GOP Megabill’s Diagnosis: Higher Health Costs for All, 12 Million Will Lose Coverage

The tax and spending legislation the House voted to send to President Donald Trump’s desk on Thursday, enacting much of his domestic agenda, cuts federal health spending by about $1 trillion over a decade in ways that will jeopardize the physical and financial health of tens of millions of Americans.

The bill, passed in both the House and the Senate without a single Democratic vote, is expected to reverse many of the health coverage gains of the Biden and Obama administrations. Their policies made it easier for millions of people to access health care and reduced the U.S. uninsured rate to record lows, though Republicans say the trade-off was far higher costs borne by taxpayers and increased fraud.

Under the legislation Trump’s expected to sign on Friday, Independence Day, reductions in federal support for Medicaid and Affordable Care Act marketplaces will cause nearly 12 million more people to be without insurance by 2034, the Congressional Budget Office estimates. That in turn is expected to undermine the finances of hospitals, nursing homes, and community health centers — which will have to absorb more of the cost of treating uninsured people. Some may reduce services and employees or close altogether.

Here are five ways the GOP’s plans may affect health care access.

Need Medicaid? Then Get a Job

The deepest cuts to health care spending come from a proposed Medicaid work requirement, which is expected to end coverage for millions of enrollees who do not meet new employment or reporting standards.

In 40 states and Washington, D.C., all of which have expanded Medicaid under the Affordable Care Act, some Medicaid enrollees will have to regularly file paperwork proving that they are working, volunteering, or attending school at least 80 hours a month, or that they qualify for an exemption, such as caring for a young child. The new requirement will start as early as January 2027.

The bill’s requirement doesn’t apply to people in the 10 largely GOP-led states that have not expanded Medicaid to nondisabled adults.

Health researchers say the policy will have little impact on employment. Most working-age Medicaid enrollees who don’t receive disability benefits already work or are looking for work, or are unable to do so because they have a disability, attend school, or care for a family member, according to KFF, a health information nonprofit that includes KFF Health News.

State experiments with work requirements have been plagued with administrative issues, such as eligible enrollees’ losing coverage over paperwork problems, and budget overruns. Georgia’s work requirement, which officially launched in July 2023, has cost more than $90 million, with only $26 million of that spent on health benefits, according to the Georgia Budget & Policy Institute, a nonpartisan research organization.

“The hidden costs are astronomical,” said Chima Ndumele, a professor at the Yale School of Public Health.

Less Cash Means Less Care in Rural Communities

Belt-tightening that targets states could translate into fewer health services, medical professionals, and even hospitals, especially in rural communities.

The GOP’s plan curtails a practice, known as provider taxes, that nearly every state has used for decades to increase Medicaid payments to hospitals, nursing homes, and other providers and to private managed-care companies.

States often use the federal money generated through the taxes to pay the institutions more than Medicaid would otherwise pay. Medicaid generally pays lower fees for care than Medicare, the program for people over 65 and some with disabilities, and private insurance. But thanks to provider taxes, some hospitals are paid more under Medicaid than Medicare, according to the Commonwealth Fund, a health research nonprofit.

Hospitals and nursing homes say they use these extra Medicaid dollars to expand or add new services and improve care for all patients.

Rural hospitals typically operate on thin profit margins and rely on payments from Medicaid taxes to sustain them. Researchers from the Cecil G. Sheps Center for Health Services Research who examined the original House version of the bill concluded it would push more than 300 rural hospitals — many of them in Kentucky, Louisiana, California, and Oklahoma — toward service reductions or closure.

Republicans in the Senate tacked a $50 billion fund onto the legislation to cushion the blow to rural hospitals. The money will be distributed starting in 2027 and continue for five years.

Harder To Get, and Keep, ACA Coverage

For those with Obamacare plans, the new legislation will make it harder to enroll and to retain their coverage.

ACA marketplace policyholders will be required to update their income, immigration status, and other information each year, rather than be allowed to automatically reenroll — something more than 10 million people did this year. They’ll also have less time to enroll; the bill shortens the annual open enrollment period by about a month.

People applying for coverage outside that period — for instance because they lose a job or other insurance or need to add a newborn or spouse to an existing policy — will have to wait for all their documents to be processed before receiving government subsidies to help pay their monthly premiums. Today, they get up to 90 days of premium help during the application process, which can take weeks.

Republican lawmakers and some conservative policy think tanks, including the Paragon Health Institute, say the changes are needed to reduce fraudulent enrollments, while opponents say they represent Trump’s best effort to undo Obamacare.

The legislation also does not call for an extension of more generous premium subsidies put in place during the covid pandemic. If Congress doesn’t act, those enhanced subsidies will expire at year’s end, resulting in premiums rising by an average of 75% next year, according to KFF.

On Medicaid? Pay More To See Doctors

Many Medicaid enrollees can expect to pay more out-of-pocket for appointments.

Trump’s legislation requires states that have expanded Medicaid to charge enrollees up to $35 for some services if their incomes are between the federal poverty level (this year, $15,650 for an individual) and 138% of that amount ($21,597).

Medicaid enrollees often don’t pay anything when seeking medical services because studies have shown charging even small copayments prompts low-income people to forgo needed care. In recent years, some states have added charges under $10 for certain services.

The policy won’t apply to people seeking primary care, mental health care, or substance abuse treatment. The bill allows states to enact even higher cost sharing for enrollees who seek emergency room care for nonemergencies. But if Medicaid patients fail to pay, hospitals and other providers could be left to foot the bill.

Cuts for Lawfully Present Immigrants

The GOP plan could cause at least hundreds of thousands of immigrants who are lawfully present — including asylum-seekers, victims of trafficking, and refugees — to lose their ACA marketplace coverage by cutting off the subsidies that make premiums affordable. The restriction won’t apply to green-card holders.

Because the immigrants who will lose subsidies under the legislation tend to be younger than the overall U.S. population, their exit would leave an older, sicker, and costlier population of marketplace enrollees, further pushing up marketplace premiums, according to marketplace directors in California, Maryland, and Massachusetts and health analysts.

Taking health care access away from immigrants living in the country legally “will do irreparable harm to individuals we have promised to protect and impose unnecessary costs on local systems already under strain,” John Slocum, executive director of Refugee Council USA, an advocacy group, said in a statement.

The bill reflects the Trump administration’s restrictive approach to immigration. But because it ran afoul of Senate rules, the legislation doesn’t include a proposal that would have reduced federal Medicaid payments to states such as California that use their own money to cover immigrants without legal status.

–Phil Galewitz, KFF Health News and Julie Appleby, KFF Health News and Renuka Rayasam and Bernard J. Wolfson. KFF Health News chief Washington correspondent Julie Rovner contributed reporting.

 

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.