Impact of 2025 Federal Legislation on Medicare and Medicaid Coverage
Medicare and Medicaid have been fundamental to the U.S. health care system for 60 years, providing essential coverage to over 100 million Americans, including older adults, people with disabilities, veterans, children, and low-income families. However, recent legislative changes under the "One Big Beautiful Bill Act" (OBBBA) signed into law in 2025 pose significant threats to these programs. The bill introduces bureaucratic barriers and funding cuts that are expected to adversely affect Medicaid recipients and the broader health care system over the next decade.
The OBBBA targets Medicaid expansion states by imposing stricter work and community engagement requirements, more frequent eligibility renewals, increased cost-sharing, and limitations on retroactive coverage. These changes are likely to increase administrative hurdles, causing many to lose coverage despite remaining eligible, as evidenced by previous experiences in states like Arkansas. The bill also affects Medicaid beneficiaries beyond the expansion population, including children, seniors, and people with disabilities, with additional eligibility and enrollment challenges.
All states face financial impacts due to provisions such as a freeze on provider taxes and limits on state-directed payments, reducing their ability to fund Medicaid and pay providers adequately. This fiscal strain threatens to erode health care infrastructure, leading to rural hospital closures and diminished emergency care access. Rural hospitals could lose significant revenue, jeopardizing local economies and employment.
Long-term care facilities stand to lose improved staffing standards, potentially diminishing care quality for seniors requiring skilled nursing and rehabilitation. Over 7 million dual Medicare and Medicaid beneficiaries may also encounter reduced access to services like medical equipment, home health aides, and transportation, essential for maintaining independent living.
The phased implementation of these provisions from 2025 through 2034 will create lasting challenges across the health care continuum. The bill's layered administrative requirements and funding cuts could result in as many as 17 million Americans losing vital health care coverage and access. These developments underscore the importance for policymakers and insurance professionals to monitor the evolving landscape and anticipate impacts on coverage, provider networks, and health outcomes.