A proposed $793 billion cut to federal Medicaid spending is projected to increase uninsured rates and place hundreds of hospitals at risk of closure.
The House of Representatives passed the One Big Beautiful Bill Act, a more than 1,000-page budget reconciliation bill, May 22. The bill cuts Medicaid spending by implementing work requirements for beneficiaries, increasing redetermination frequency and cutting federal funding for states that provide Medicaid benefits to undocumented immigrants.
The package also includes cuts to ACA marketplace coverage.
The Senate has yet to vote on the reconciliation bill.
Here’s how the proposed cuts are expected to affect patients and hospitals:
Patients
- An estimated 7.8 million people would lose Medicaid coverage by 2034 if the cuts passed by the House become law, according to the Congressional Budget Office.
- The reconciliation bill also includes changes to marketplace coverage. The CBO estimates the package will result in 10.9 million people total being uninsured by 2034. When combined with the expected expiration of premium subsidies for marketplace coverage, the CBO estimates as many as 16 million people will be uninsured by 2034.
- If the reconciliation package is passed and ACA tax credits expire, the uninsured rate will increase by around 5 percentage points by 2034, according to KFF, a health policy organization.
- The increases in uninsured rates will vary by state, according to KFF, which estimates Florida would see the highest increase in uninsured rates, with a 9 percentage point increase by 2034. Four other states — Georgia, Louisiana, Mississippi and Texas — would see their uninsured rates increase by 6 percentage points.
Hospitals
- Citing health economics and consulting firm KNG Health Consulting, the American Hospital Association said that the loss of enhanced premium tax credits would result in a $28 billion reduction in hospital spending over 10 years.
- The proposed cuts could also place 338 financially struggling rural hospitals at risk of closure, according to the data from the Cecil G. Sheps Center for Health Services Research at the University of North Carolina in Chapel Hill. The 338 hospitals either saw three consecutive years of negative total margins, served the highest share of Medicaid patients, or both. The states with the highest number of hospitals at risk are Kentucky at 35, Louisiana at 33, California at 28 and Oklahoma at 21.
- The proposed changes are projected to increase hospitals’ uncompensated care costs by at least $42.4 billion in 2034, according to America’s Essential Hospitals. Analyzing CBO data, AEH projects that in 2034, lower Medicaid payments will add $21.7 billion in shortfalls — the difference between a hospital’s cost of care for Medicaid patients and the payment it receives for those services. The increase of 10.9 million uninsured Americans by 2034 will add $20.6 billion in uncompensated care costs.
