The House of Representatives has passed One Big Beautiful Bill as requested by President Donald Trump; it is currently being reviewed by the U.S. Senate. The bill proposes up to $800 billion in cuts to Medicaid over the next decade, which Members, Providers, and advocates argue will terminate critical access to care for our most vulnerable populations.
What's the Potential Impact?
While there remains much to be decided about how exactly the bill will achieve $800 billion in cuts, there are numerous proposals, including:
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- Work Requirements. The federal government will likely require 'able-bodied' adults between the ages of 19 - 64 to be working, pursuing work, or be enrolled in college or trade school for a minimum of 80 hours per month.
- Verifying Eligibility More Frequently. In most states, eligibility for Medicaid is reverified annually. We can reasonably expect states to verify eligibility semi-annually (every six months) or even more often based on the State.
- Provider tax restrictions. Medicaid is a federal program that requires states to match a percentage of the funds. To do this, many States use creative tax methodologies to generate the State's share. The federal government may attempt to put restrictions on how States can raise the money; which may make it difficult for some states to come up with their share. Without adequate matching funds, Medicaid budgets will shrink, likely forcing access to care to also shrink.
- Increased cost sharing. Some states may introduce or increase cost-sharing for Medicaid such as co-payments for medical visits, hospital stays and medications. In many instances, cost-sharing is capped, for example $4 for outpatient visits, $2 for medications etc. but this can become greater for the 'expansion' population that makes more than 100% of the federal poverty line (currently $15,650 for single, childless individuals, and $32,150 for a family of four).
What Should Health Systems and Providers Do to Prepare?
State, County and regional health systems and Providers have much to do to prepare for pending changes. Including:
- Perform an Impact Analysis. Executive teams should run financial models to identify what a 5%, 10%, 20%, 25% cut to their top-line budgets may do to their organizations.
- Cost Reduction. While many organizations' budgets are as lean as possible, do the unpleasant but necessary work to identify where and when to make further cuts.
- Exit Planning. This should include honest conversations about organizational viability, and if necessary, consider consolidation with like-minded organizations.
- Payer Diversification. In the event individuals lose Medicaid coverage, some may shift to Marketplace and/or employer-sponsored coverage. If your organization isn't contracted beyond Medicaid, start there. If you have existing contracts with non-Medicaid health plans, consider strategies to better balance your payer mix, which will soften the impact of potential Medicaid cuts.
- Diversify Services. Also consider your service mix and identify mission-driven opportunities to expand services under different payer types (e.g. contracting with child welfare, justice system, tribes, schools, etc.).
- Social Enterprise Administration. Consider for-profit strategies to introduce new revenue, while still providing care and support. This can be as simple as a sliding fee schedule, introducing retail health and wellness services like fitness programs, yoga, meal and nutrition planning, group classes etc.
- Volunteer Network. As resources become contained, maintaining current staff levels may become complex. Consider launching volunteer programs that can help fill select front-line and low-skilled labor roles.
- Fundraising Strategies. Introduce or scale fundraising and development programs. These can include monthly giving campaigns, large gift donors, fundraising events, grant writing, and corporate philanthropic partnerships. These non-restricted funds can help fill critical gaps in contract revenue.
While we don't know the full impact that One Big Beautiful Bill may have on Medicaid, we have an opportunity to be prepared.