08/11/2025
Bloomberg School
How New Federal Legislation Will Affect Health Care Costs and Access for Americans
Two health policy experts explain provisions in the 2025 Budget Reconciliation Act that affect Medicaid, Medicare, and the Affordable Care Act.
Published
July 30, 2025
By Aliza Rosen
Disability Health Equity Health Policy
In a physical therapy office, two female therapists, one on either side, work with a man in a wheelchair who is navigating between parallel bars.
Physical therapists assist a man in the extended care facility at Valley Health Hampshire Memorial Hospital on June 17 in Romney, West Virginia. Photo by Ricky Carioti/The Washington Post via Getty Images
Signed into law on July 4, the 2025 Budget Reconciliation Act—
Signed into law on July 4, the 2025 Budget Reconciliation Act—also known as the One Big Beautiful Bill Act—includes sweeping changes to who is eligible for health insurance in the U.S.
The law, which the Center on Budget and Policy Priorities estimates will result in up to 15 million more people without health insurance in 2034, includes over $1 trillion in spending cuts to health care through 2034. ”It is the biggest cut to our social safety net in history,” says Liz Fowler, PhD ’96, JD, distinguished scholar in Health Policy and Management.
The majority of the cuts impact federal support for Medicaid, the public insurance program that helps cover medical costs for low-income families, older adults, and people with disabilities. The law also changes who is eligible to receive Medicaid and Medicare benefits or access Affordable Care Act plans—which, Fowler says, could increase health care costs for all Americans.
In this Q&A, Fowler and Gerard Anderson, PhD, professor in Health Policy and Management, explain what changes will occur and when, who will be affected, and what people can do in the months ahead to prepare.
Impacts to Medicaid
How does the new law affect Medicaid eligibility?
Gerard Anderson: The most significant change is the new federal work requirement, referred to in the law as a “community engagement requirement.” Most people who receive Medicaid will need to spend at least 80 hours a month working, volunteering, or in school. In order to maintain their coverage, Medicaid recipients will have to verify every month that they have met this requirement, which will create a large burden on both the individual recipients and the state systems managing coverage.
When do the new work requirements take effect?
GA: These new requirements will begin to take effect starting January 1, 2027.
Who does the Medicaid work requirement law apply to? Who is exempt?
GA: The requirement applies to all “able-bodied” Medicaid recipients ages 19–64, but there are numerous reasons someone would be exempt, including:
They have a child age 13 or younger or a child who is disabled.
They are a caregiver for a disabled relative.
They have a disability or health condition that prevents them from fulfilling the requirement.
Why are these new work requirements expected to result in so many people losing access to Medicaid coverage?
GA: There are a few reasons these requirements could result in people losing coverage.
First, most Americans on Medicaid are located in geographic areas where there is no school, there are no jobs, and there is nothing to volunteer for—especially not 80 or more hours a month. Others may be sufficiently incapacitated—even temporarily—that they can’t fulfill the requirement, thus losing their health care coverage due to illness.
We also expect that some people who qualify for Medicaid will not fill out the form every month. Some may forget. Others may not have a computer or internet access to complete the form reliably each month. Consider, for example, a person in rural Louisiana who has lost electricity because of a recent hurricane—or who can’t afford a mobile device or internet access—and still need to fill out this form each month to retain their health care.
How does someone determine whether they qualify for an exception from the work requirement?
GA: While the work requirement is a federal law, Medicaid programs are regulated and operated at the state level. It is up to the states to interpret the law and determine how they will write the rules for their residents.
How states define who qualifies for Medicaid will matter a great deal—including what is considered “able-bodied” and the disabilities or other conditions that qualify for exceptions to the requirements. For example, someone who has trouble walking due to an injury or disability may not be able to work a job at a factory or a grocery store. A chronic illness that flares up unexpectedly could make it hard to hold a job long-term. Are those people entitled to coverage? I think most states believe so and will be pretty generous in their rules, but we don’t know yet.
The U.S. health system is like a balloon: When you squeeze one part of the balloon, the rest of the balloon stretches out.
—Liz Fowler, distinguished scholar in Health Policy and Management
What can people do now if they or a family member currently receives Medicaid or anticipate needing it in the future?
GA: People should look at how their state’s rules are written. Some states, like Georgia, already have work requirements in place. Those that don’t have existing rules have until December 31, 2026, to interpret these federal guidelines and write their regulations—though states that show a “good faith effort to comply” can get exemptions through December 31, 2028.
So now is the time for people who rely on Medicaid to try to influence their state’s rules. They can reach out to state representatives or Medicaid directors to explain their specific situations—for example, a caregiving obligation or condition that prevents them from 80 hours of community engagement—and urge them to account for those in their eligibility rules.
People who don’t anticipate qualifying for an exemption can also start planning ahead for how they’ll fill those required hours: Where might I be able to volunteer? If I can’t find a job, can I enroll in classes? Have a backup plan or workaround in place to ensure you can maintain coverage.
Once states have their rules and processes established, people should make a plan for filling out the form each month. Know where to find the form, when deadlines are, and what type of supporting documentation you might need to provide.
