Medicaid Cuts Force a Reshaping of the Nation’s Healthcare Safety Net

"Save Medicaid + its a matter of life and Death". Courtesy of Wikimedia Commons.

On July 4, President Donald Trump signed the One Big Beautiful Bill Act, also known as H.R. 1, into law. The bill raises the debt ceiling and slashes Medicaid spending by 15%. Behind those figures lies a fundamental reshaping of the nation’s health care safety net, one that extends far beyond Washington’s budget debates.

Medicaid is a joint federal and state program that provides coverage for more than 70 million Americans. It supports low-income families, pregnant women, children, seniors and people with disabilities. For many households, Medicaid is not only insurance — it is a lifeline that enables families to access care and serves as their primary financial safeguard against medical debt.

The OBBBA threatens to chip away at this support in multiple ways. It ends incentives for states to expand Medicaid, imposes work requirements, increases the frequency of eligibility checks and reduces funding for home- and community-based services that help older adults and people with disabilities live at home rather than in institutions. Cuts to other safety-net programs, including food assistance and housing vouchers, compound the strain and leave many families facing reduced support on multiple fronts.

The Congressional Budget Office projects these provisions will eliminate coverage for more than 10.5 million people by 2034 and reduce federal spending on Medicaid and the Children’s Health Insurance Program by over $1 trillion. Optional benefits such as HCBS are often the first to be cut when budgets tighten, forcing some people into nursing homes or leaving families to provide costly care without support. 

The OBBBA introduces a new HCBS waiver for individuals who do not meet institutional-level care requirements, but the funding allocated would cover only a tiny fraction of those in need. States already struggling with budget shortfalls will likely be unable to implement meaningful coverage for everyone, leaving long waitlists intact.

Work requirements represent another major policy shift. Proponents argue the law will “[stop] the subsidization of competent adults who are just choosing to not work” from relying on Medicaid. Rep. Tom Cole (R-OK) noted that Medicaid enrollment has grown in ways that make it challenging to remove ineligible participants, raising concerns that able-bodied adults may be drawing on resources intended for vulnerable populations. From this perspective, expanding eligibility risks straining the program’s sustainability, with projections estimating additional costs of $172 billion over the next decade. 

Yet, most recipients capable of employment are already working. Those who are not employed are often caregivers or people facing barriers such as chronic illness, unreliable transportation or local job shortages. Evidence from states that have tried similar policies reveals these requirements primarily strip coverage from eligible people without meaningfully increasing employment. Paperwork burdens are high, confusing and time-consuming, leaving eligible individuals without care.

The consequences extend beyond individuals to entire communities. Rural hospitals, which rely heavily on Medicaid funding, are especially vulnerable. Nearly half of rural hospitals operate with negative margins, and more than 300 are considered at “immediate risk” of closure. These hospitals provide essential services such as emergency care, maternity wards and cancer treatment. When they close, entire communities lose critical access to health care. Temporary relief funding included in the bill falls far short of compensating for the loss of Medicaid revenue, leaving rural areas at heightened risk.

The law also advances a long-standing political goal: defunding Planned Parenthood. By banning Medicaid patients from using their insurance at Planned Parenthood, the OBBBA advances one of Project 2025’s long-standing goals: defunding the nation’s largest provider of reproductive and preventive care. While a federal court has temporarily blocked this measure, a final ruling could shutter hundreds of health centers, including a quarter of remaining abortion providers. Millions rely on these clinics for preventive care, including birth control, cancer screenings and STI testing. 

For patients like Jamie Benner-Clemons, who credits a Planned Parenthood screening with catching her breast cancer early, the stakes are life or death. Like many young adults, she had let her insurance lapse because she could not afford private coverage at the time. During her visit, doctors diagnosed her with stage 3B breast cancer and connected her with the treatment she needed. Without that care, her condition might have advanced to stage 4 before she could seek help without insurance. Supporters of continued funding point to cases like Benner-Clemons’ as evidence of the organization’s role in providing essential preventive services, while critics believe other health centers can provide the same care without the controversies tied to Planned Parenthood.

Beyond reproductive and preventive care, the law’s reach extends into maternal health, where its impact could be especially profound. Medicaid covers nearly 40% of all births in the United States, and physicians warn the bill will worsen growing “maternity deserts,” particularly in rural areas. Expectant mothers may face hours-long drives to reach obstetric care, increasing risks for both parent and child. Low-income families are disproportionately affected, as they are less able to travel long distances, take time off work or afford alternative sources of care, leaving them at greater risk of delayed treatment and poorer health outcomes.

The OBBBA presents itself as a fiscal reform, but its reach spans into every corner of the health system. It will potentially impact hospitals, weakening support for families, restricting access to reproductive care and endangering maternal and child health.

As states navigate shrinking budgets and providers weigh closures, the nation faces a pivotal question: What kind of health care system will the U.S. have in the decade ahead? If the OBBBA stands, millions of Americans could lose access to certain services, and communities may experience varying levels of coverage depending on local resources. Policymakers and states will need to make decisions about how to allocate funding and maintain care, potentially reshaping how health care is delivered across the country over the coming decade.