Signed into law by President Donald Trump on July 4, 2025, the One Big Beautiful Bill Act (OBBB) introduces major changes to the US healthcare system (1). The bill includes measures to cut federal healthcare spending, with significant implications for healthcare delivery. Officially known as H.R.1, the bill was narrowly approved by the Senate (51-50) and the House (218-214) and has been the subject of much controversy over reallocating funds, limiting federal program eligibility, and reversing Affordable Care Act (ACA or “Obamacare”) provisions (1). In the early stages of implementation, two main changes from the One Big Beautiful Bill have begun to reduce federal spending—but some critics argue that these savings come at a cost to Americans and healthcare providers.
In an attempt to cut federal spending, the first change of the bill targets the nation’s largest healthcare expenditure: public healthcare programs (1). In 2012, around 102 million Americans were enrolled in Medicare and Medicaid, which support Americans over the age of 65 and low-income or disabled adults and children, respectively (2, 3). However, due to the aging American population, ACA policies, and COVID-19 expansions, Medicaid and Medicare enrollments surged to roughly 160 million in 2023, raising total costs from about $989 billion in 2012 to $1.9 trillion in 2023 (3-6). In 2023, these programs accounted for nearly 40% of U.S. healthcare spending (5, 7).
Consequently, the OBBB targeted Medicaid, incorporating provisions for implementing employment requirements, reversing simplified Biden-era procedures, and increasing the frequency of eligibility re-determinations (8-11). Additional cost-saving measures include explicitly excluding Americans without proof of citizenship, shortening retroactive coverage periods, reducing federal health center staffing requirements, and removing federal incentives and funding for state Medicaid programs (8-11). According to the House of Representatives, these changes aim to reduce fraud and waste by disqualifying certain groups, primarily able-bodied, childless, unemployed young adults and undocumented immigrants (1, 12). However, evidence demonstrates that Medicaid fraud rarely occurs, and most Medicaid recipients work at least part-time (4, 13). Therefore, critics argue, the OBBB may cause funding issues for states, introduce administrative burdens for Medicaid management organizations, and withdraw healthcare from Americans, for minimal overall benefit (9, 13-16).
The One Big Beautiful Bill’s second change derives significant savings by reducing payments to healthcare providers (1). Historically, states utilized provider payment programs (DPPs) to reimburse Medicaid providers at above-market rates, which incentivized higher-quality, more accessible care (11). However, the OBBB sets a cap on these payments at 100% to 110% of average commercial rates (1, 10, 11). Furthermore, provider taxes—funds imposed by states to finance Medicaid and provider reimbursements—are slated to decline from a maximum of 6% in 2023 to 3.5% by 2032 (1, 10, 11). Beyond fiscal considerations, the OBBB also raises political concerns by eliminating federal funding for reproductive healthcare providers that offer abortion services (1, 16, 17). Overall, while the bill established a safety net for rural hospitals, the reduced payment rates and federal funding may lead to the closure or reduction of services in approximately 300 to 700 hospitals, as well as at least 200 reproductive healthcare clinics (11, 17, 18). Although the OBBB restricts states’ ability to waive or modify these federal adjustments, critics have urged states to counteract these changes to protect the health and livelihood of American providers and patients (8, 17).
As a consequence of these healthcare reforms, the OBBB is projected to reduce federal spending by at least $990 billion over the next decade (1, 11). Yet, these savings come at a substantial cost to American patients and providers, with estimates indicating that around 11 million Americans may lose Medicaid coverage, 839,000 may avoid necessary medical treatment, and 12,600 may suffer medically preventable deaths (11, 19). On the providers’ side, reductions in Medicaid payments, diminished hospital and state funding, and decreased patient volumes could lead to a $24 billion increase in uncompensated care, as well as the loss of 400,000 to 1.2 million healthcare jobs, over the next decade (8, 11, 20). Overall, although the bill is expected to lower income taxes for most American households, it carries profound implications for the future of the U.S. healthcare landscape (21).
References
1: One Big Beautiful Bill Act, H.R. 1, 119th Congress. 2025. https://www.congress.gov/bill/119th-congress/house-bill/1/text
2: Centers for Medicare and Medicaid Services. 2013. 2012 CMS Statistics. CMS Research, Statistics, Data, and Systems. https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/cms-statistics-reference-booklet/downloads/cms_stats_2012.pdf
3: Kaiser Family Foundation. 2024. Health insurance coverage of the total population. KFF State Health Facts. https://www.kff.org/other/state-indicator/total-population/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D
4: Desilver, D. 2025. What the data says about Medicaid. Pew Research Center. https://www.pewresearch.org/short-reads/2025/06/24/what-the-data-says-about-medicaid/
5: Centers for Medicare and Medicaid Services. 2024. National health expenditure data: NHE fact sheet. CMS Research, Statistics, Data, and Systems. https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet
6: Kaiser Family Foundation. 2016. National health expenditures 2012 highlights. KFF. https://www.kff.org/wp-content/uploads/sites/2/2012/12/highlights.pdf
7: McGough, M., Wager, E., Winger, A., Panchal, N., and Cotter, L. 2024. How has US healthcare spending changed over time? Peterson-KFF Health Systems Tracker. https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#:~:text=Private%20health%20insurance%20accounted%20for,of%20all%20health%20consumption%20spending.
8: Galace, A. 2025. State impacts of the One Big Beautiful Bill. National Association of Community Health Centers (NACHC) Newsroom. https://www.nachc.org/state-impacts-of-the-one-big-beautiful-bill/
9: Ortaliza, J., McGough, M., Cox, C., Pestaina, K., Rudowitz, R., and Burns, A. 2025. How will the One Big Beautiful Bill Act affect the ACA, Medicaid, and the uninsured rate? KFF Policy Watch. https://www.kff.org/policy-watch/how-will-the-2025-budget-reconciliation-affect-the-aca-medicaid-and-the-uninsured-rate/
10: Association of State and Territorial Health Officials (ASTHO). 2025. One Big Beautiful Bill Law Summary. ASTHO Legislative Alerts. https://www.astho.org/advocacy/federal-government-affairs/leg-alerts/2025/one-big-beautiful-bill-law-summary/
11: Heuer, T. 2025. The One Big Beautiful Bill: what every PA needs to know. American Academy of Physician Assistants (AAPA) News Central. https://www.aapa.org/news-central/2025/07/the-one-big-beautiful-bill-act-h-r-1-what-every-pa-needs-to-know/
12: The White House. 2025. Myth vs. fact: the One Big Beautiful bill. The White House Articles. https://www.whitehouse.gov/articles/2025/06/myth-vs-fact-the-one-big-beautiful-bill/
13: Hinton, E. and Rudowitz, R. 2025. 5 key facts about Medicaid work requirements. KFF Medicaid issue briefs.
https://www.kff.org/medicaid/issue-brief/5-key-facts-about-medicaid-work-requirements/
14: National Academy for State Health Policy (NASHP). 2025. What health care provisions of the One Big Beautiful Bill Act mean for states. NASHP Health Coverage. https://nashp.org/what-health-care-provisions-of-the-one-big-beautiful-bill-act-mean-for-states/
15: Galewitz, P., Appleby, J., Rayasam, R., and Wolfson, B. 2025. 5 ways Trump’s megabill will limit healthcare access. Shots: Health News, National Public Radio. https://www.npr.org/sections/shots-health-news/2025/07/02/nx-s1-5453870/senate-republicans-tax-bill-medicaid-health-care
16: Lee, C. 2025. Abortion is legal in Maine, but Trump’s Big Beautiful Bill could gut much of the state’s reproductive health care access. Reproductive Health, TIME. https://time.com/7299743/trump-big-beautiful-bill-reproductive-health-care-maine/
17: Goldman, R. 2025. What is the One Big Beautiful Bill and its impact? League of Women Voters. https://www.lwv.org/blog/what-one-big-beautiful-bill-and-its-impact#:~:text=Federal%20funding%2C%20including%20Medicaid%2C%20is,filed%20lawsuits%20challenging%20the%20law.
18: Cruz-Martinez, G. 2025. What to know about new Medicaid cuts: is your local hospital closing soon? Kiplinger Today. https://www.kiplinger.com/taxes/medicaid-cuts-and-your-local-hospital
19: Gaffney, A., Himmelstein, D. and Woolhandler, S. 2025. Projected effects of proposed cuts in federal Medicaid expenditures on Medicaid enrollment, uninsurance, health care, and health. Annals of Internal Medicine, vol. 25. https://doi.org/10.7326/ANNALS-25-00716
20: Ku, L., Kwon, K., Krips, M., Gorak, T. and Cordes, J. 2025. How Medicaid and SNAP cutbacks in the One Big Beautiful Bill would trigger big and bigger job losses across states. The Commonwealth Fund Issue Briefs.
21: Watson, G., Li, H., York, E., Muresianu, A., Cole, A., Van Ness, P. and Durante. A. 2025. One Big Beautiful Bill Act tax policies: details and analysis. Tax Foundation. https://taxfoundation.org/research/all/federal/big-beautiful-bill-senate-gop-tax-plan/
