On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law. This comprehensive budget reconciliation measure marks the most significant overhaul of U.S. healthcare policy in over a decade. The legislation introduces substantial changes, including reductions in Medicaid funding, the implementation of work requirements, and limitations on retroactive coverage. It also rolls back several provisions of the Affordable Care Act (ACA), such as marketplace subsidies.
These policy shifts are expected to increase the number of uninsured individuals, transfer financial responsibility to states and healthcare providers, and disrupt access to care for millions of Americans. The effects will likely be most pronounced among rural hospitals, safety-net providers, and human service organizations that support low-income and vulnerable populations. Below is a summary of the most impactful provisions:
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Medicaid Program Changes
- Work Requirements: Non-disabled adults aged 19–64 must complete at least 80 hours per month of work, education, or volunteer activity to maintain Medicaid eligibility. This is expected to increase administrative complexity and the risk of coverage loss.
- Eligibility Redeterminations: States must verify Medicaid eligibility twice annually, likely increasing churn and administrative burden.
- Retroactive Coverage Reduction: Retroactive Medicaid eligibility is reduced from three months to one month, limiting reimbursement for prior medical expenses.
- Expanded Cost-Sharing: States may impose co-pays up to $35 per service and require premiums for enrollees with incomes above 100% of the federal poverty level.
- Provider Tax Restrictions: Gradual phase-down of provider taxes as a Medicaid financing tool, reducing states’ ability to sustain program funding.
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Affordable Care Act ACA Rollbacks
- Marketplace Subsidy Elimination: Enhanced ACA premium tax credits are sunset, increasing out-of-pocket costs and reducing access to coverage.
- Stricter Eligibility Standards: Income and documentation requirements for ACA exchange participation are tightened, further limiting access to subsidized plans.
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Support for Rural Hospitals
- Rural Hospital Transformation Fund: Establishes a $50 billion fund to support rural hospitals. While intended to mitigate financial strain, the funding is significantly less than projected losses under other provisions.
The OBBBA is expected to have far-reaching consequences, including a rise in the uninsured rate, increased financial pressure on states and providers, and widespread disruption to healthcare access, particularly for those served by rural hospitals and safety-net organizations. Over the next decade, an estimated eight million Medicaid enrollees and four million individuals receiving ACA subsidies could lose coverage. An additional 4.2 million may be affected if enhanced Premium Tax Credits expire at the end of 2025.
Beyond coverage losses, the legislation fundamentally reshapes Medicaid financing. By capping provider tax programs and freezing new assessments, the OBBBA limits states’ ability to generate matching funds, reducing the resources available to sustain care for vulnerable populations. These changes weaken the financial infrastructure that many healthcare systems and human service organizations rely on.
While the scope of these changes is substantial, the path forward remains uncertain. First, many provisions will phase in gradually, with some Medicaid eligibility and cost-sharing changes delayed until 2027 or 2028. However, federal agencies must still issue detailed guidance to clarify how and when these provisions will be enforced. Until then, providers and organizations will struggle to anticipate the timing and magnitude of enrollment and revenue impacts.
Second, states will have considerable discretion in implementing the OBBBA. Some may move quickly to tighten eligibility, enforce work requirements, and reduce retroactive coverage. Others may adopt mitigation strategies, such as state-funded premium assistance or delayed implementation, based on administrative readiness. As with past Medicaid reforms, this will likely result in a patchwork of state approaches, complicating national planning and best practices.
Third, regulatory and legal uncertainty looms. Litigation could delay or block enforcement of key provisions, particularly those related to work requirements and eligibility restrictions. Meanwhile, federal agencies may need significant time to develop the infrastructure necessary to operationalize the law.
Taken together, these uncertainties make it difficult for healthcare and human service organizations to plan with confidence. Some states and markets may experience rapid enrollment losses and funding cuts, while others may see a slower or more moderate transition. To navigate this variability, organizations will need to move beyond static forecasting and adopt scenario planning and flexible strategies that account for a range of implementation timelines and policy outcomes.
Preparing for Uncertainty
In this environment of uncertainty, scenario planning becomes an essential tool. Rather than attempting to predict a single outcome, scenario planning helps organizations explore a range of plausible futures, identify critical uncertainties, and develop flexible strategies to adapt as conditions evolve.
The process begins with a clear understanding of your mission and how you currently deliver it in a financially sustainable way. Grounding planning in your core purpose ensures that your strategies remain focused on what matters most.
Next, identify the few uncertainties that will most directly affect your operations, such as how your state will implement work requirements or whether federal guidance will create administrative barriers that increase disenrollment. Avoid overcomplicating the process; three or four well-defined scenarios are typically sufficient. For example:
- A delayed implementation with moderate impact,
- A rapid rollout with severe consequences,
- A state-specific approach that softens or intensifies effects.
For each scenario, assess the operational and financial implications. How would coverage losses or shifts in payer mix affect your budget? Would staffing or service levels need adjustment? Which parts of your organization are most exposed?
Also consider how reduced Medicaid coverage and cuts to related social programs may increase demand for your services. Healthcare providers may face more uninsured patients and rising uncompensated care, while human service organizations could see higher caseloads without corresponding funding.
Finally, monitor signals from your state. Has your Department of Health released strategic plans or funding priorities? Are they emphasizing coverage reduction, health equity, work programs, or housing? Aligning your planning with state policy direction will help you stay ahead of the curve.
Steps to Effective Scenario Planning
- Clarify what’s most important to your organization: where and how you deliver your mission sustainably.
- Focus on 2–3 key uncertainties that will drive the biggest impacts.
- Develop 3–4 clear, plausible scenarios — no need for endless hypotheticals.
- Think through operational and financial consequences in each scenario.
- Understand and anticipate your state’s health policy priorities and funding signals.
Brace for Impact
Healthcare and human service organizations cannot afford to wait for perfect clarity. Federal guidance will take time, states will vary in their approaches, and legal challenges may delay or reshape key provisions. But the direction is clear: the landscape is shifting, and financial and operational pressures are mounting—especially for those serving Medicaid populations.
At The Bonadio Group, we understand the complexity and uncertainty surrounding the OBBBA and its far-reaching implications for healthcare and human service organizations. Our team of experienced professionals is here to help you navigate these changes with confidence. Whether you need support with scenario planning, financial modeling, policy interpretation, or strategic response development, we’re ready to partner with you every step of the way. Together, we can build resilient strategies that protect your mission, sustain your operations, and position your organization for long-term success in a rapidly evolving landscape.
Stay Informed on the OBBBA
We’re continuing to share timely insights to help you navigate the One Big Beautiful Bill Act. Find all our updates on the OBBBA Resource Hub, and follow us on LinkedIn and via email to stay connected.
If you need further guidance or have any questions, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
