The US House of Representatives passed its fiscal year 2025 budget reconciliation package, titled the One Big Beautiful Bill Act (OBBBA), by a 215–214 vote on May 22.
The legislation includes substantial changes to Medicaid financing and the structure of the Health Insurance Marketplaces, prompting concerns from health care providers and industry groups.
In a statement issued prior to the vote, Rick Pollack (pictured above), president and CEO of the American Hospital Association (AHA), expressed concern about the bill’s potential impact.
“The sheer magnitude of the level of reductions to the Medicaid program alone will impact all patients, not just Medicaid beneficiaries, in every community across the nation,” Pollack said. “Hospitals – especially in rural and underserved areas – will be forced to make difficult decisions about whether they will have to reduce services, reduce staff and potentially consider closing their doors.”
Among its provisions, the bill proposes restrictions on state funding mechanisms used to finance Medicaid and limits the use of supplemental payment programs, such as provider taxes and state-directed payments. These changes are intended to address concerns about waste and abuse but are being challenged by health care stakeholders as financially disruptive.
In a statement, Pollack also said the Medicaid provisions would "severely restrict the use of legitimate state funding resources and supplemental payment programs," calling them "critical, legitimate and well-established." He noted that these tools have been necessary to offset longstanding underpayments to providers treating Medicaid enrollees.
According to the AHA, the proposed changes would reduce federal Medicaid support by over $700 billion across a 10-year period and could lead to coverage losses for millions of individuals. The bill also allows enhanced premium tax credits available through the Affordable Care Act’s Marketplaces to expire, further affecting access to health coverage.
The AHA warned that immediate implementation of the Medicaid funding changes would leave state governments with little time to adjust their budgets, potentially disrupting the delivery of health services.
“Given the substantial reduction in Medicaid payments and cuts to the Health Insurance Marketplaces, including allowing the enhanced premium tax credits to expire, millions will lose health care coverage. Therefore, the AHA urges the House to reject efforts to dismantle these vital programs in the OBBBA and preserve health care access for our nation’s vulnerable and working families,” Pollack said.
Projections from multiple analysts indicate that the legislation would reduce federal Medicaid funding by approximately $698 billion between 2026 and 2034. The reduction would come largely from changes to how states can finance their Medicaid programs and manage supplemental payments.
As the legislation moves to the Senate, members of both parties have indicated that amendments are likely. Some Senate Republicans have expressed reservations about the depth of Medicaid cuts and have signaled that revisions may be necessary before the chamber takes up the bill for a final vote.
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