KFF analysts: Big Beautiful Bill is biggest change to U.S. health care since Affordable Care Act

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The One Big Beautiful Bill Act (OBBBA) will bring the biggest changes to the American health care system since the Affordable Care Act (ACA), said KFF’s chief analyst.

KFF President and CEO Drew Altman, PhD, and nine colleagues hosted “What the Budget Reconciliation Law Could Mean for Health …” an online press briefing to discuss President Donald J. Trump and Congress’ massive spending plan.

The bill, which the president signed into law on July 4, is not the first attempt by Republicans to cut back Medicaid and the ACA, Altman said. There were efforts in 1981 under President Ronald Reagan, in 1996 under House Speaker Newt Gingrich, and the legislation in July 2017.

But OBBBA is the first one to succeed, he said, and now it is the largest health program rollback in the nation’s history.

Drew Altman, PhD
© KFF

“All of these prior efforts failed, and actually that was before Medicaid was as big and popular as it is today, and it was before the ACA became as popular as it is today,” Altman said. “So what we're looking at today is really noteworthy, because it's never happened before.

“It’s significant, it’s unprecedented, it’s noteworthy,” he said.

More to come

OBBBA did not contain rules about another element affecting health insurance and availability of health care: enhanced tax credits for ACA coverage. Those credits will expire at the end of 2025 and one actuarial estimate predicted 4.2 million people will join the ranks of the uninsured, Altman said.

That will bring the projected total to 17 million people without health insurance as early as 2026, he said.

Textbook strategy

Republicans followed a “reasonably textbook” strategy to sell the cuts to Medicaid, Altman said.

• Wrap up policy in a giant budget reconciliation bill that moves pretty fast.
• Make changes “many of which are kind of too wonky for people to talk about around the kitchen table.”
• Play up parts that are popular with the public, such as work requirements for able-bodied beneficiaries, even if that actual rule doesn’t really work.
• Make it sound noble by claiming to eliminate waste, fraud and abuse, while protecting the program for your version of the truly needy.

“But it hasn't totally worked with the public,” Altman said. “We've been doing a lot of polling about this, we will continue to poll about this, and it shows that most Americans know that the bill cuts Medicaid. They know that the bill cuts SNAP. They also don't like that, and the Democrats will now go to town on that in the midterms. That will likely work.

“But how much it works, how well it works, that also remains to be seen,” Altman said.

‘Staggering’

The bill was not framed as a health care effort, but it represents the biggest change to the health care system since ACA, said Larry Levitt, KFF executive vice president for health policy.

Larry Levitt, MPP
_{© KFF}

The Congressional Budget Office estimated the legislation will reduce federal health spending by more than $1 trillion over the next decade and increase the number of uninsured by 11.8 million people. Those are preliminary numbers and the numbers could come down due to last-minute changes to the bill, he said.

“Still, the scale of the change to the health care system is staggering,” Levitt said. “This represents the biggest rollback in federal support for health coverage ever. But the law is complicated, and few of the provisions are direct cuts in Medicaid or ACA benefits or eligibility, though they would have that effect indirectly.”

For example, in Medicaid, the provision that generates the most savings to the federal government is a new work requirement that applies to adults made eligible for the ACA Medicaid expansion in states. “The vast majority of these adults are either working or would qualify for an exemption, but millions are expected to lose coverage because they fail to navigate the reporting process,” Levitt said. “Some people would also fall through the cracks, because they will be required to renew their Medicaid coverage more frequently, every six months.”

Hospitals and insurance at risk

The Senate version of the bill added a $50 billion rural health fund that will help rural communities and their hospitals, but a temporary fund won’t fully compensate for permanent cuts, Levitt said.

Changes to the ACA Health Insurance Marketplaces have gotten less attention than Medicaid cuts, but new income verification procedures will make it harder for people to sign up and will effectively end automatic renewal of coverage, leading to people having their insurance canceled, Levitt said.

A matter of timing

Levitt agreed the issues will be important to the electorate, but the timing is not immediate.

“As substantial as the changes in the so-called One Big Beautiful Bill are, they won't all happen immediately,” Levitt said. “In fact, many of the changes are back loaded after the midterm elections and beyond. We're not all going to wake up one morning and find millions more people uninsured. Changes to Medicaid and the ACA are going to roll out bit by bit over the next decade.”

States taking control

Altman, Levitt and the KFF analysts spent an hour fielding questions about provisions of the bill.

Regarding Medicaid, the policy analysts agreed states will have the difficult job making Medicaid work. They also said there will be variety among the 50 states.

For example, HHS Secretary Robert F. Kennedy, Jr., will be required to give guidance to answer implementation questions about the work requirements. But there will be some flexibility and variations in how states implement those, along with state leaders’ interest in trying to maintain coverage versus being more stringent in implementation, said Robin Rudowitz, KFF vice president and director for the foundation’s program on Medicaid and the uninsured.

States generally need to balance their budgets annually, and with new limits on health care provider taxes, state leaders will have difficult decisions to make about raising revenues or cutting other programs to cover Medicaid costs, Rudowitz said

Altman agreed it will be interesting to watch how the states will implement work requirements in very different ways. “The blue states hate them,” he said, referring to states with predominantly Democratic voters.

Another future element to watch: whether states can or cannot replace some lost federal Medicaid funding. When chunks of money start to add up to billions of dollars, states cannot just come up with that kind of money, Altman said. Some states can make up for some of that money, but the situation will be different in every state, he said.

Hospital closures

Rural hospitals have been closing steadily and that certainly will continue in years ahead.

“As a political matter, I am certain that will get blamed on this mega bill,” Levitt said. “And in some cases, that might be right, in some cases, that might just be pinning blame.”

Provisions that will affect hospitals will roll out down the road, but will factor into hospital leaders’ calculations about financial sustainability, he said.

ACA Insurance

Cynthia Cox, KFF vice president and director of its Program on the ACA and of the Peterson-KFF Health System Tracker Project, explained about ACA Insurance and 22 million or so people who will see sharp increases in premiums starting Jan. 1, 2026. The Congressional Budget Office projects some will drop coverage, some will pay the full premiums, and some will shift to a lower-tier bronze plan with a much higher deductible. But six months out, an estimated 4 million people will no longer have coverage. There also will be changes for people with ACA insurance but no tax credits, many of whom make more than federal poverty level wages, are disproportionately older adults, more likely to live in rural areas, and more likely to be small business owners.

“So to put it another way, it isn't one story, it's many stories about different groups,” Altman said. “There are more people in one of those categories and less than another that gets hit harder. It's a big and complex story, and it isn't just about how many uninsured. It's about how health care becomes even more unaffordable for a lot of people.”