Medicaid in Flux: What the One Big Beautiful Bill Act Means for Healthcare Providers & Patients

Overview

The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, is one of the most sweeping budget-reconciliation laws since the Affordable Care Act. While it spans multiple policy areas, including immigration, agriculture, and defense, its healthcare provisions are among the most consequential.

For providers, state agencies, and patients, the OBBBA’s changes to Medicaid, the Affordable Care Act Marketplace, and Medicare introduce new compliance obligations, significant funding reductions, and complex eligibility rules that will redefine how care is delivered and reimbursed across Virginia and beyond.

Key Medicaid Changes

1. Work and Community Engagement Requirements

The OBBBA reinstates and expands work requirements for Medicaid recipients.
Nonelderly, nonpregnant adults qualifying on a non-disability basis must complete at least 80 hours per month of work, education, or community service. Limited exemptions apply for medical conditions and caregiving responsibilities.

For hospitals and healthcare providers, this means increased administrative burdens — including verifying compliance and managing patients who lose eligibility due to reporting failures. Providers should anticipate fluctuations in patient coverage and prepare for higher rates of uncompensated care.

2. Semiannual Eligibility Redeterminations

States must now redetermine eligibility every six months (up from annually) for most adult enrollees. The law also suspends prior CMS initiatives designed to simplify renewals, such as pre-populated forms and automated systems.

This shift will likely result in higher administrative costs, coverage interruptions, and increased churn, especially for patients facing housing or documentation instability.

3. New Premiums and Cost-Sharing

States may now impose co-pays up to $35 per service and require premiums from individuals earning more than 100% of the federal poverty level.
For Virginia Medicaid recipients who previously faced no co-pays, this marks a significant policy change that may discourage care access and increase collection challenges for providers.

4. Provider Taxes and Payment Caps

The OBBBA phases down provider taxes, which are a major funding mechanism for state Medicaid matching funds, and caps state-directed payments at Medicare rates.
Hospitals that relied on enhanced reimbursement arrangements will see revenue reductions, particularly in expansion states like Virginia.

5. Coverage Restrictions

Medicaid and CHIP funds can no longer be used for gender-affirming care, and reimbursements will be restricted for states providing care to undocumented immigrants. These provisions may invite legal challenges under federal nondiscrimination statutes and equal protection principles.

Marketplace and Medicare Implications

The OBBBA allows ACA premium tax credits to expire at the end of 2025, meaning millions of Marketplace enrollees could face substantial premium increases beginning in 2026.

For Medicare, the Act’s impact is more modest but includes eligibility adjustments for non-citizens, limited drug pricing reforms, and the creation of a $50 billion Rural Hospital Fund (2026–2030) intended to offset some of the financial strain on rural facilities.

Projected Impact on Providers

Congress estimates the OBBBA will reduce federal Medicaid spending by nearly $908 billion by 2035. Analysts predict 7–10 million individuals could lose coverage by fiscal year 2034.

For providers, particularly rural hospitals, safety-net facilities, and children’s hospitals, the financial repercussions may be severe:

• Rural hospital closures are expected to accelerate, compounding access issues in “medical deserts.”
• Safety-net hospitals that serve large uninsured populations will face greater uncompensated care burdens under EMTALA obligations, without proportional Medicaid reimbursement.
• Children’s hospitals, already reliant on government subsidies, may see substantial shortfalls.

The Augusta Medical Group’s 2025 consolidation of three rural facilities in Virginia is viewed as an early indicator of the law’s impact.

Looking Ahead

The One Big Beautiful Bill Act represents a fundamental restructuring of federal health funding and coverage. While it aims to curb spending, it will likely impose new operational, financial, and legal challenges on providers and patients alike. For those affected by healthcare policy, the coming years will demand careful navigation of evolving Medicaid rules, strategic advocacy, and creative funding approaches to sustain care access for vulnerable populations.