporting requirement from $100 million in the House version to $200 million. And that is on top of enhanced (90%) administrative matching funds for the development of new eligibility & enrollment systems that states can pull down anyway.
The Senate is expected to take up the OBBBA imminently. This gives it the 80 Senators who represent the 40 Medicaid expansion states the opportunity to reduce the number of losers. It doesn’t seem like much to ask.