The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduces significant changes to the healthcare landscape, with provisions impacting Medicaid, Medicare, the Affordable Care Act (ACA), and other healthcare programs. Read our detailed summary of OBBBA’s healthcare provisions here.
During our July 24, 2025, webinar, the McDermott+ team discussed key elements of the final legislation, the timeline for implementation, and potential implications for stakeholders.
Watch the recording here, and read on for key takeaways:
OBBBA’s Medicaid provisions constitute most of the health section and will have implications for beneficiary coverage and state financing of the program. The provisions include mandated work requirements and cost sharing for the expansion population, a cap on state directed payments (SDPs), a freeze and reduction in provider taxes, and changes to the eligibility process.
The Congressional Budget Office estimates that OBBBA will cause 10 million individuals to lose their health coverage over the next 10 years. It will put pressure on state Medicaid budgets, but each state will be affected and will respond differently. The greatest impact will be on expansion states that have maximized use of state funding mechanisms such as provider taxes and SDPs. States could respond to reductions in federal Medicaid funding by reducing coverage, services, or provider reimbursement.
While most health focus has been on the Medicaid provisions, OBBBA will also drastically modify the ACA Marketplaces. OBBBA will narrow legal immigrants’ eligibility for advanced premium tax credits (APTCs), eliminate financial protections for Marketplace enrollees with the lowest incomes, and enact new enrollment hurdles starting in 2028. These policies are expected to reduce Marketplace enrollment over time. If the enhanced APTCs, which are set to expire in December 2025, are not extended and the ACA program integrity rule is implemented, the Congressional Budget Office estimates that coverage losses could increase by an additional five million people.
OBBBA includes $50 billion for a rural health transformation program that aims to offset the impact of the other health provisions on rural communities. The funding will be provided to states beginning in October 2025, with $25 billion distributed equally among states with approved applications, and $25 billion distributed according to a Centers for Medicare & Medicaid Services-determined formula. States will decide how to allocate the funds, which can be used for multiple purposes, not just funding for rural hospitals.
There are still opportunities to modify or delay OBBBA provisions through regulation or legislation. Many provisions will not take effect for years, and the US Department of Health and Human Services will need to issue implementation rules or guidance that may allow for public input. Lawmakers have already started the process of introducing legislation to modify provisions, and they will likely continue to do so.
McDermott+ will continue to monitor developments and provide updates as implementation unfolds. For additional insights or support in the changing policy environment, please contact our team.
Read our +Insight for more on the healthcare provisions of the One Big Beautiful Bill Act.
When:
July 24, 2025 | 1:00 – 2:00 PM EDT
Where:
Webinar
