On Thursday, May 22, 2025 HR 1, the President’s “Big Beautiful Bill,” passed the U.S. House of Representatives by a narrow 215-214 vote.   It now moves to the Senate where we can anticipate more changes to be made.

This summary of provisions below was largely taken from the Kaiser Family Foundation website. Please read to the end for my comments.

Brief Bill Summary:

Medicaid Impact
 Congressional Budget Office (CBO) estimates:

• $700 billion in Medicaid cuts
• 7.6 million Medicaid recipients losing coverage – 3.4 million in California
• 5 million ACA recipients losing coverage – 1.5 million in California
• State estimates the bill will result in $30 billion in cuts to California  

Medicaid Provisions

• HR 1 cuts $200 billion in provider taxes and state directed payments to states.
• Sets a moratorium on new provider taxes and a freeze on current provider tax amounts.  Effective upon enactment. Impacts 49 states.
• Requires provider taxes to meet the uniformity rules effective up to 3 years from enactment at the HHS Secretary’s discretion.
• The Prop 35 MCO provider tax and a CA hospital provider tax received waivers from meeting the uniformity criteria that requires all taxed entities – hospitals, nursing homes, managed care organizations, and others – to be taxed equally.  It applies to many types of provider taxes used in 49 states.
• Limits new state directed payments for mostly public hospitals and the UC system to Medicare payment levels. Current programs are grandfathered in.
• Reduces the federal match for the Medicaid Expansion adult program from 90% to 80% for 15 states that cover undocumented immigrants with state only funding.
• Reduces the federal match for the Medicaid Expansion by 10% during the 5 year bar in states that cover “permanent legal resident” women and children.  The 5-year bar prohibits legal immigrants from receiving public services for the first 5 years they are in the U.S.
• Establishes work requirements for certain Medicaid recipients.  CBO estimates that the overly onerous paperwork required to provide employment verification will result in eligible adults losing coverage.  Effective date moved from 2029 to December 31, 2026.
• Sets Cost-sharing requirements at $35/service or 5% of income.
• Defunds Planned Parenthood Medicaid funding
• Requires states to establish a process for out-of-state pediatric providers to enroll as participating Medicaid providers without additional state screening if providing services to youth and children under age 21.
• Repeals the Biden nursing home staffing ratios. 
   Sets limit of $1 million on home equity value to qualify for long-term care services.
• Eliminates Biden rules that streamlined eligibility determinations and enrollment for Medicaid and ACA.
• Establishes new waste, fraud and abuse checks by requiring monthly and quarterly provider enrollment checks; biannual eligibility redeterminations for Medicaid expansion enrollees; routine beneficiary address verifications and checks on deceased individuals; reduces federal match for state payment errors.

Affordable Care Act Provisions

• Allows the ACA enhanced premium tax credits to expire.
• Reduces the cost-sharing reduction payments so that enrollees receive less financial assistance.
• Eliminates abortion coverage.
• Prohibits Gender Affirming Care as an Essential Health Benefit for adults and children.
• Eliminates coverage for DACA recipients.
• Shortens the open enrollment period, ends special enrollment periods, and establishes new eligibility verification requirements. 

Medicare Physician Payment

• 2025: No relief from the 2.8% payment cut.
• 2026: Provides an update of 75% of the Medicare Economic Index (MEI) = 2.25% increase
• 2027-2034: Provides an update of 10% of MEI = ~0.25%/year. Current law = +.25% for FFS and +.75% for APMs.
• The physician payment provision provides a 4.3% cumulative growth in the payment rate from 2026-2034 and establishes the MEI inflation index in the law.  However, because the bill does not restore the 2025 payment cut, physicians receive less than the 2024 payment rate until ~2029-2030. It also reduces payment for physicians participating in APMs.

Potential Medicare Sequestration Cuts Triggering Physician Payment Cuts

• HR 1 increases the deficit by $2.5 trillion and is therefore, in violation of the Statutory Pay As You Go (PAYGO) rules which requires the Office of Management and Budget (OMB) to order across the board sequestration cuts to certain government programs. CBO projects the Medicare sequestration cuts would be 4% each year from 2026-2034 which also reduces physician payments by 4%/year. The total Medicare program funding cut in 2026 would be $45 billion and $490 billion in 2027-2034.  However, Congress can waive the PAYGO rules.

Student Loan Provisions for New Loans After 2026

• Caps medical student borrowing to $50,000 undergraduate and $100,000 graduate education.
• Eliminates the Grad PLUS loan for graduate students to cover the full cost of tuition and living expenses. However, the bill establishes other new loan programs.
• Prohibits the hours worked in non-profit public hospitals and institutions during medical residency from qualifying for Public Service Loan Forgiveness (PSLF). 

Health Savings Accounts 

• Doubles the basic annual contribution limits by $4,300 for individuals with self-only coverage, and by $8,550 for family coverage.  Increased contribution phases out for adjusted gross incomes between $75,000 and $100,000 (individual), and $150,000 to $200,000 (joint filers with family coverage).

Pharmacy Benefit Manager (PBM) Reform and Medicare Drug Price Negotiation

• Requires PBM payment for Medicare Part D drugs to be based on a flat fee and prohibits payment based on the price of a drug or rebate arrangement. 
• Requires PBM transparency and reporting on utilization, pricing, revenues from covered formulary drugs, affiliated pharmacies and contracts with drug manufacturers, among other issues.
• Allows Medicare to negotiate drug prices for certain orphan drugs designated for one or more rare diseases or conditions.  Begins in 2026 for negotiated drug prices after Jan 1, 2028.

Now I don’t disagree with everything is this bill. I understand that there may be aspects of fiscal containment that are necessary in the above provisions. However, what worries me is that saving money may come at a tremendous cost. And many of the cost savings are short-sighted and will only serve to increase overall health care costs for everyone. 

A recent publication from the non-partisan National Bureau of Economic Research, looked at 37 million low-income adults who gained Medicaid coverage in states that expanded the program under the ACA. What they found was that these people were 21 % less likely to die in a given year of enrollment than those who did not gain coverage. States that expanded Medicaid saved 27, 400 lives between 2010 and 2022 and states that did not missed the opportunity to save 12,800 more lives.  (editors note, for a critical analysis of the article please click here)

Another recent study in NEJM looked at the dual population of Medicare and Medicaid eligible people. These, roughly 12 million Americans have the unfortunate problem that when they lose their Medicaid they also lose their Medicare coverage that lowers prescription drug costs by approximately $6000/year. For those who lost this subsidy, it was found that they:

-filled 1.2 fewer prescriptions on average

-were between 4% and 22% more likely to die depending on their level of co-morbidities

-were most likely to die during the 17-month study period if they had high drug costs and were more likely to die if they had HIV, cardiovascular or pulmonary diseases. This paper suggests that by improving access to medications, Medicaid can improve patient survival.  This population will also be the most vulnerable if they even temporarily lose coverage due to the above policies that will likely increase “churn” by increasing the administrative burden.

As a neurosurgeon, this issue of reducing access is no more obvious than in our emergency rooms. Due to the federal law, EMTALA, and our ethical principles as physicians, we are obligated to provide emergency care to everyone who walks through those doors. If a larger proportion of those patients are uninsured, which will happen if Medicaid eligibility is further limited, than the hospitals and physicians will have to absorb this uncompensated care. In rural communities, it is projected that this will lead to increasing ER and hospital closures leading to large geographic gaps in care, especially in sub-specialties like ours. Furthermore, fewer neurosurgeon practices will be able to afford to cover on-call care in ERs if they are not getting reimbursed for a higher proportion of patients they see. That means the insured patients in these communities will also have decreased access to physicians and services.

Arguments will be made that creating a leaner, meaner Medicaid will improve care and lead to more patients entering the commercial market, but I don’t see the straight line that leads from these cuts to this outcome? Why would insurance companies charge less and take on more medically and socioeconomically disadvantaged patients? The main population of adults affected by the ACA expansion only make $21,000/year.  They cannot afford private insurance. This legislation allows the ACA tax credits to expire so they cannot take advantage of those credits to try to afford ACA coverage.  There is nowhere for them to go, except to be uninsured.  We all would like to see less patients that need Medicaid but that is a societal problem that these cuts won’t address but only exacerbate.

In summary, this bill really doesn’t attempt to make Medicaid more efficient.  This is about coming up with cuts to fund the President’s other priorities.  Where is the plan to truly reform the Medicaid program, such as more coordinated care for dual eligibles which would provide higher quality care and save significant money? While fraud and abuse exist and this absolutely should be addressed, the impact of this on overall cost has been shown to be relatively minor.  Furthermore, let us not celebrate a Medicare “fix” to our reimbursement that gets us back to what we were paid in 2024 by 2029 when we all have felt the pain of inflation.  This bill does not serve doctors or patients, and we should not accept being on the budgetary chopping block…again.