Everything in the One Big Beautiful Bill that impacts healthcare

President Donald Trump signed the One Big Beautiful Bill Act (H.R. 1) into law on July 4, 2025, capping months of budget maneuvering and delivering what Republican leaders called a long-overdue course correction for federal health programs. The measure passed the House 218-214 on July 3, after the Senate approved it 51-50 with Vice President JD Vance casting the tie-breaking vote. Only Reps. Thomas Massie of Kentucky and Brian Fitzpatrick of Pennsylvania broke ranks to oppose it alongside every Democrat. 

Medicaid overhaul wrapped in work rules

At the heart of the 700-plus-page package is Medicaid. Able-bodied adults ages 19-64 will have to prove they logged 80 hours a month of work, study, community service or a mix of the three to gain or keep coverage. States may demand compliance for up to three months before enrollment and at every redetermination thereafter, although veterans, parents of young children and people deemed “medically frail” are exempt. If beneficiaries miss the mark, they risk an immediate lockout and the loss of Affordable Care Act subsidies. 

The bill also introduces monthly premiums and co-pays—capped at 5 percent of family income—for expansion enrollees with earnings above the poverty line starting in 2028, while forbidding cost-sharing on pregnancies, vaccines and primary care. Retroactive eligibility shrinks from three months to one for most adults, and states must re-verify expansion beneficiaries every six months, not annually. 

States face a new provider-tax squeeze

To pay for the changes, lawmakers turned to state financing tactics long criticized as fiscal alchemy. Beginning in fiscal 2028 the ceiling on hospital “provider taxes” in Medicaid expansion states falls each year until it hits 3.5 percent of net patient revenue in 2032, half today’s limit; non-expansion states keep the 6 percent cap. Any state that never adopted a provider tax will be barred from adding one. 

Section 71116 goes further, preventing expansion states from using Medicaid managed-care “directed payments” that exceed Medicare’s fee schedule, a move analysts say could restrain lucrative supplemental payments that many hospitals have come to rely on. 

Rural sweeteners and nursing-home pause

After late-stage negotiations, leadership added a $50 billion Rural Health Transformation Program—$10 billion per fiscal year from 2026-2030—essentially a block grant for states to shore up workforce pipelines, cybersecurity defenses and new care models. At the same time, the bill freezes the Biden administration’s minimum nursing-home staffing rule until 2034, a decade-long reprieve for long-term care operators but a possible concern for families in the market for long-term care. 

Medicare and the marketplace

Seniors’ physicians receive a one-time 2.5 percent pay bump in 2026 to dampen a scheduled cut in the Medicare physician fee schedule. Drugmakers won a crucial carve-out: any medicine with even a single orphan-drug indication escapes price negotiation under the Inflation Reduction Act. 

Immigration restrictions ripple across programs. Only U.S. citizens, lawful permanent residents, certain Cuban or Haitian entrants and Compact of Free Association migrants will qualify for Medicare or Affordable Care Act premium tax credits. Subsidy recipients who underestimate their income will have to repay any excess in full—no matter how small the miscalculation. 

Telehealth champions notched a win: high-deductible health plans may permanently cover virtual visits pre-deductible without jeopardizing Health Savings Account eligibility. 

The human toll

The Congressional Budget Office estimates that 11.8 million people will lose health coverage by 2034 due to the law’s health provisions. Hospitals warn the squeeze on provider taxes and emergency Medicaid could erode already-thin margins, especially in states that expanded coverage after the pandemic. 

Republicans counter that the savings—combined with tighter eligibility checks they say will curb fraud—will stabilize Medicaid for future generations. Democrats dismiss that argument, calling the package “neglect wrapped in austerity” and predicting that uncompensated-care costs will boomerang back to state budgets. 

Implementation begins immediately for some provisions, while others will phase in over the coming years. Millions of patients and providers are now grappling with the reality of the most significant changes to federal healthcare programs in over a decade, as states prepare to navigate new requirements while managing reduced federal funding. The law’s full impact will unfold as implementation proceeds, setting the stage for ongoing political battles over healthcare access and affordability.