- The 2025 budget law (P.L. 119-21) cuts roughly $1.1–$1.2T from Medicaid, ACA marketplaces, and CHIP over 2025–2034, raising the uninsured by about 10–15M by 2034.
- Medicaid adds an 80-hours/month work or community-engagement requirement for many adults starting 2027, plus tighter eligibility checks, provider tax limits, and more cost sharing that are expected to reduce enrollment.
- ACA marketplace coverage faces shorter open enrollment, no auto-renewal, tougher verification and immigrant limits, and potentially large 2026 premium hikes if enhanced tax credits expire.
- Medicare trims Part D low-income subsidies and tightens eligibility for some lawfully present immigrants, while hospitals—especially rural—face large revenue losses and higher uncompensated care despite a $50B rural aid fund.
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The 2025 Budget Reconciliation law (P.L. 119-21), colloquially the One Big Beautiful Bill Act, represents the most significant rollback of the U.S. health social safety net in recent history. The law imposes sweeping reforms across Medicaid, Medicare, and ACA marketplaces—structurally altering eligibility, financial support, and obligations for beneficiaries and states.
Medicaid is undergoing the most dramatic transformation. Starting January 1, 2027, non-elderly, non-disabled, non-caregiver, and non-parent adults aged 19–64 will need to meet 80 hours/month of work or qualifying community engagement or school to maintain coverage. States are required to verify compliance regularly, first at application and at renewal, with possibilities for more frequent checks. Key exemptions exist, but the burden—including administrative and verification overhead—is likely to reduce enrolled populations substantially. Early CBO and KFF projections suggest coverage losses in the millions, with Medicaid outlays reduced by nearly $1 trillion over ten years.
For Medicare, changes are subtler but still consequential. The law reduces subsidy levels for Low-Income Subsidy (LIS) in Part D, delays rules that streamline Medicare Savings Program enrollment until 2034, and excludes many lawfully present immigrants—including asylees, refugees, those with temporary protected status, and DACA recipients—from eligible categories. Some existing beneficiaries already enrolled are protected, but eligibility for new entrants is curtailed.
The ACA marketplaces will also be reshaped. Premium tax credits enhanced previously will expire unless Congress acts; open enrollment is shortened, automatic renewals eliminated; eligibility verification is tightened; and immigrant access is narrowed. Premium increases are projected to average 75% without extended credits in 2026.
Strategic implications are significant. Hospitals—particularly rural facilities—are in line for large revenue losses and rising uncompensated care, which threatens service cuts or closures. States with large Medicaid expansion populations risk fiscal pressure; legislative or legal pushback may intensify. Coverage losses may exacerbate health disparities, administrative burdens may disproportionately affect low-income, rural, immigrant, disability, and LGBTQ+ populations. Key open questions include how states define exemptions and implement verification; whether Congress will extend ACA credits; and how legal challenges might alter execution.
Supporting Notes
- P.L. 119-21 will cut health funding—Medicaid, CHIP, Marketplace cuts—by approximately $1.1 to $1.2 trillion over 2025-2034.
- The law is projected to increase the number of uninsured individuals by 10 million by 2034 under CBO’s baseline; when including the non-extension of enhanced marketplace subsidies, total uninsured could reach about 15 million.
- Medicaid work requirement: adults aged 19-64 must complete 80 hours/month of work, volunteering or schooling to remain eligible, with exemptions for caregivers, parents of young children, and medical disability. Effective January 1, 2027.
- Medicare changes: cuts to Low-Income Subsidy support; immigrants lawfully present—including refugees, asylees, TPS, DACA recipients—face limits; implementation delays for savings programs.
- Marketplace reforms: premium tax credits set to expire end of 2025; open enrollment period reduced one month; automatic renewals eliminated; eligibility verification tightened; immigrant access limited.
- Hospitals & providers: projected $1.03 trillion decrease in spending from all payers over 2025-34; uncompensated care to increase by $278-283 billion; rural hospitals targeted via a $50 billion fund, but seen as small relative to scale of cuts.