Trump’s New Law Expected to Impact Health Insurance and Federal Spending
WASHINGTON – The recently enacted “One Big Beautiful Bill Act” is projected to increase the deficit by $3.394 trillion over the coming decade, potentially causing 10 million individuals to lose their health insurance coverage.
This assessment follows the near-unanimous approval of the law by Republican lawmakers just prior to the July 4 deadline. This legislation not only solidifies tax cuts from Trump’s first term but also facilitates extensive spending, particularly in defense and immigration enforcement plans.
Maya MacGuineas, who heads the Responsible Federal Budget Committee, expressed skepticism, noting that even after extensive discussions around fiscal responsibility, the addition of $4 trillion to the deficit feels hard to comprehend.
She stated, “This is a precarious situation we’ve been navigating. The bill escalates issues we’ve faced for years, and we really need to draw the line somewhere.”
The Congressional Budget Office (CBO) has released several reports, evaluating how various aspects of this bill will affect federal health spending and access.
The latest findings align with a preliminary report from earlier this month, forecasting a deficit increase of about $3.4 trillion from 2025 to 2034, a figure considerably larger than the anticipated $2.4 trillion increase from an earlier version of the bill.
Significant Cuts to Health Spending
Changes to Medicaid outlined in the law are expected to significantly reduce federal spending by an estimated $1.058 trillion over the next decade.
The law enacts over a dozen modifications to health programs aimed at low-income individuals and those with disabilities, with varying financial implications. One specific change that restricts Medicaid spending is predicted to inflate the federal deficit by $53 million over the next ten years.
This new law is currently facing legal challenges, as a federal judge recently issued a temporary injunction affecting its implementation. This injunction arose from a lawsuit concerning planned parenthood funding for Medicaid beneficiaries. Historically, federal law has restricted the use of taxpayer money for abortion services, and a one-year pause on Medicaid funding could hinder access to essential health appointments for enrolled patients.
A more detailed state-by-state analysis of the law’s impact on health care is anticipated from the CBO in the near future.
Changes to Nutritional Assistance Programs
In addition to the health care modifications, the law also anticipates substantial savings from changes to the Supplemental Nutrition Assistance Program (SNAP). Beginning in fiscal year 2028, states will be required to share in the costs of SNAP benefits, a move expected to save the federal government between $5.7 billion and $6 billion per year, accumulating close to $41 billion over seven years.
Furthermore, new work requirements for SNAP are expected to cut federal spending by approximately $68.6 billion over the decade starting in fiscal year 2026, according to CBO forecasts.
Revisions to Federal Student Loan Program
The adjustments to the federal student loan framework are expected to lead to a reduction in federal spending amounting to $2.7 trillion across the next decade. This involves a significant overhaul of higher education financing, where borrowers will be limited to certain repayment plans starting July 1, 2026.
Tax Cuts Adjustments
The CBO’s latest score indicates that the continuation of Trump’s 2017 tax cuts, along with new extensions, may cost an estimated $4.472 trillion over the next ten years. A substantial portion of the revenue comes from individual taxpayers, with increases in standard deductions and lower income tax brackets contributing to revenue losses of up to $3.497 trillion.
Trump had also campaigned for further tax reductions on tips, overtime, and car loan interest. These temporary provisions are set to expire in 2029.
Notably, the child tax credit will rise from $2,000 to $2,200 under the new law, though lawmakers did not increase the refund limits for families. The CBO estimates these tax credits will cost $62.6345 billion over the next decade.
Some expenses in the bill were offset by eliminating clean energy tax incentives, including those for electric vehicles and energy efficiency improvements for homeowners, collectively saving about $48.7909 billion as a response to climate change challenges.
