Joel E. Miller
Past Chair
National Coalition on Mental Health and Aging
July 2025
Executive Summary:
Health Provisions of HR 1 — The “One Big Beautiful Bill Act” (OBBBA)
The “One Big Beautiful Bill Act” (OBBBA) makes significant changes to Medicaid, the Affordable Care Act (ACA), and other healthcare provisions, with a focus on cost containment, program integrity, and state flexibility. Key changes include stricter eligibility checks, work requirements for some Medicaid beneficiaries, and limitations on Medicaid spending. The bill also revises ACA subsidy verification and extends enhanced subsidies for a limited time.
Below is a summary of the OBBBA’s primary health provisions, with additional detail provided on the following pages.
Medicaid:
Work Requirements: The OBBBA introduces work, volunteer, or education requirements for certain Medicaid beneficiaries, requiring them to demonstrate participation in qualifying activities for at least 80 hours per month.
Eligibility Changes: States will need to verify Medicaid eligibility more frequently (every six months instead of annually) and may face stricter eligibility criteria for non-citizens.
Cost-Sharing: Higher-income Medicaid beneficiaries will face increased cost-sharing for some healthcare services, potentially up to $35 per service.
Eligible Populations: Limits Medicaid eligibility to U.S. citizens and lawful permanent residents.
Provider Taxes: The bill tightens federal oversight of state-collected taxes from healthcare providers.
Federal Funding: The OBBBA includes caps on state-directed Medicaid payments and limits on provider taxes, potentially impacting state funding for Medicaid programs.
ACA Premium Tax Credit Modifications:
Elimination of Automatic Re-enrollment: The OBBBA eliminates the automatic re-enrollment process for individuals receiving premium tax credits, requiring annual re-verification of eligibility.
Changes to Open Enrollment; The bill shortens the annual open enrollment period for ACA Marketplace plans and eliminates certain special enrollment periods based on income, making it potentially harder for some to enroll or retain coverage.
Income Verification Burdens: The bill imposes additional income verification requirements on individuals with incomes between 100-400% of the Federal Poverty Level, potentially creating administrative burdens and delays.
Reduced Tax Credits: The legislation potentially reduces the amount of tax credits available to enrollees, leading to higher premiums.
Other Key Health Care Provisions:
Rural Health Relief Fund: Appropriates $50 billion to states to support rural providers.
Medicare Provider Payment Increase: Provides for a 2.5% increase in the Medicare Physician Fee Schedule conversion factor, effective for services furnished in calendar year 2026.
Overall Impact:
These changes have raised concerns about potential reductions in health insurance coverage, increased costs for some enrollees, and administrative burdens for states and individuals. The legislation is also expected to have significant impacts on rural hospitals and communities due to potential cuts in Medicaid funding.
The “One Big Beautiful Bill” Reality Check:
What Sweeping Healthcare and Tax Changes Mean for Older Adults
The comprehensive legislation known as the “One Big Beautiful Bill Act” (House Resolution 1), enacted on July 4, merges significant healthcare program reforms with tax policy extensions, new deductions for tip and overtime income, enhanced border security and defense funding, and a $5 trillion increase to the federal debt limit.
Medicaid Program Overhaul
The new law enacts sweeping Medicaid reforms that will reduce federal expenditures by more than $1 trillion over ten years. Central to these changes are mandatory employment requirements that require adult beneficiaries to engage in 80 hours of monthly work, volunteer activities, or educational programs to retain their healthcare benefits. Although certain groups receive exemptions—including expectant mothers, parents with dependent children, and those with serious medical conditions—the Congressional Budget Office projects that 5 million Americans will lose their healthcare access through this single provision.
Implementation deadlines require states to establish these work mandates by December 31, 2026, though states facing operational difficulties may receive extensions until 2028. Healthcare policy experts caution that historical evidence shows such requirements typically lead to coverage reductions without meaningful employment increases, while simultaneously creating substantial administrative costs for state governments.
The legislation introduces additional Medicaid modifications including biannual eligibility reviews for expansion participants, limitations on provider taxation in non-expansion states, and termination of federal support for legally present immigrants.
Funding reductions will create uneven impacts across states, with Louisiana and Virginia facing 21% decreases in Medicaid resources over the coming decade. Rural healthcare facilities encounter heightened risks despite a $50 billion protective fund.
ACA Insurance Market Modifications Threaten Coverage for Millions
While public discourse concentrated on Medicaid reductions, equally significant but less publicized changes target the Affordable Care Act’s Health Insurance Marketplaces, potentially eliminating coverage for approximately one-third of current participants. These under-reported provisions constitute a hidden danger that could dramatically alter America’s healthcare infrastructure.
Initial Congressional Budget Office projections suggest that marketplace modifications could result in roughly 8.2 million Americans losing insurance by 2034, though actual numbers may prove higher. Despite receiving far less attention than Medicaid work requirements, these marketplace changes could prove equally harmful.
Key Marketplace Modifications
The legislation undermines ACA Marketplace accessibility through several mechanisms. Enhanced advance premium tax credits that currently subsidize insurance costs for millions will expire at year-end 2025 without renewal. These subsidies have been essential for moderate-income Americans who exceed Medicaid eligibility thresholds but struggle with private insurance premiums.
New documentation requirements will significantly complicate enrollment and coverage maintenance processes, demanding comprehensive verification before individuals can access advance premium tax credits, potentially suspending coverage for months. Automatic renewal processes will be eliminated, requiring all marketplace users to reapply annually—a change that appears minor but could have massive consequences as many individuals will miss deadlines or fail to navigate complex administrative requirements.
The law eliminates marketplace access for various categories of legal immigrants, including asylum applicants, refugees, DACA beneficiaries, and trafficking survivors. These vulnerable groups typically have substantial healthcare needs but will lose subsidized coverage access. Furthermore, individuals earning up to 150% of federal poverty levels will lose continuous enrollment opportunities, forcing them to wait for annual enrollment periods even when experiencing life changes affecting their insurance requirements.
The Overlooked Emergency
Recent analyses indicate that expiring enhanced premium tax credits combined with the described provisions could decrease ACA Marketplace participation by 47 to 57 percent, representing 11.2 to 13.6 million enrollees. This reduction would compound the projected 8 to 9 million Medicaid coverage losses. (Source: https://www.wakely.com/wp-content/uploads/2025/06/Reconcilliation-Bill-Impacts_6_23_25_FINAL.pdf)
The combined effects create a crisis scenario: millions losing Medicaid through work requirements, millions more unable to afford marketplace plans due to reduced subsidies, and vulnerable immigrant communities losing eligibility completely. The outcome is a healthcare infrastructure that becomes progressively less accessible to those with the greatest needs.
SNAP Work Requirements
- The OBBBA extends SNAP work requirements, including to older adults and parents with older children who were previously exempt.
- The previous threshold for able-bodied adults without dependents (ABAWDs) requiring participation in work activities for at least 20 hours per week to receive SNAP for more than 3 months in a 36-month period remains.
- States can request waivers of the ABAWD time limit for areas with an unemployment rate over 10% or insufficient job opportunities. However, ABAWDs still remain subject to the general SNAP work requirements even with a time limit waiver.
- States have discretion to exempt 15% of individuals otherwise subject to the time limit each month.
Medicare Automatic Reductions: $45 Billion in Cuts Starting 2026
The legislation triggers significant Medicare spending reductions totaling approximately $545 billion through the Statutory Pay-As-You-Go Act (S-Paygo). This automatic reduction mechanism activates when new legislation increases federal deficits, initially implementing roughly $45 billion in Medicare cuts during fiscal year 2026.
PAYGO activation would automatically reduce 4% from most Medicare spending categories. These cuts would impact hospital reimbursements, provider payments, Medicare Advantage programs, and prescription drug plans. Congressional action could eliminate this PAYGO requirement through future legislation.
Tax Code Transformation: Individual and Business Provisions
The legislation includes comprehensive tax modifications for both individuals and businesses. Individual provisions make numerous Tax Cuts and Jobs Act elements permanent, including reduced tax rates and brackets, higher standard deductions, and permanent elimination of personal exemptions (with temporary senior deductions). The law temporarily raises the state and local tax (SALT) deduction limit from $10,000 to $40,000 and provides tax relief for seniors, overtime workers, and tip recipients.
Business provisions restore permanent 100% bonus depreciation, expand Section 179 expensing opportunities, and make research and development expense deductions permanent.
Key Individual Tax Changes:
Permanent TCJA Elements: Lower tax rates, increased standard deductions, and eliminated personal exemptions become permanent features
Temporary SALT Relief: State and local tax deduction limits increase to \$40,000 for five years
Senior Tax Benefits: Temporary \$6,000 deduction for seniors with incomes under \$75,000 (or \$150,000 for joint filers)
Worker Tax Elimination: Federal income tax removed from tips and overtime compensation
Vehicle Interest Deduction: Limited car loan interest deductions included
Enhanced Child Benefits: Child tax credit increases to \$2,200
Business Tax Enhancements:
Permanent Bonus Depreciation: 100% bonus depreciation becomes permanent for qualified property
Enhanced Small Business Expensing: Increased Section 179 limits for small enterprises
Immediate R\&D Deductions: Research and development expenses become immediately deductible rather than amortized
Permanent Business Income Deduction: 20% deduction for pass-through entity qualified business income becomes permanent
Modified Interest Limitations: Permanent changes to business interest deduction restrictions
Additional Provisions:
Clean Energy Rollbacks: Elimination of several green energy tax incentives from the Inflation Reduction Act
Permanent Opportunity Zones: Extension of opportunity zone provisions
AMT Modifications: Permanent increases to alternative minimum tax exemptions and thresholds
IMPLICATIONS FOR OLDER ADULTS
The OBBBA changes would fundamentally undermine Medicaid’s core mission as a health care safety net and would be particularly devastating for individuals with mental health and substance use disorders who rely on Medicaid for essential care.
According to the Congressional Budget Office’s updated estimate, this legislation would result in approximately 12 million Americans losing health insurance coverage. This massive coverage loss is not merely a statistic—it represents millions of vulnerable individuals, including those with mental health conditions and substance use disorders, who would lose access to life-sustaining treatment.
Without Medicaid, many Medicare enrollees—especially those with limited income—would struggle to afford care, risking their health or having to choose between medical care and housing, food and other essentials. Cutting Medicaid would directly harm millions of Medicare enrollees and increase costs for the Medicare program and state budgets.
OBBBA Could Trigger $500 Billion in Mandatory Medicare Cuts to Medicare
According to Congressional Budget Office analysis, the legislation would activate substantial Medicare reductions approaching $545 billion through the Statutory Pay-As-You-Go Act of 2010 (S-PAYGO). This automatic spending reduction mechanism engages when new laws expand the federal deficit, initially imposing approximately $45 billion in Medicare reductions during fiscal year 2026, followed by additional reductions affecting various programs serving seniors and disabled populations. CBO documentation and correspondence detail how these mandatory spending cuts would be distributed across affected programs.
Activating the Statutory PAYGO mechanism would automatically slash 4% from the majority of Medicare expenditures. These reductions would affect reimbursements to hospitals, physicians, healthcare providers, Medicare Advantage programs, and prescription drug plans. Hospital systems would face a compounded impact, experiencing both these Medicare payment cuts and the financial strain from Medicaid program changes within the same legislation. While certain programs supporting low-income Medicare recipients receive protection from these automatic reductions, the vast majority of Medicare spending remains vulnerable to these across-the-board cuts.
Impact on Dual Eligible Beneficiaries
We are profoundly concerned about how the legislation would affect the approximately 12.5 million Americans who are dual-eligible for both Medicare and Medicaid. These individuals represent some of our nation’s most vulnerable citizens—63% have multiple chronic conditions, 41% have at least one mental health diagnosis, and 49% receive long-term services and supports. For dual eligibles with mental health conditions, the coordination between Medicare and Medicaid is particularly critical, as Medicare typically covers acute psychiatric care while Medicaid often covers community-based mental health services, case management, and rehabilitation services that Medicare does not.
The changes would create several specific challenges for dual eligibles:
First, the imposition of work requirements presents an exceptional burden for dual eligible beneficiaries, many of whom have disabilities or chronic conditions that limit employment opportunities but may not meet the stringent standards for exemptions. The complex documentation requirements to prove disability or caregiver status would create insurmountable administrative barriers for individuals with cognitive impairments, serious mental illness, or limited technological access. Work requirements would effectively sever the Medicaid lifeline for thousands of dual eligibles who rely on these services to maintain stable mental health and community integration. Research from states that have implemented similar requirements shows disproportionate coverage loss among those with disabilities and chronic conditions, even when they should qualify for exemptions.
Medicaid Work Requirements
Requirement: The OBBBA mandates that states, starting January 1, 2027, implement community engagement requirements (also known as “work requirements”) for most of the population covered under the Affordable Care Act (ACA) expansion to qualify for and maintain Medicaid eligibility.
Hours: Individuals must complete at least 80 hours per month (or 20 hours per week) of community engagement activities.
Qualifying Activities: These activities include working, participating in a work program, community service, or enrolling in an education program. A monthly income not less than the applicable minimum wage multiplied by 80 hours can also satisfy the requirement.
Verification: States must determine compliance for new applicants within one to three months (at the state’s choice) and re-evaluate enrollees at least every six months (during eligibility redeterminations).
Exemptions: The OBBBA includes exceptions for certain individuals from the work requirement. These exemptions include individuals who are: American Indians, Veterans with disabilities, medically frail individuals, and parents or caregivers of a dependent child under 14 or an individual with a disability.
Second, more frequent redeterminations would disproportionately impact the older aduly population, who often face cognitive impairments, physical disabilities, and social determinants of health challenges that make navigating bureaucratic processes exceptionally difficult. Data from previous eligibility verification initiatives shows that dual eligibles are at high risk of inappropriate coverage loss due to administrative barriers rather than actual ineligibility.
Third, the limitations on provider taxes would strain state Medicaid budgets that fund crucial services not covered by Medicare, such as personal care services, certain home and community-based services, and specific behavioral health supports. These services are often what allow dual eligibles with a mental illness to remain in community settings rather than institutions.
Fourth, the proposed cost-sharing requirements would create a particularly devastating “double jeopardy” for dually eligible beneficiaries with mental health conditions. Already responsible for Medicare cost-sharing that Medicaid has traditionally covered, they would now face additional Medicaid service fees for community-based mental health services. For someone with a serious mental illness requiring weekly therapy, psychiatric medication management, and case management services, the cumulative financial burden could exceed $200 monthly—an impossible sum for individuals surviving on limited fixed incomes. The inevitable result would be treatment discontinuation, symptom escalation, and increased reliance on costly emergency services and institutional care.
The Congressional Budget Office (CBO) estimates that as many as 1.3 million dual-eligible individuals could lose their Medicaid coverage between 2026 and 2034 as a result of OBBBA. This loss of coverage is primarily due to the bill’s provisions delaying the implementation of rules aimed at streamlining Medicaid enrollment and reducing administrative barriers, making it harder for some individuals to maintain their coverage. Specifically, the OBBBA delays the implementation of two rules that were designed to simplify the Medicaid enrollment process and make it easier for people to stay enrolled. This delay is expected to disproportionately impact dual-eligible individuals, who are more likely to face administrative hurdles in maintaining their Medicaid coverage. The CBO estimates that these provisions would lead to a significant reduction in Medicaid enrollment by 2034, with dual-eligibles comprising a substantial portion of those losing coverage.
Other low-income Medicare recipients who depend on both Medicare and Medicaid will lose essential financial support that covers Medicare’s monthly $185 Part B premium and reduces other healthcare costs. These individuals already survive on severely constrained budgets and will face impossible choices between healthcare expenses and basic necessities like housing and food.
Health Consequences of Medicaid Coverage Loss for Medicare Beneficiaries
The changes to Medicaid eligibility standards threaten to undermine the Medicare Savings Program, which provides critical cost assistance to economically disadvantaged seniors. Congressional Budget Office projections indicated that eliminating these expanded enrollment provisions would strip Medicaid benefits from 2.3 million individuals, with 600,000 losing health coverage entirely. The consequences would be particularly severe for approximately 1.4 million Americans who depend on both Medicare and Medicaid for comprehensive healthcare coverage.
Research demonstrates that dual-eligible individuals who lose Medicaid face substantially higher death rates. A pivotal study in the New England Journal of Medicine examined mortality outcomes following Medicaid termination, which also eliminates eligibility for Medicare Part D’s Low-Income Subsidy program that makes prescription medications affordable.
The research documented mortality increases ranging from 4% to 22% among those who lost both Medicaid and prescription drug subsidies compared to individuals who retained coverage. Additional research projects an alarming 18,200 excess deaths annually among Medicare beneficiaries who lose Medicaid coverage and prescription drug affordability benefits.
These mortality findings align with broader evidence showing that medication costs directly influence health outcomes and overall Medicare spending. When financial barriers prevent consistent adherence to prescribed therapies, chronic conditions worsen and eventually require costlier emergency department visits and hospital admissions that could have been avoided through affordable ongoing treatment.
Increased Health Care Costs for Older Adults
While considerable attention has focused on coverage losses from Medicaid work requirements and reduced ACA premium subsidies, these policy modifications collectively represent a fundamental transfer of health care costs to older Americans and the Medicare program itself, ultimately increasing expenses for all taxpayers. Beyond higher out-of-pocket costs, seniors are likely to experience worse health outcomes and increased mortality risks.
The OBBBA reconciliation legislation includes two specific provisions that will raise health care expenses for older adults: mandatory copayments for Medicaid expansion enrollees with incomes above the federal poverty level, and a reduction of Medicaid’s retroactive coverage period from three months to one month.
The legislation requires all states to impose copayments exceeding zero dollars but not exceeding $35 for most health care services utilized by older adults living slightly above the poverty threshold. Primary care, pediatric services, prenatal care, behavioral health treatment, and emergency services remain exempt from these charges. This represents a significant policy shift that increases financial burdens on those least equipped to absorb additional costs while simultaneously reducing healthcare access,
Medicaid policy had previously allowed the program to cover health care expenses incurred up to three months before an application date for individuals who would have qualified during that period. Evidence confirms that insurance coverage substantially reduces medical debt burdens, and this retroactive coverage provision serves as an important financial safeguard for low-income populations. While quantifying this protection presents methodological challenges, data from Indiana’s Medicaid waiver program, which eliminated the three-month retroactive period, an independent report revealed that nearly 14% of beneficiaries who would have received retroactive reimbursement accumulated average costs of $1,561 per person.
Given that older adults typically face higher health care expenses and greater susceptibility to sudden health crises, the financial exposure could be considerably greater for this population. By reducing retroactive coverage by two-thirds, the legislation will weaken these financial protections and likely increase medical debt among vulnerable older adults.
Mental Health Consequences of Coverage Losses Among 50-64 Year-Olds
The proposed Medicaid changes would have particularly devastating mental health implications for adults aged 50-64. This age group experiences significantly higher rates of depression, anxiety disorders, and early-onset dementia compared to younger populations, with approximately 20% having a diagnosable mental health condition requiring treatment. The loss of Medicaid coverage would disrupt access to psychiatric medications, therapy, and specialized mental health services precisely when these interventions are most critical.
Research demonstrates the profound mental health benefits of Medicaid for this age group. Following Medicaid Expansion in 2013, treatment rates for depression increased by 61% among previously uninsured older adults with low incomes, and emergency department visits for suicide attempts and self-harm decreased by 24%. Conversely, studies of coverage disruptions show that even short lapses in insurance lead to medication discontinuation for 42% of those with serious mental illness. The psychological impact of coverage loss is also significant—studies document increased anxiety, hopelessness, and suicidal ideation among older adults who lose health insurance, creating a dangerous compounding effect where the stress of losing coverage exacerbates underlying mental health conditions.
Perhaps most concerning is the mortality impact. The 9.4% reduction in mortality for 55-64 year-olds attributable to Medicaid expansion was driven significantly by decreases in suicide and deaths of despair. Proposed work reporting mandates would affect an estimated 6 million near-elderly Medicaid enrollees. Despite the fact that more than half of Medicaid beneficiaries aged 50-64 maintain employment, these individuals face potential coverage termination due to administrative errors or documentation failures rather than actual work status. Among non-working individuals in this age cohort, nearly one in six cite health problems or disabilities as the primary barrier to employment.
The fundamental consequence of Medicaid termination for adults approaching Medicare eligibility is deteriorated health status at the point of Medicare enrollment. When individuals lose access to routine preventive care, essential medications, and ongoing chronic disease management, their health conditions progress unchecked. This creates a cascade effect where Medicare must subsequently absorb significantly higher costs to address advanced conditions that could have been managed preventively through continued Medicaid coverage.
Research demonstrates that individuals who experience Medicaid coverage gaps prior to Medicare eligibility exhibit substantially higher healthcare utilization patterns throughout their Medicare enrollment. Studies show that the duration of uninsurance correlates directly with increased hospital admissions, extended inpatient stays, higher rates of surgical interventions, and elevated personal healthcare expenditures that persist for at least ten years following Medicare enrollment.
The mental health implications represent a particularly concerning dimension of coverage loss. Preventable mental health-related mortality would likely surge under these policy changes, as individuals lose access to essential psychiatric care and medications. Untreated mental health disorders compound physical health deterioration, exacerbate existing chronic conditions, and generate substantial cost increases when these individuals eventually enter the Medicare system. The research conclusively demonstrates that eliminating Medicaid coverage for near-elderly adults would precipitate a widespread mental health emergency with enduring consequences for both individual well-being and healthcare spending.
Creates Medicare Affordability Crisis for Vulnerable Populations
OBBBA creates bureaucratic obstacles for Medicare beneficiaries by eliminating the Streamlining Medicaid Eligibility & Enrollment Rules. These modernized regulations had simplified outdated procedures, enabling seniors and disabled individuals to more easily access and maintain Medicaid benefits and Medicare Savings Programs that assist with Medicare expenses.
According to Congressional Budget Office analysis, reversing these streamlined processes would discourage enrollment in Medicaid and MSPs among qualified individuals. Approximately 1.4 million low-income Medicare recipients—representing over 10% of dual-eligible beneficiaries—would forfeit essential financial support that covers Medicare’s monthly $185 Part B premium and reduces other healthcare costs.
The affected individuals already survive on severely constrained budgets. Losing this financial relief would create impossible situations where they must prioritize healthcare expenses over fundamental necessities such as housing and nutrition, potentially leading to increased homelessness and food insecurity among vulnerable seniors and disabled Americans.
Impact on Legal Immigrants
The legislation eliminates Medicare benefits for numerous legal immigrants who have contributed taxes to the system for years. This represents a dramatic shift from established policy that grants coverage to anyone meeting “fully insured” status through adequate Social Security and Medicare tax contributions. Since Medicare already excludes undocumented individuals from coverage, assertions about this provision’s necessity are contradicted by existing restrictions.
Denying Medicare access to legal residents and disabled individuals who have paid into the system while continuing to collect their payroll taxes constitutes a fundamental violation of fairness and American principles. The legislation would also eliminate these individuals’ eligibility for ACA premium subsidies that help make private insurance affordable after losing Medicare coverage.
Given that current law already limits Medicaid access for lawful residents without permanent status, this dual exclusion from both Medicare and ACA assistance would leave many long-term taxpayers completely without health insurance options.
Threatens Essential Long-Term Care Services for Medicare Recipients
Medicare beneficiaries depend heavily on Medicaid, rather than Medicare itself, to cover their long-term care needs. In 2022, Medicaid funded 61% of all long-term care services nationally and over 70% of Home- and Community-Based Services that allow people to remain in their homes and communities.
OBBBA jeopardizes long-term care access by transferring financial responsibility to cash-strapped states, creating strong incentives for reductions in HCBS programming. The bill also establishes additional barriers to Medicaid qualification, increasing the likelihood of coverage interruptions during critical care periods.
Additionally, the legislation eliminates nursing home minimum staffing requirements, creating dangerous conditions for thousands of Medicare beneficiaries residing in institutional care facilities where inadequate staffing levels have been linked to increased mortality and poor health outcomes.
Conclusion
We witness daily how Medicaid serves as a lifeline for individuals with mental health and substance use disorders. Approximately one in four adult Medicaid beneficiaries has a mental health condition, and the program covers almost 30% of adults with serious mental illness. For these individuals, consistent access to medication, therapy, and supportive services is not optional—it is essential for functioning, recovery, and often survival.
The savings projected from these measures would come at an unconscionable human cost: increased untreated mental illness, more emergency interventions, greater strain on families and communities, and ultimately, increased health care costs in other sectors as preventable crises go unaddressed.
Furthermore, these changes would severely impact dual eligibles, creating additional complications in an already complex system of care for our most vulnerable citizens.
The provisions in OBBBA make it very clear: Congress and the Administration broke their promise not to undermine Medicare or cut coverage and benefits. The OBBBA would cut coverage and access to care for millions of older adults with mental health conditions and those with disabilities, putting their lives, health, and financial security at risk.