Death by a Trillion Cuts: The Unraveling of Medicaid
Projected cuts to Medicaid funding will create an adversarial process that increases burdens for everyone—enrollees, states, and providers.
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As the sun rises on January 1, 2027, a new era will begin for Medicaid. Many of the approximately 20 million people enrolled in expanded Medicaid coverage will have to deal with more—more paperwork, more work, and more uncertainty which will lead to millions becoming uninsured.
These changes stem from the One Big Beautiful Bill Act, or H.R.1, signed into law on July 4, 2025. H.R.1 is projected to cut nearly a trillion dollars (~$911 billion) of federal Medicaid spending over the next decade, with over half of that (~$511 billion) coming from making enrollment in the program harder in three ways.
First, the law delays Biden administration rules aimed at simplifying enrollment, which were designed to make government services easier to navigate. Second, eligibility redetermination paperwork will occur every six months instead of once per year for people enrolled in Medicaid expansion under the Affordable Care Act, creating extra administrative burdens for enrollees and states. Third, adults enrolled in Medicaid expansion will have to prove they comply with “community engagement” or work reporting requirements, despite overwhelming evidence that they are expensive to implement and don’t work.
None of these rules make sense unless the goal is to keep people out of Medicaid. The federal “savings” on Medicaid mean that a projected 7.5 million people (or more) will become uninsured by 2034. States will struggle to pay their share of Medicaid costs, and safety net hospitals will face huge budgetary holes while serving the same patient populations, which are likely to have greater medical needs.
Much like the Affordable Care Act made getting coverage easier for many, H.R.1 will make it clear that law is a determinant of health that can improve or (in this case) reduce coverage and access to care. In a recent commentary in the New England Journal of Medicine, we discuss this unraveling of Medicaid and how it creates an adversarial process that increases burdens for everyone—enrollees, states, and health care providers.
H.R.1 may have seemed a political win for the second Trump administration, but it is a clear loss for taxpayers and the American people.
When H.R.1 was enacted last year, its consequences were entirely predictable. The Centers for Medicare and Medicaid Services (CMS) issued an interim final rule (IFR) for implementing community engagement requirements that will make negative outcomes even worse. Tens of thousands of public comments, including one submitted by us and other members of the Boston University Medicaid Policy Lab, implored them to reconsider the extra paperwork burdens the IFR creates.
One new wrinkle is created by the medical frailty rules, which allow those with serious medical conditions to be excluded from work requirements (meaning work is not a condition for eligibility). States were expecting to be able to use data already available to them, like diagnosis codes from prior claims. However, the IFR requires states to document both the presence of medical frailty and whether it prevents 80 hours of “community engagement.”
CMS avoided specifically defining qualifications for being deemed medically frail or having special medical needs, yet also threatened states with “corrective action” if too many exclusions are given. States alone cannot determine medical needs or ability to work, so a visit to the doctor will “become an eligibility determination” for many. A higher burden of medical frailty exemptions for a given physician could be flagged under CMS’s mission to “crush fraud,” leading states and providers to err on the side of caution rather than judge each patient’s case on its merits.
H.R.1 will create more coverage disruptions, or churn, where enrollees drop out of the program and then later re-enroll. Yet, a 2021 analysis from the Office of the Assistant Secretary for Planning and Evaluation, an advisory group within the Department of Health and Human Services, found that churn actually costs more for Medicaid than full-year enrollment, especially among beneficiaries with chronic conditions. By making it harder to get and stay enrolled in Medicaid, the federal government will spend less on paper while creating a host of new problems.
More administrative burdens will make the program less efficient, which is not what Americans say they want. H.R.1 may have seemed a political win for the second Trump administration, but it is a clear loss for taxpayers and the American people.
