On July 4, the President signed into law the One Big Beautiful Bill Act (OBBB), a nearly 1,000-page bill that changes federal spending levels by stripping tens of millions of our most vulnerable neighbors of their health care and nutrition.
The OBBB slashes vital programs like Medicaid, Medicare, and the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) to pay for tax cuts that disproportionately benefit the wealthiest Americans. This article looks at just some of the new law’s provisions, many of which will go into effect over the coming years, causing confusion about when and why people are losing their benefits.
How the OBBB Impacts Health Coverage: Medicaid and Medicare
Medicaid Cuts
Medicaid is the country's single largest source of health coverage, insuring nearly 72 million, or 1 in 5. This includes children, pregnant people, parents, older adults with limited incomes, and people with disabilities. Medicaid covers essential care like doctors' visits, hospitalizations, long-term care, maternity care, mental health treatment, and rural clinic services.
The OBBB makes the largest cuts to Medicaid in the program’s history. According to the latest estimate by the nonpartisan Congressional Budget Office (CBO), the law will cause 10 million more people to become uninsured by 2034.
Making it Harder to Enroll and Stay Enrolled in Medicaid
The new law will drop eligible people from Medicaid due to increased administrative burden. This is because the bill requires a significant amount of new paperwork that will likely result in eligible people being dropped due to missing mail, late submissions, states being overburdened, and more.
For the next decade, the OBBB blocks the implementation of the Centers for Medicare & Medicaid Services (CMS) Eligibility and Enrollment final rule, which was designed to streamline the process for people to enroll and stay enrolled in Medicaid and apply for the Medicare Savings Program. The Medicare Savings Program helps people with low incomes afford Medicare premiums and cost-sharing.
The OBBB also requires states to check the eligibility of Medicaid expansion enrollees (adults with incomes up to 138% of the federal poverty level) every six months instead of every 12 months.
Medicaid Job Loss Penalty
The new law requires Medicaid recipients who are able-bodied and 19-64 years of age to work, do community service, or participate in work training for at least 80 hours per month, or go to school part time. This includes people with children over 13 years of age.
Most Medicaid enrollees already work, and most who do not will be exempt from this new requirement. Thus, the OBBB will not increase the number of people who are employed but will drop more eligible people from Medicaid due to administrative errors and unexpected job loss.
Medicaid Cost Sharing Requirement
The new law requires states to impose cost-sharing of up to $35 per health care service for Medicaid expansion recipients. This means that for every medical service they seek, Medicaid expansion recipients — who are in the program due to their low-income status and are often chronically ill or disabled — will need to pay up to $35. Over time, these payments can add up to unmanageable costs.
Limiting Medicaid Funding
The OBBB will make it harder for states to raise Medicaid funds, which will decrease how much the federal government contributes to the program.
Medicaid is jointly funded by the federal and state governments, and the federal government “matches" state funding at a rate of 50-77% per Medicaid enrollee and 90% per Medicaid expansion enrollee. All but one US state raises some of its Medicaid funding through taxes on health care providers like hospitals, known as provider taxes. The new law prohibits states from imposing new or higher provider taxes and requires states with Medicaid expansion to reduce their provider taxes by 0.5% each year until they reach 3.5%.
A Medicaid Error Rate Penalty
The law also reduces federal funding for states with a more than 3% error rate for overpayment to eligible individuals and payments to ineligible individuals, including where there isn’t enough information to confirm someone’s Medicaid eligibility. Fear of losing federal funding due to payment errors could result in states denying eligible people coverage.
Medicare Cuts
Medicare is a public health insurance program for people 65 years of age or older and people with specific disabilities, insuring more than 66 million people. A CBO analysis estimates that the OBBB will cause a $45 billion cut to Medicare in 2026, growing to a $75 billion cut in 2034. These massive Medicare cuts result from the OBBB increasing the federal deficit by $3.4 trillion by 2034, as the 2010 Pay-As-You-Go (PAYGO) Act requires that legislation that increases the deficit must be paid for by tax increases or spending cuts.
How the OBBB Impacts Nutrition: SNAP
The Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) is the country’s largest nutrition assistance program, supporting more than 42 million people with low incomes to afford food. The OBBB will result in an estimated 22 million families losing some or all of their SNAP benefits.
Limiting Benefits
The new law limits future increases to the Thrifty Food Plan, which is used to determine SNAP benefit levels, only allowing adjustments for inflation. This will likely mean that people’s SNAP benefits won’t keep up with the rising cost of food.
Expanding Work Requirements
The law also expands existing SNAP work requirements. It changes requirements for able-bodied adults without dependents by raising the age of exemption from 55 to 65. This requires caregivers to work if their children are at least 14, and veterans and unhoused people to work. It removes the grace period for individuals who were in the foster care system (who previously did not have to work until age 24) and restricts states’ ability to waive work requirements in areas with unemployment above 10% or limited job opportunities.
An Error Rate Penalty
SNAP is federally funded, but the new law requires that states with at least a 6% payment error rate pay 5-15% of SNAP costs. Fear of losing federal funding due to payment errors could result in states denying eligible people's coverage.
How the OBBB Impacts Reproductive Health Care: Planned Parenthood and Maine Family Planning
The OBBB defunds Planned Parenthood and Maine Family Planning by banning people from using Medicaid at health care nonprofits that:
- Provide abortions outside of cases of rape, incest, or when the pregnant person’s life is in danger; and
- Received more than $800,000 in Medicaid funding in FY23, for the following year.
Federal funding, including Medicaid, is already prohibited from covering abortion services except in case of rape, incest, or life endangerment of the pregnant person.
The new law threatens to close nearly 200 Planned Parenthood health centers, 60% of which are in medically underserved areas, primary care health professional shortage areas, or rural areas. More than 1.1 million people could lose access to affordable health care, including contraception, cancer screenings, and STI testing and treatments.
Further, as more than 90% of the centers at risk of closure are in states where abortion is legal, the closures could eliminate one in four abortion providers nationwide.
Both Planned Parenthood and Maine Family Planning have filed lawsuits challenging the law.
How the OBBB Impacts Immigration and Border Enforcement
The OBBB further limits which categories of lawfully present immigrants can receive Medicaid, Medicare, and SNAP. It removes refugees, asylees, and more who have already paid into the programs.
The OBBB also provides more than $170 billion for immigration and border enforcement activities to the Department of Homeland Security — including Immigration and Customs Enforcement (ICE) and Customs and Border Protection — and to the Department of Defense. This includes $45 billion to build new detention centers — more than four times ICE's annual detention budget — nearly $47 billion for border wall construction, nearly $30 billion for ICE enforcement and deportation, $13.5 billion to reimburse state and local enforcement of federal immigration law, and $1 billion for the military to support immigration enforcement.
The law also rolls back asylum and child welfare protections, including undermining due process and allowing the indefinite detention of children and families.It also imposes new and increased application fees.
How the OBBB Impacts Education
The OBBB also makes many changes to education. Notably, the law allows states to opt into a federal school voucher program. The program incentivizes people to donate money to nonprofits that offer educational scholarships by offering a dollar-for-dollar tax credit for how much a taxpayer donates up to $1,700. Then, these scholarship-granting organizations distribute money for certain educational expenses, including tuition at private or religious schools.
As school voucher programs effectively redirect public funds for private school tuition, they divert resources from the public education system.
How the OBBB Impacts Tax Cuts
The OBBB law expands and makes permanent the 2017 Tax Cuts and Jobs Act, whose tax cuts disproportionately benefit wealthy Americans.
According to analysis by the Institute on Taxation and Economic Policy, the highest-earning 5% will receive more than 45% of the cuts, the highest-earning 20% of Americans will receive more than 70% of the cuts, and the lowest-earning 20% will receive less than 1% of the cuts.
How Did Congress Pass This Law?
The OBBB passed through budget reconciliation, a special legislative process that allows Congress to quickly pass laws that change federal mandatory spending (like Medicaid, Medicare, and SNAP), revenues (taxes), and/or the debt limit. This legislation can move quickly because it faces a special procedure in the Senate; it can only include budget-related items and requires 51 votes instead of the usual 60 to start debate.
On July 1, the Senate passed the bill with a vote of 51 to 50: three Republican Senators — Susan Collins (ME), Rand Paul (KY), and Thom Tillis (NC) — joined Democrats in opposing the legislation, forcing the Vice President to cast the tie-breaking vote to move the bill forward.
On July 3, the House passed the bill with a vote of 218 to 214. Two Republican members of the House — Brian Fitzpatrick (PA-1) and Thomas Massie (KY-4) — joined all Democrats in opposing the legislation. On July 4, the President signed the bill into law.