New Federal Tax and Spending Bill Cuts Medicaid Coverage in Pennsylvania

The recent federal tax cut and spending bill enacted by the U.S. government proposes significant reductions in Medicaid coverage, potentially affecting over 310,000 Pennsylvanians, as estimated by the Pennsylvania Department of Human Services. Additionally, the expiration of health insurance tax credits this year could threaten coverage for another 270,000 residents and destabilize rural hospitals in the state. The legislation eliminates tax credits for health insurance purchased through Pennsylvania's official marketplace, Pennie.

Key Medicaid reforms included in the bill will take effect between 2027 and 2029. Able-bodied adults seeking Medicaid will be required to work a minimum of 80 hours per month, with exemptions only for students, caregivers, and persons with disabilities. Eligibility redeterminations for Medicaid expansion enrollees in Pennsylvania, who currently number around 750,000, will occur every six months, alongside an introduction of higher out-of-pocket expenses for treatments starting in 2028.

The bill also limits retroactive coverage for Medicaid expansion enrollees to one month prior to application, whereas traditional Medicaid will retain two months of retroactive coverage. Noncitizen eligibility is tightened as well, affecting refugees, asylum seekers, and certain vulnerable immigrant groups with new eligibility rules beginning in October 2026. These changes intersect with Pennsylvania's existing immigration verification process for Medicaid applicants.

National projections by the Congressional Budget Office estimate that nearly 12 million Americans could lose health coverage over the next decade due to this legislation, with some estimates from Senate committees suggesting the impact may reach 20 million. The bill enforces $1.3 trillion in cuts to social safety net programs, including Supplemental Nutrition Assistance, alongside a $4.5 trillion tax cut primarily extending previous Trump-era tax provisions.

Fiscal analyses indicate that while these spending cuts are substantial, they will not offset the overall tax revenue reduction, potentially increasing the federal deficit by approximately $3.4 trillion over ten years. The bill narrowly passed the House of Representatives with mostly party-line votes, highlighting ongoing political divides on healthcare funding and social program priorities.