The One Big, Beautiful Bill Act Cuts Medicaid Benefits for 1 in 10 Enrollees

Editor: Patti Boozang and Amanda Eisenberg
Authors: Jocelyn Guyer, Avi Herring and Kaylee O’Connor

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tl;dr

• The House of Representatives passed the “One Big Beautiful Bill Act” through the budget reconciliation process on May 22. The bill, which the Senate has now taken up, has provisions that will result in 8.7 million fewer Medicaid enrollees, or about one in 10 Medicaid beneficiaries losing coverage. In states like Nevada, Louisiana and Oregon, enrollment reductions could reach 15% or more.

• While coverage losses will be concentrated in Medicaid expansion groups, largely due to work requirements, the repeal of two eligibility and enrollment rules is expected to cause nearly 600,000 children and more than 200,000 pregnant women, parents and caretakers of dependent children to lose health coverage. All in, 2.1 million people will not have Medicaid coverage due to the change, per Manatt Health’s state impact assessment, produced with input from State Health and Value Strategies.

• It’s not just enrollees who will face hardship. States, including those that didn’t expand Medicaid, will lose a significant amount of federal funding over the next decade — which will impact the entire health care delivery system, especially in rural areas. States may also incur steep penalties for covering certain immigrants (the majority of which are children).

The 80 Million Impact

Manatt Health has used its Medicaid Financing Model to estimate the state-by-state impact over the next 10 years (federal fiscal year [FFY] 2025 to FFY 2034) of most of the major Medicaid provisions in the House’s “One Big, Beautiful Bill Act.” As a reminder, these include:

• New work reporting requirements and more frequent renewals for expansion adults

• Repeal of regulations to simplify eligibility and enrollment for Medicaid-eligible individuals

• New limits on state directed payments, which states use to enhance reimbursement for Medicaid providers

• New restrictions on financing tools used by states to fund their share of the Medicaid program

• A financial penalty for expansion states that cover certain immigrants

The estimates consider the interactions across these provisions. Manatt has also updated its estimates to include the impact of repealing two eligibility and enrollment rules, revised projections of the expected impact of mandatory work requirements, and estimated enrollment losses by eligibility group.

State-by-State Coverage Impact of Select Medicaid Provisions, FFY 2025-2034

An estimated one in 10 people, or 8.7 million individuals, are set to lose Medicaid coverage due to the provisions of the act, including implementation of work requirements and six-month renewal requirements, and the repeal of eligibility and enrollment rules. The coverage losses will be far worse in some states such as Louisiana, Nevada and Oregon, where the rate of those losing coverage climbs to 15% or more. The map shows the mid-point estimate of coverage losses in Manatt’s model. For the lower and upper estimates attributed to work requirements in expansion states, please reference the full analysis.

State-by-State Expenditure Impact of the Fiscal Penalty on Expansion States Covering Certain Immigrants, FFY 2025-2034

The House bill that would reduce the matching rate for expansion adults from 90% to 80% for states that cover undocumented immigrants or certain lawfully present immigrants. Half of expansion states will face steep penalties if they continue these programs, the majority of which cover children. The penalties across 19 expansion states (including the District of Columbia) will top $100 billion over 10 years if they do not terminate coverage. For purposes of estimating expenditure impacts of the House bill, Manatt’s modeling assumes that states will terminate coverage rather than incur the penalty.

Coverage Impacts for Seniors, People with Disabilities and Children

Children, seniors, people enrolled in Medicaid based on a disability, expansion adults, other adults and “partial benefit” enrollees, which includes seniors and people with disabilities for whom Medicaid pays for Medicare premiums and sometimes cost-sharing will also see reduction in average annual enrollment compared to current law due to the act’s provision forestalling implementation of eligibility and enrollment simplifications for these groups of enrollees.

The Bottom Line

Manatt’s estimates understate coverage losses and funding cuts, as the model does not account for all provisions in the bill due to data limitations. Specifically, we haven’t accounted for:

• Prohibitions on states setting up any new hospital provider taxes or increasing current hospital taxes

• A ban on new or increased taxes for providers other than hospitals

• The provision revoking certain, already-approved provider taxes that will cost states such as California, Illinois, Michigan, New York, Ohio and West Virginia billions of dollars

• A new mandatory cost-sharing requirement of up to $35 for certain low-income Medicaid adults, which is expected to reduce access to services — likely accounting for the Congressional Budget Office’s estimated $13 billion drop in federal spending from the policy

That means that estimated coverage losses for one in 10 Medicaid enrollees caused by the One Big Beautiful Bill Act is a conservative analysis. And reason would suggest that many among these about to uninsured Americans are indeed “deserving” of health insurance coverage, and more importantly, need it — to live, work and thrive.

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