One Big Beautiful Bill Law Summary

July 09, 2025

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law. This legislation was initially passed by the House on May 22 by a 215-214 vote and was received in the Senate and passed with an amendment by a 51-50 vote. The amended bill passed the House by a 218-214 vote on July 3. This budget package will have sweeping impacts across Medicaid, the Affordable Care Act (ACA), food nutrition programs, and more.

The Congressional Budget Office (CBO) estimates the bill’s health provisions will result in 11.8 million people losing health coverage by 2034. The CBO also estimates that an additional 5.1 million people would lose health coverage due to two policy changes outside the bill including: 1) the final 2025 CMS marketplace rule implementing eligibility changes and 2) the expiration of the ACA expanded premium tax credits. In total, CBO estimates 16.9 million people could lose coverage.

The new law may impact states in several ways:

• Increased Medicaid and ACA coverage loss for noncompliance with work requirements, eligibility changes (Medicaid), and limits on coverage for certain noncitizens (ACA and Medicaid).
• Limited ability to fund the state share of Medicaid and overall decreased federal funding for state Medicaid programs.
• Increased administrative burden for state eligibility staff and increased costs for technology systems to implement work requirements.

Note: Not all provisions apply to U.S. territories, such as work requirements for expansion adults, financing (provider tax and state-directed payments), and certain eligibility changes. ASTHO is closely monitoring the anticipated impact.

Resources

The legislative text of the final bill is 870 pages and was modified throughout the legislative process. For more detailed information, we encourage state and territorial health officials to utilize these resources in addition to the summary of relevant public health provisions below.

• Full Text — H.R. 1
• Congressional Budget Office — Information Concerning the Budgetary Effects of H.R. 1, as Passed by the Senate on July 1, 2025
• Kaiser Family Foundation — Health Provisions in the 2025 Federal Budget Reconciliation Bill

Rural Hospitals

This provision was not included in the initial House-passed bill but was included in the Senate-amended (and ultimately enacted) legislation. This program seeks to address potential impacts of CBO-predicted reductions to Medicaid spending due to the Medicaid provisions in this legislation.

• Establishes the Rural Health Transformation Program: The Rural Health Transformation program appropriates $10 billion per fiscal year to the Centers for Medicare and Medicaid Services (CMS) for 2026-2030 ($50 billion over five years) to disperse to eligible states. States must submit an application to CMS by Dec. 31, 2025, that includes a detailed rural health transformation plan and a certification that includes specifics on the expenditure for the funding under the program. States selected for funding will receive payments for five years, and the amount each state receives is determined by the state’s rural population, the number of rural health facilities, and an analysis of the state hospitals.
• State Eligibility: States must submit an application that includes a rural health transformation plan detailing how the state will improve health care access and outcomes, prioritize the use of new technologies, initiate collaboration between rural health care providers, enhance the supply of health care providers through economic incentives, outline strategies for the long-term financial solvency of rural hospitals, and identify risk factors for rural hospital closure. The state must also certify that no funding would be spent on intergovernmental transfer, certified public expenditure, or any other expenditure to finance the non-federal share of expenditures required under any provision of law.
• Funds can be used toward a list of criteria, such as promoting evidence-based interventions to improve prevention and chronic disease management including technology-based solutions, paying providers for health care, recruiting and training rural health workforce, and other activities as designated by the Secretary.
• The bill does not specify which state agency should be the applicant and custodian of these funds.

Medicaid

Work Requirements

• Overview: Requires able-bodied adults aged 19-64 to work (or perform other qualifying activities) for at least 80 hours a month. There are mandatory exemptions for certain individuals (e.g., pregnant women, those with serious medical conditions, tribal members, parents/caregivers of a dependent child 13 years and under or with a disability). States may issue optional hardship waivers for specific individuals facing short-term hardship (e.g., inpatient care, related outpatient care, natural disasters, high unemployment rate within their county).
• Verification: States will be required to conduct a “look-back” to determine if an individual meets requirement within the three months prior to applying. States would be required to verify an individual's compliance with work requirements within one or more months of enrollment and one or more months before redetermination.
• Implementation Dates:
• June 1, 2026: HHS to release interim final rule with implementation requirements.
• Dec. 31, 2026 (or earlier at state option): States must implement work requirements. However, the final bill allows the Secretary to exempt states from compliance with new requirements until Dec. 31, 2028, if they demonstrate a good faith effort toward compliance.
• Funding: Provides $200M for HHS implementation funding and $200M for states in FY2026 (an increase from $50M and $100M, respectively, from the initial House version).

Expansion

• Expansion FMAP for Emergency Medicaid: Effective Oct. 1, 2026, limits federal matching payments for Emergency Medicaid to the state’s regular FMAP for individuals who would otherwise be eligible for coverage through Medicaid expansion if not for their immigration status.
• Sunsetting increased FMAP incentive: Effective Jan. 1, 2026, states that newly adopt Medicaid expansion will no longer have provisions for the temporary incentive. In addition to the federal government providing 90% federal financing for the expansion population under a state’s Medicaid expansion, the American Rescue Plan Act provided states that expand Medicaid after March 2021 a temporary boost in FMAP — a two-year, five-percentage-point increase in FMAP for all non-expansion population.
• Modifying cost sharing requirements for certain expansion individuals under Medicaid: Effective Oct. 1, 2028, states are required to impose cost sharing of up to $35 per service on expansion adults with incomes 100-138% FPL. Exempts primary care, mental health, and substance use disorder services, along with services provided by federally qualified health centers (FQHCs), behavioral health clinics, and rural health clinics. Maintains the previous law that out-of-pocket costs cannot exceed 5% of family income. Provides $15M in implementation funding for 2026.
• The final legislation adds exemptions to cost-sharing services provided by FQHCs, behavioral health clinicals, and rural health clinics.

Provider Taxes

• Freezes provider taxes at current levels by disallowing increases in any new provider taxes or increases on current tax amounts. Amends the hold harmless “safe harbor” threshold, which is currently 6%.
• In non-expansion states: Remains at 6%.
• In expansion states: Phases down hold harmless threshold from 6% to 3.5% by 0.5% annually starting in FY 2028.
• Exempts long-term care facilities.

State Directed Payments

• Caps state directed payments for expansion states at 100% and non-expansion states at 110% of the Medicare rate. This may limit a state’s future options to incentivize high-quality care or improve access to care.

Eligibility

• Coverage for Noncitizen Alien Medicaid Eligibility: Effective Oct. 1, 2026, Medicaid eligibility of qualified aliens who are humanitarian entrants (i.e., refugees, asylees, and humanitarian parolees), is cancelled, thus leaving Lawful Permanent Residents, certain Cuban/Haitian entrants, and Citizens of Freely Associated States in place as the only categories of noncitizens eligible for Medicaid. 
• The final legislation includes language defining Alien Medicaid eligibility. The text restricts the definition of qualified immigrants for the purposes of Medicaid and CHIP eligibility.
• HHS system to prevent duplicate state enrollment: By Oct. 1, 2029, requires HHS to establish a system to prevent enrollment in multiple states. Requires states to update enrollee addresses using certain datasets by Jan. 1, 2027.
• Eligibility verification using Death Master File: By Jan. 1, 2028, requires states to use the SSA Death Master File to verify eligibility on a quarterly basis.
• Home equity cap for Long-Term Services and Supports: Effective Oct. 1, 2028, lowers the home equity cap for long-term services and supports eligibility to $1M.
• Limits on Retroactive Coverage: Effective Jan. 1, 2027, limits retroactive coverage to up to one month for the expansion population and two months for traditional enrollees and CHIP.

Home and Community Based Services (HCBS)

• Effective July 1, 2028, allows states to expand home-and-community-based services program eligibility criteria and waive the requirement that individuals require nursing home level of care. This would allow a greater number of individuals with less severe needs to access HCBS programs; however, many states already face waitlists so may be unable to expand enrollment. The bill provides implementation funding including $50M in FY2026 and $100M in FY2027.

CMS Eligibility/Long-Term Care Staffing Rule Delays

• Prohibits CMS from implementing or enforcing eligibility rules for Medicaid, CHIP, Basic Health Program, the Medicare Savings Program, and long-term care staffing standards until Oct. 1, 2034.

Other Provisions

• Payment reduction for certain erroneous excess payments: When erroneous payments for ineligible individuals or overpayments for eligible individuals exceed 3% of total payments, federal law requires CMS to recoup payments. Beginning in 2030, the bill requires HHS to reduce federal match to states for identified improper payment errors (while also capping the amount the Secretary can waive for states demonstrating a good faith effort to rectify improper payments) and modifies the definition of improper payments to include payments where insufficient information is available to confirm eligibility.
• Waivers and Budget Neutrality: Effective upon enactment, the CMS Chief Actuary would certify that 1115 waivers are not expected to result in an increase in federal expenditures compared to federal expenditures without waiver. Language also states that the HHS Secretary would be required to develop methodologies for applying savings generated under a project to allowable expenditures in a project’s extension.
• Federal Payments to Prohibited Entities: Prohibits federal payments to “prohibited entities” including Medicaid payments. Prohibited entities including affiliates, subsidiaries, and clinics of a prohibited entity (i.e., tax-exempt essential community providers that deliver family planning and abortion services, other than those allowable under the Hyde Amendment). The signed law allocated implementation funding of $1 million for fiscal year 2026, administered by CMS. This will be enacted for a one-year period.
• The initial House-passed bill had a 10-year period of prohibition after enactment. The signed law has a one-year period.

Medicare

• Limits Medicare coverage of certain individuals: Beginning 18 months after enactment of the bill, eliminates Medicare eligibility for certain immigrant types including those with temporary protected status, refugees, and asylum seekers.
• Temporarily increases payment under the Medicaid physician fee schedule: From Jan. 1, 2026 - Jan. 1, 2027, provides a temporary one-year increase of 2.5% to the fee schedule conversation factor.
• Clarifies the exclusion for orphan drugs under the Drug Price Negotiation Program: Beginning in 2026, expands criteria for the orphan drug exclusion for the Medicare Drug Price Negotiation Program.

Affordable Care Act

• Limits certain noncitizens access to ACA marketplace coverage by restricting ACA marketplace premium tax credits to lawfully present immigrants including lawful permanent residents, Compact of Free Association migrants, and certain other immigrant types.
• Modifies eligibility verification processes.
• Clarifies that lack of a deductible for telehealth will not prohibit a plan from being treated as a High Deductible Health Plan (HDHPs).
• Allows ACA marketplace bronze and catastrophic plans to have Health Savings Accounts by treating them as HDHPs.
• Treatment of direct primary care (DPC) service arrangements: Clarifies that direct primary care service arrangements, which generally offer unlimited primary care in exchange for a periodic fee, are not considered health plans, enabling individuals in DPCs to obtain Health Savings Accounts.
• Does not extend enhanced advanced premium tax credits that are set to expire in 2025.

Food Nutrition Programs

• Redefines the Thrifty Food Plan (TFP) by tying it to a specific adult male and female (ages 20-50) and two children (ages 6-8 and 9-11) reference family. It also requires cost neutrality for future reevaluations of the TFP’s market baskets starting no sooner than Oct. 1, 2028, and at five-year intervals after that.
• Revises the Supplemental Nutrition Assistance Program (SNAP) by implementing work requirements for able-bodied adults without dependents (ABAWD). It also raises the age of a dependent child, for whom a parent/caretaker is exempt, from under 14, and codifies exemptions for individuals under 18 or over 65.
• Individuals who are Indian, Urban Indian, California Indian, and other Indians who are eligible for the Indian Health Services are also exempt.
• The Secretary may exempt individuals in a noncontiguous state (does not include Guam or the Virgin Islands) if the state submits a request to the Secretary and shows a good faith effort to comply with the requirements, including quarterly progress reports. The exemption would expire no later than Dec. 31, 2028.
• Codifies exemptions for individuals under 18 or over 65, those who are medically certified as unfit for employment, pregnant women, homeless individuals, veterans, and former foster youth up to the age of 24. Exemptions for homeless individuals, veterans, and former foster youth are set to expire on Oct. 1, 2030.
• Creates a state cost-sharing requirement for SNAP allotments beginning in FY 2028.
• The state share would increase to 5%, 10%, or 15% when a state's payment error rate exceeds 6%, 8%, or 10%, respectively. A federal share of 100% will be retained by states with error rates of less than 6%.
• Reduces the federal reimbursement rate for states’ SNAP administrative costs from 50% to 25% starting in FY27.
• Revises the age range for general SNAP work requirements (separate from ABAWD rules above) from “over 15 and under 60” to “over 17 and under 65.”
• Sunsets the dedicated funding authorization for the National Education and Obesity Prevention Grant Program (SNAP-Ed) after FY25.
• Eliminates SNAP eligibility for lawfully present non-citizens, including Registry Aliens (entered before 1948), those paroled into the United States, and those granted withholding of deportation. Specifies that non-citizens are eligible for SNAP only if they are residents of the U.S. and are U.S. nationals, lawful permanent residents (with exceptions), aliens who have been granted the status of Cuban or Haitian entrant under specific migration agreements, or individuals lawfully residing in the U.S. under Compact of Free Association.
• Extends funding authority for the Emergency Food Assistance Program commodity purchases from 2024 to 2031.

Notable Provisions Removed from Final Bill

During the legislative process, some of the provisions were removed from the first House-passed bill due to a ruling by the Senate parliamentarian and/or negotiations with the Senate. The list below is not exhaustive and is focused on potential relevant public health provisions.

• Delay of Disproportionate Share Hospital (DSH) payment reductions. DSH payment reductions will occur beginning in FY 2026.
• ACA marketplace eligibility verification modifications, such as removing income-based special enrollment periods and other changes.
• Requiring states to regularly screen Medicaid-enrolled providers to determine if HHS or another state had terminated the provider from Medicaid participation.
• Prohibiting federal match during the “reasonable opportunity period” of 90 days when individuals prove documentation of immigration status.
• Reduced federal match from 90% to 80% for the expansion population for states providing coverage to certain immigrant populations with state-only funds.
• Prohibited coverage of gender-affirming care.
• Several provisions relating to pharmacies and pharmacy benefit managers.