On July 4, 2025, President Trump signed into law H.R. 1 – the One Big Beautiful Bill Act (OBBB). This sweeping legislation narrowly passed Congress through a special budget process (“reconciliation”), which allowed it to pass the Senate with a simple majority vote rather than the usual 60 votes needed to overcome a filibuster. The law extends tax cuts that were first enacted in 2017 and funds other administration priorities. To help pay for these policies, it makes unprecedented cuts to critical safety-net programs that provide health care and other assistance.
Massive Health Care Cuts
The OBBB cuts over $1 trillion from health programs – the largest rollback of federal support for health care in American history. These cuts will result in an estimated 10 million people losing their health insurance coverage.[1] The legislation also slashes at least $120 billion from SNAP (the Supplemental Nutrition Assistance Program, formerly known as food stamps), reducing food assistance for low-income families.
Even with these significant cuts, the Act is still projected to add at least $3.4 trillion to the national debt.[2] It also speeds up the timeline for when Medicare’s trust fund (which pays for hospital care) will become insolvent. If Congress takes no additional action, automatic spending cuts will be triggered, reducing Medicare funding by approximately $500 billion between 2026 and 2034.[3]
The health care cuts will be implemented over several years and primarily target Medicaid – the joint federal-state program that provides health coverage to low-income individuals and families. The cuts are enacted through several mechanisms that will reduce the number of people enrolled in Medicaid:
- Work requirements: Certain adults will need to meet new “community engagement” mandates (essentially work or training requirements) to keep their Medicaid coverage. These requirements have been shown to increase administrative costs and burdens for states and individuals while reducing access to health care and failing to increase employment.
- More frequent eligibility checks: States will need to verify people’s eligibility for Medicaid more often, which historically leads to coverage losses even among those who remain eligible.
- Immigration restrictions: Certain groups of lawfully present immigrants will lose Medicaid eligibility.
- Reduced state funding options: The law restricts the use of “provider taxes” by states to generate additional money for their Medicaid programs.
There will also be significant changes in the Affordable Care Act (ACA) marketplace. Financial assistance that helps people afford ACA insurance will be allowed to expire at the end of 2025. It is estimated that this change alone will cause an additional 5 million individuals to lose insurance,[4] further exacerbating coverage losses across the health care system.
Changes Affecting Medicare Beneficiaries
While these broad health care cuts will affect many Medicare beneficiaries indirectly, including those who are dually eligible for both Medicare and Medicaid, several provisions of the OBBB directly target Medicare beneficiaries:
New Restrictions on Lawfully Present Immigrants
Before the OBBB, lawfully present non-citizens could qualify for Medicare by meeting work history requirements, or if they lacked the required work credits, by meeting length of residency requirements. Qualified non-citizens who worked and contributed payroll taxes for the required number of years were eligible for Medicare coverage on the same basis as U.S. citizens. Now, starting immediately, only the following groups can newly enroll in Medicare:
- U.S. citizens,
- Lawful permanent residents (green card holders),
- Cuban and Haitian Entrants, and,
- individuals from certain Pacific Island nations with special agreements with the U.S. (“COFA” migrants).
This eliminates Medicare eligibility for all other lawfully present immigrants, regardless of how long they have worked and paid into the system, including:
- Refugees and people granted asylum,
- People with Temporary Protected Status,
- Survivors of human trafficking,
- Survivors of domestic violence, and,
- Individuals granted humanitarian parole.
By July 2026 the Social Security Administration must identify current Medicare beneficiaries who do not meet the above immigration criteria and notify them that their coverage will end in January 2027. This represents a major policy shift. While undocumented immigrants have never been eligible for Medicare, lawfully present individuals who worked and paid into the system have historically been able to qualify for Medicare benefits.
Blocking Improvements to Medicare Savings Programs
The law imposes a nine-year ban on implementing improvements to Medicare Savings Programs (MSPs), which help lower-income Medicare beneficiaries pay for premiums and out-of-pocket costs.[5] The Congressional Budget Office estimates this will save over $66 billion over 10 years.[6] But these “savings” come from preventing eligible beneficiaries from accessing programs designed to make Medicare more affordable.
Blocking Nursing Home Staffing Standards
The legislation blocks the implementation of national minimum staffing requirements for nursing homes that were designed to improve quality of care. Interestingly, while federal courts have already struck down portions of these standards, the Trump Administration continues to defend the staffing rule in court as of July 2025.
Limiting Medicare’s Ability to Negotiate Drug Prices
The 2022 Inflation Reduction Act 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 “orphan drugs” (medications for rare diseases) from this negotiation process, limiting Medicare’s ability to control costs for some of the most expensive medications.
Conclusion
The OBBB represents a fundamental shift in federal health care policy, with implications extending far beyond immediate budgetary concerns. The legislation’s impact on Medicare beneficiaries reflects broader questions about health care access, equity, and the government’s role in ensuring coverage for vulnerable populations. As implementation proceeds, the full scope of these changes will become increasingly apparent across the American health care system.
July 24, 2025 – D. Lipschutz & A. Bers
[1] Congressional Budget Office (CBO), “Estimated Budgetary Effects of Public Law 119-21, to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, Relative to the Budget Enforcement Baseline for Consideration in the Senate” (July 21, 2025), available at: https://www.cbo.gov/publication/61569.
[2] CBO, “Information Concerning the Budgetary Effects of H.R. 1, as Passed by the Senate on July 1, 2025” (July 1, 2025), available at https://www.cbo.gov/publication/61537; also see Politico, “GOP megabill’s final score: $3.4T in red ink and 10 million kicked off health insurance, CBO says” (July 21, 2025), available at: https://www.politico.com/news/2025/07/21/gop-megabills-final-score-3-4t-in-red-ink-and-10-million-kicked-off-health-insurance-cbo-says-00465546.
[3] KFF, “Health Provisions in the 2025 Federal Budget Reconciliation Bill” (July 8, 2025), available at: https://www.kff.org/tracking-the-medicare-provisions-in-the-2025-budget-bill/.
[4] CBO, Letter to Ranking Member Wyden, Ranking Member Pallone and Ranking Member Neal titled “Re: Estimated Effects on the Number of Uninsured People in 2034 Resulting From Policies Incorporated Within CBO’s Baseline Projections and H.R. 1, the One Big Beautiful Bill Act” (June 4, 2025), available at: https://link.edgepilot.com/s/ee6646c8/XPfd54N6vkGPQ2s9WhXpYg?u=https://urldefense.com/v3/__https:/www.cbo.gov/system/files/2025-06/Wyden-Pallone-Neal_Letter_6-4-25.pdf__%3B!!Bg5easoyC-OII2vlEqY8mTBrtW-N4OJKAQ!IJ_t_o6SqNNHAGA7fJX0WDGk_HfwS17IQbrLNHSWxhWQLKTrV7BJ92WE6rP3fV4ZT4rd4bqgrrwYuE7ZedeE99_Nc2LFofg9m1-L94g%24.
[5] See, e.g., KFF “What Does the Medicaid Eligibility Rule Mean for Low-Income Medicare Beneficiaries and the Medicare Savings Programs (MSPs)?” (Nov 2023), available at: https://www.kff.org/medicaid/issue-brief/what-does-the-medicaid-eligibility-rule-mean-for-low-income-medicare-beneficiaries-and-the-medicare-savings-programs-msps/.
[6] CBO, “Estimated Budgetary Effects of Public Law 119-21, to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, Relative to the Budget Enforcement Baseline for Consideration in the Senate” (July 21, 2025), available at: https://www.cbo.gov/publication/61569.