A Trillion Dollar Cut to Care: The Fight for Medicare and Medicaid

Commemorating 60 Years of Vital Programs — A Legacy in Jeopardy

For 60 years, Medicare and Medicaid have been defining features of the health care landscape, serving as a vital lifeline by providing coverage to older adults, people with disabilities, veterans, children and low-income individuals and families, ensuring millions receive the care they need to live healthy, dignified lives.

But this year, as we commemorate six decades of providing health care for more than 100 million Americans, we must acknowledge the severe threat to both of these programs as President Trump and Republicans in Congress have just sent a wrecking ball directly at them. The “One Big Beautiful Bill Act” (OBBBA) that was signed into law earlier this month guts Medicaid and adds bureaucratic barriers to care that could have far reaching effects on the health care system and will make it harder for millions of Americans to get the care they need.

The OBBBA’s provisions would not only devastate individuals and families who receive coverage through Medicaid, but also ripple through the broader health care ecosystem — forcing independent rural hospital closures, overburdening health systems and wounding state economies across the country. It’s important to note that these changes do not exist in a vacuum, and impacts will not be felt all at once. Over the next decade, different parts of the bill will go into effect. For a detailed breakdown, please review Families USA’s section-by-section summary and analysis.

Changes Across States

Medicaid expansion states have been particularly targeted. Thanks to the ACA, 40 states and DC embraced expanded coverage to benefit their populations — efforts that are now being restricted with punishing measures.

Low-income adults who access Medicaid through the ACA expansion face harsh penalties under OBBBA, including requirements to report work hours or other community engagement activities for at least 80 hours per month, requirements to reapply for Medicaid every six months, increased cost-sharing and reduced retroactive coverage. Requiring more frequent and onerous eligibility checks will force individuals off coverage not as a result of ineligibility, but due to administrative burden. When Arkansas attempted work reporting requirements over 18,000 people lost access to Medicaid because of paperwork burdens, despite more than 95% of them meeting requirements or exemptions.

For those that can meet eligibility hurdles, retroactive coverage changes are particularly disadvantageous to pregnant women or others experiencing life events, as delays in paperwork could result in loss of coverage for hospital stays or significant medical bills, potentially plunging families into medical debt. Increased cost-sharing, even at small dollar increments can lead to reduced use of care, and a potential increase of emergency room services. The bill caps cost-sharing for families at no more than 5% of family income, to be reported on a monthly or quarterly basis, penalizing seasonal or self-employed workers whose income may change throughout the year.

Medicaid-enrolled people who are not part of the “ACA expansion” category — including children, seniors and people with disabilities — are still at great risk of losing Medicaid coverage due to other increased eligibility and enrollment hurdles found in the bill, along with reduced protections and retroactive coverage restrictions.

What’s more, all states, whether or not they have expanded Medicaid to low-income adults, have to contend with these changes in a major way. Reduced ability to raise the revenue they need to support their Medicaid program (due to the freeze on provider taxes), reduced ability to pay providers that see Medicaid patients at higher rates (due to new limits on state directed payments), and reduced payments to providers lead to further reductions in coverage. All of these will result in an erosion of the health care system on which we all rely.

What to Watch

Improvements made to long-term care facilities are being rolled back, to the detriment of seniors needing skilled nursing home care or rehabilitation. The bill rescinds permanent staffing requirements put in place to improve nursing facilities and patient care. Nursing home residents such as Gail Smith will directly feel these changes. After a near-fatal health crisis in 2021, she lost a kidney and now depends on a team of specialists and regular lab monitoring. Medicaid has covered her care for four years across multiple facilities. “I can’t live well or safely without all of that being covered by Medicaid.”

Over 7 million Medicare beneficiaries, who also rely on Medicaid for essential services, could also feel impacts. Essential services for these older adults include coverage of medical equipment, home health aides, and transportation to medical appointments and make it possible for seniors to remain safely in their homes. Medicaid provides an additional avenue to cost-savings and care safeguards as Medicare costs continue to rise. Previous improvements to ease eligibility into the Medicare Shared Savings Program (MSSP) have been halted, hindering low-income seniors from assistance that would cover some premiums and out-of-pocket costs.

For many rural hospitals, Medicaid and Medicaid expansion are a critical source of funding. Independent rural hospitals could lose an estimated $465 million in total patient revenue in 2026 due to federal Medicaid cuts — an average loss of $630,665 per hospital. Cuts would accelerate closures and threaten emergency care access for rural communities. Losing a local hospital hurts local economies and reduces rural jobs by 14%.

Follow our Implementation Timeline for more detail on provision rollout from 2025–2034.

These vital yet often overlooked services are exactly what’s at risk as the bill begins to be implemented. With fewer resources, hospitals will face closures, emergency rooms will grow more overcrowded, and delays in care will ripple across the entire health care system. This is not just a budget cut, as many as 17 million lives are at risk — entire communities could lose access to essential care.

These policies that narrowly passed both the House and the Senate create new administrative burdens and paperwork requirements for millions of people with Medicaid, target specific communities with particular harm, slash federal funding for states which could lead to a reduction in health care services across the board, and pull back rules that made it easier for people to enroll in and maintain coverage.

If you’re feeling outraged, you’re not alone. Send a message to your Representative(s) and tell them exactly how you feel about these cuts to care. The fight for our health care is far from over and we’re committed to protecting Medicaid and Medicare so that these programs can provide quality health care for decades to come.