We recently outlined the impact that H.R. 1 – the One Big Beautiful Bill Act (OBBB) – will have on Medicare and the broader health system. This sweeping legislation cuts over $1 trillion from health programs, which will result in 10 million people losing health insurance. In addition, 5 million more people will lose coverage if Congress allows financial assistance for individuals with Affordable Care Act (ACA) marketplace plans to expire at the end of this year.
With respect to Medicare, among other things, the OBBB imposes new restrictions on lawfully present immigrants – marking the first time in the program’s history that Medicare coverage has been stripped from an entire category of eligible individuals. It also stops implementation of improvements to Medicare Savings Programs (MSPs) that help people pay for their Medicare expenses, blocks nursing home staffing standards, and limits Medicare’s ability to negotiate drug prices. With respect to drug prices, as outlined below, new information has emerged showing that drug costs to the Medicare program and its enrollees will be much higher than initially anticipated. In addition, provider groups continue to weigh in on the adverse impact OBBB will have on access to care.
Higher Drug Costs
The 2022 Inflation Reduction Act (IRA) gave Medicare the power to negotiate prices for certain high-cost medications, with the first negotiated prices taking effect in 2026. The OBBB carves out certain “orphan drugs” (medications for rare diseases) from this negotiation process, limiting Medicare’s ability to control costs for some of the most expensive medications. The Congressional Budget Office (CBO) initially estimated that these provisions, which were pushed by the pharmaceutical industry, will cost Medicare at least $5 billion over 10 years. But this number could be substantially higher.
A recent Wall Street Journal article notes that the OBBB expands certain pre-existing orphan drug exemptions, including delaying negotiation periods for drugs first approved as orphan drugs but later approved for wider use. The OBBB also entirely exempts from negotiation drugs approved for multiple orphan diseases but not for more common conditions.
In developing costs estimates for the legislation, which it is now re-evaluating, CBO did not factor in some of the world’s biggest- selling drugs, such as Keytruda. As the article states, “[t]housands of Medicare recipients will have to wait longer to get some price relief on the expensive cancer drugs they depend on for treatment, while others might not get any reprieve at all.”
Impact on Access to Care
Not only are consumer advocacy organizations raising alarms about the devastating harm that will be caused by the OBBB, many health care provider associations are also issuing dire warnings about what is to come. Here are a few examples.
In a recent interview with Politico, Bruce Siegel, president and CEO of America’s Essential Hospitals, a trade group for safety-net hospitals, was asked about how the OBBB’s cuts are expected to impact hospitals. Siegel replied:
The impact will be catastrophic. The [law] is an unfortunate, self-inflicted wound. You’re talking about easily a trillion dollars coming out of the health care system, with 17 million people probably losing their coverage, between the [law] and if the [enhanced Obamacare] premium tax credits expire at the end of the year. That is going to have huge ramifications for the health care system, especially hospitals.
We have estimated that we’re probably looking at about over $400 billion total in additional uncompensated care for U.S. hospitals over 10 years.
In response to a question about a $50 billion rural hospital fund included in the law to help mitigate some of the cuts, Siegel replied:
It’s better than nothing, but it’s not much. That $50 billion is equal to 5 percent of the cuts. So it’s like somebody took $100 from you and gave you $5 back.
I’m not sure where it’s going to go and what it’s going to be used for. If you read the language, it doesn’t say this money is going to replace the Medicaid cuts. It could go to a lot of things, and the [HHS] secretary has huge discretion in how it’s distributed. The proof will be in the pudding as to what actually happens.
Similarly, the President of the American Hospital Association (AHA) issued a statement claiming that the OBBB:
will result in irreparable harm to our health care system, reducing access to care for all Americans and severely undermining the ability of hospitals and health systems to care for our most vulnerable patients.
After the Senate passed the OBBB, the National Rural Health Association (NRHA) issued a statement stating that the bill “will limit access to care for all rural patients by ending health care coverage for rural residents nationwide and putting financial strain on rural facilities who care for them.”
American Medical Association (AMA) President Dr. Bobby Mukkamala, stated in a press release: “This bill moves us in the wrong direction. It will make it harder to access care and make patients sicker. It will make it more likely that acute, treatable illnesses will turn into life-threatening or costly chronic conditions. That is disappointing, maddening, and unacceptable.”
Conclusion
Like a slow moving and eminently predictable disaster, the OBBB will wreak havoc on our nation’s health care system. Congress must reverse our collision course with this cataclysm.
August 7, 2025 – D. Lipschutz