Understanding the Impacts of the “One Big Beautiful Bill Act”

Recently, President Donald Trump signed the “One Big Beautiful Bill Act,” which modifies the criteria for Medicaid compensation. This act significantly increases federal spending on Medicaid while transferring the funding burden from the federal level to state governments.

Last Wednesday, I had a conversation with Louise Norris, a lead writer for an independent resource on Affordable Care Act and Medicaid policies. We discussed the implications of this new legislation on Medicaid in Alabama and other states.

Norris began by addressing some of the inaccuracies Republican lawmakers have used to justify cuts to Medicaid and the introduction of new work requirements. She mentioned that the most significant change would be a work requirement starting in 2027. “There’s this narrative suggesting many people are just sitting around, but that’s far from the truth. Many are older or have chronic health issues,” she noted.

“The percentage of Medicaid recipients who can work is quite small. Some may have retired early, at age 63, but until they qualify for Medicare, they still depend on Medicaid,” she added. “The assumption that a 63-year-old should jump back into the workforce is just a misconception.”

Norris explained that these work requirements won’t only impact healthy individuals; as federal funding diminishes, states will need to find ways to manage their Medicaid expenses.

“It’s a misconception to think that cutting $1 trillion from Medicaid will not have broader effects. States are going to have to make choices about how to balance their budgets,” she said, noting that programs for home-based care for those with chronic illnesses or disabilities could face reductions.

The additional work requirements won’t affect the 10 states, including Alabama, that haven’t expanded Medicaid under the Affordable Care Act, meaning they won’t see new work mandates come into play.

“In states like Alabama that haven’t expanded Medicaid, there won’t be new work requirements. Essentially, this means that the overall budget cuts for Medicaid will be less severe,” Norris explained. However, she also cautioned that if Alabamians do not face new labor demands, the inability to extend ACA premium tax credits could lead to a significant market downturn.

“The most concerning impact might be the end of expanded premium subsidies by year’s end, especially for those under 100% of the poverty line. In Alabama, where many are already relying on market-based coverage instead of Medicaid, a lot of these individuals could become uninsured,” she elaborated.

Norris further pointed out that these changes could hamper future efforts in Alabama to expand Medicaid due to increased management costs tied to the new work requirements. She referenced the American Rescue Plan Act of 2021, which had previously offered incentives for states to expand Medicaid. “There was a two-year window where the federal government would cover a larger portion of costs, but those benefits may now be jeopardized,” she stated.

Although only a few states have taken advantage of the expansion benefits from the American Rescue Plan, the cuts under the “One Big Beautiful Bill Act” could deter states like Alabama from considering expansion in the future.

“This isn’t a strong incentive for those still holding out on expanding Medicaid. And with the work requirements set to roll out in 2027, it complicates the discussion even further,” Norris remarked.

Critics of the new bill argue that these cuts could further strain rural hospitals already operating on tight margins. Norris noted that closures of these facilities could have wide-ranging effects on urban healthcare providers, as rural patients often rely on larger hospitals for their care.

“When a rural hospital closes, it doesn’t just impact that community. It creates a ripple effect, affecting all local healthcare providers and their capacity to care for patients,” she said. “Hospitals absorbing uninsured patients are likely to raise costs for those with private insurance or on Medicaid.”

“As the marketplace evolves, we’re anticipating about 17 million more people could end up uninsured,” Norris indicated, suggesting substantial impacts across the healthcare system.

She highlighted potential premium increases for the next year, which could exceed 15% before subsidies, affecting both Medicaid recipients and private insurance holders. “This rise could create financial strain for everyone involved,” she added.

Norris emphasized the need for Americans, particularly those in Alabama, to stay informed about healthcare plan changes. “If you’re in a marketplace plan, keep an eye on communications from your state Medicaid agency and your health plan. Awareness is critical for navigating these shifts,” she concluded.