TL/DR –
The One Big Beautiful Bill Act (OBBBA) presents numerous changes to the U.S. healthcare system, including stricter eligibility checks and cost-containment mechanisms for Medicaid, residency rule tightening and drug pricing changes for Medicare, tax code tweaks, and a $50 billion boost for rural healthcare. Notable alterations encompass Medicaid work requirements, prohibition of medical assistance to non-residents unless they meet strict requirements, a 2.5% increase in Medicare reimbursements for physician services, and a tax credit for health insurance premium only going to those who pass stricter eligibility checks. The Act, despite its diverse scope and ambition, appears to be a compilation of disparate policy ideas rather than a cohesive reform strategy.
The One Big Beautiful Bill Act (OBBBA) proposes diverse changes to the U.S. healthcare system. Despite its broad scope, the Act has only 118 references to healthcare, reflecting a compilation of unrelated policy ideas.
I. Medicaid: New Rules and Restrictions
Effective January 1, 2027, OBBBA introduces new checks in Medicaid and CHIP plans:
- Monthly address updates to prevent duplicate Medicaid registration. (Section 71103)
- Quarterly checks to remove deceased recipients with quick reinstatement if wrongly flagged. (Section 71104)
- Semi-annual eligibility reevaluations for ACA Medicaid expansion enrollees. (Section 71107)
From October 1, 2026, Medicaid will only provide medical assistance to non-residents that meet strict citizenship or legal status conditions. (Section 71109)
From January 1, 2027, adult enrollees must fulfill the “Community Engagement Requirement” to remain eligible for Medicaid. (Section 71119)
OBBBA also introduces several cost-containment mechanisms, including retroactive coverage shrinkage and new cost-sharing rules. (Sections 71112, 71120)
A few provisions expand access to care, including potential cost waivers for community services and expanded access to long-term care. (Sections 71121, 71108)
II. Medicare: Revised Access and Benefits
- Tightened residency rules for Medicare eligibility. (Section 71201)
- 2.5% increase in Medicare reimbursements for physician services between January 1, 2025 and January 1, 2026. (Section 71202)
- Delays in the Medicare Drug Price Negotiation Program initial price applicability to 2028. (Section 71203)
III. Tax Code Changes: Health Edition
From January 1, 2026, the health insurance premium tax credit will be aligned with stricter Medicare/Medicaid rules. (Sections 71303 – 71305)
Several tax perks are introduced for certain health plans, like making telehealth safe harbor permanent and allowing pairing of catastrophic and bronze ACA plans with Health Savings Accounts (HSAs). (Sections 71307, 71308)
IV. $50B Boost to Rural Healthcare
OBBBA allocates $50 billion to fund healthcare improvements in underserved rural areas, allowing states to choose from a list of health-related activities to receive funding.
OBBBA’s healthcare provisions, ranging from Medicaid work requirements to substantial investment in rural healthcare infrastructure, aim to drive broad transformation, albeit through a collection of policy priorities instead of a cohesive reform strategy.
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