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Health Affairs This Week places listeners at the center of health policy’s proverbial water cooler. Join editors from Health Affairs, the leading journal of health policy research, and special guests as they discuss this week’s most pressing health policy news. All in 15 minutes or less.
Hello and welcome to Health Affairs This Week. I'm your host, Jeff Beyers. We're recording on 07/23/2025. Just as a reminder, Health Affairs Insider Program released a new report on the health care workforce. Check that out.
Jeff Byers:Today, I'm gonna turn over the program to Health Affairs' very own Chris Fleming to chat with Georgetown University's Katie Keith. Chris and Katie, welcome to the program.
Chris Fleming:Thank you, Jeff. Thank you. And and Katie, thank you for joining us.
Katie Keith:Yeah. Thank you. It's always a miracle that I get invited back, so I'm happy to be here. And, you know, Chris, together with our powers combined, did the fall in the ACA column for five years. So it was not not insignificant, that we were recovering all the ins and outs then and, back at it, including with big, you know, budget reconciliation legislation like what we're gonna talk about today.
Chris Fleming:Indeed. Indeed. Indeed. And what Katie is referring to, as many of our listeners will know, is the so called one big beautiful bill act, which, went through, both the house and the senate, with record speed and then was signed by, president Trump with much fanfare on July 4 on Independence Day. We'd like to start by talking about some of the contents of that, and the it was a, certainly a big bill, and the contents are many.
Chris Fleming:And before we start, on the program, I do want to mention to listeners that Katie wrote extensively on this as did others for forefront, in the health policy to crossroads series. So we'll only have time to touch on a little bit of, what's there in written form today. So definitely encourage you to go check that out. So I figured, Katie, we'd start talking about the one big beautiful bill and what's in it by focusing on the Medicaid pieces of the bill. So can you tell us what we should know in terms of the Medicaid changes that are in the bill?
Katie Keith:Yeah. Absolutely. And even before I jump right to Medicaid, I think, Chris, you said this, it is a very big bill. It's 870 pages long. It was a very fast bill, so I was looking back at my notes.
Katie Keith:You know, this was formally introduced on May 20, and it was signed into law by president Trump on the July 4. And so you don't often see bills this big and this significant move that quickly. And, you know, we'll run through some of the details, but suffice to say, this bill, you know, enacts the largest ever cuts to the nation's safety net programs. So about a trillion dollars in cuts to Medicaid, more than $280,000,000,000 in cuts to SNAP. I think we're about to see, you know, some really significant impacts as this legislation starts to go into effect, which I know is what we'll talk about here.
Katie Keith:And then earlier this week, we got final numbers from the congressional budget office, which we did not have when the bill was signed into law. And and CBO, you know, is out with its analysis of, you know, 10,000,000, more people will be uninsured, as a result of the bill. You add that to another 5,000,000 more uninsured folks from the impact of a Trump administration marketplace rule, which we'll also talk about, and if congress fails to extend the enhanced premium tax credits for the affordable care act. So looking at, you know, potentially 15,000,000 uninsured over the next ten years, with this legislation plus some of the other policy changes that I talked about. So that that's the highlights, I think, as we go into this conversation and some additional context.
Katie Keith:But on Medicaid, I already said this, but, you know, it's some of the largest cuts I think it is the largest cuts to the program, in history. Maybe I'll start with the work requirements. Some people prefer to call these the work reporting requirements because we know Medicaid beneficiaries overwhelmingly work or are caregivers or are in school or the vast majority have a reason that they should be exempt from or are already in compliance with work requirements, but the reporting, as we know from experience at the state level, can be very burdensome. And so, you know, now in all 50 states, beginning essentially with 2027, States will have to roll out these new mandatory, work reporting requirements. There's a ton of questions about implementation and how this will be set up.
Katie Keith:I think recognizing that this will be hard for states to do in, you know, just a little bit over a year to try to get these systems into place. In the senate version, Republicans in the senate added a sort of extension or waiver where states can apply to push that deadline out essentially to 2029. That will be fully up to the discretion of the, folks in the Trump administration. So we'll see, a, how many states make those requests and how many are granted. But in the meantime, I think states are, you know, setting about trying to figure out what they do next.
Katie Keith:For listeners who are into the wonkier legal stuff, it certainly jumped out to me as I was reading the final text that a lot of the implementation of the work requirements is exempt from the Administrative Procedure Act. And so, you know, normally that is an issue that causes a lot of litigation and and things that I write that, Chris helpfully edits. So we'll sort of see how that plays out, but that jumped out to me. So that's on the work requirements piece. We're expecting, you know, if you look at the Congressional Budget Office and others, expecting to see significant losses there, and really will disproportionately affect Medicaid expansion enrollees.
Katie Keith:So I think this is one of the examples of how the bill sort of undermines Medicaid expansion under the Affordable Care Act. I would give three quick more categories of stuff on the Medicaid side under the new legislation. In addition to reports, there's a lot of other paperwork and administrative burdens that states and beneficiaries are going to have to grapple with. One example is more frequent eligibility redeterminations for Medicaid expansion enrollees, where you had to prove your eligibility once a year, and now you'll have to do it every six months. New co pays for certain Medicaid expansion enrollees, so folks who are right above the federal poverty level could face co pays of up to $35, kind of up to 5% of your income could be going towards cost sharing, which has not been allowed before, new limits on retroactive coverage, which I think will probably, you know, hurt hospitals and result in more uncompensated care.
Katie Keith:The second category would be, which has gotten a lot of focus, I think given the impact it's gonna have on states and hospitals, is making changes like freezing provider taxes, addressing the hold harmless provisions in those provider taxes, limiting state directed payments, all these, you know, trying to tamp down on all the ways that states have long many states, almost all of them have, you know, used these mechanisms in some form or fashion to finance their Medicaid program, which is gonna shift, I think, cost to states as they look for other ways to make up this revenue. So a lot of those changes, some kick in in '27, some will kick in in 2028 in earnest. There's been a ton of discussion there, especially because of how this is gonna impact hospitals. And then the third category of Medicaid changes that I will flag is which we've already seen start to play out in real time. So unlike the other changes that I just talked about, which phase in, the bill included a provision to prohibit federal Medicaid funds from flowing to Planned Parenthood, and it has, you know, the bill has a specific definition for prohibited entities, but essentially, health care providers that, perform abortions and receive a certain amount of Medicaid money in 2023, and it would prohibit those federal funds for a year.
Katie Keith:This limit, is one that went into effect right away, and Planned Parenthood Federation of America, which is a national entity, and then several of its affiliates have already sued. We've seen temporary restraining orders and partial preliminary injunctions, and even earlier today, the Trump administration filed a notice of appeal. So that's one I don't know how that is gonna play out, but that one's actively that part of the legislation is actively being litigated right now, and we'll see sort of what Planned Parenthood's fate is. That could be a devastating change for access to a whole bunch of care, certainly abortion, especially in states where it's lawful. But, you know, contraception, cancer screenings, a whole range of services that Planned Parenthoods provide to Medicaid beneficiaries right now.
Chris Fleming:Well, thanks, Katie. And, you know, as if all of that weren't enough, that that's only one of the categories of changes in this bill are now law. There are a whole bunch of changes to the Affordable Care Act. Could you talk a little bit about those?
Katie Keith:Yeah. Absolutely. And sort of similar to well, I guess, dissimilar to the Medicaid changes, a lot of these start right away. Some of them many of them start beginning in 2026, and so are changes that are gonna have to be adjusted for this coming open enrollment period, which starts in November. So some examples here, the legislation would prohibit marketplace premium tax credits for those who are low income and use special enrollment periods, would make some changes around health savings account eligibility, would eliminate, beginning in 2026, eliminate subsidy eligibility for individuals who would be eligible for Medicaid except for their immigration status, which I think in some states is significant number of people that could We'll see how that affects the risk pool.
Katie Keith:And then in 2027, we'll see additional immigration eligibility restrictions kick in. So for many since the marketplace has opened, many different types of lawfully present immigrants have been eligible for tax credits. I'm thinking of refugees, asylees, you know, various categories of folks who are in the country lawfully have been able to access coverage through the Affordable Care Act, and all that is going away beginning in 2027. The the category of of law you can't see me using air quotes, but lawfully present will be quite limited, under the new legislation. So I think that will be very disruptive for many people.
Katie Keith:We'll start to see the elimination of financial protections for folks who get premium tax credits, but maybe misestimated their income for, you know, very reasonable reasons, but might have to repay some of that so folks could get a real, you know, surprise when they file their taxes beginning in 2027. And then I think the big change that a lot of insurance companies and marketplaces are already probably stressed about is a provision of the bill that would functionally ban automatic reenrollment for those who receive premium tax credits. And, you know, for those who have employer based coverage or medic you know, any other type of coverage, you kind of enroll once, and then you, you know, stay enrolled until you take action, and you always have the option to go in and change your coverage. But and that's been the you know, in place with the marketplace since it was started, since it opened, but this would really require significant changes. So each year, folks would have to come back to the marketplace, verify their eligibility again, and and I think just think it's gonna be incredibly could be incredibly burdensome for marketplaces and consumers depending on how the Trump administration implements it.
Chris Fleming:And then, of course, another area which I think people, even proponents of the bill or people voted for it, recognize where, where the changes might be burdensome is rural health and, rural hospitals, which have already been under strain. There were some attempts to to deal with that, in the bill, but there are some real questions as to how that will play out. Can you talk a little bit about that?
Katie Keith:Yeah. Absolutely. So I think I would assume recognizing what some of the impact of this legislation is gonna be on rural hospitals. I think you're exactly right, Chris. The legislation, includes a five year $50,000,000,000 they're calling it a rural health transformation program.
Katie Keith:This would begin in 2026, run through 02/1930. It's about $10,000,000,000 a year. There's an entire state application process. You know, I I think ForeFront has published some terrific features from Anne Reed and Sarah Rosenbaum and and also Carol Johnson that dive into the details in a way that I will spare all of you. But this is gonna move very quickly because applications and approvals are due by December 31 this year because this program starts quite soon.
Katie Keith:You know, I think Anne and Sarah called the program exceptionally modest, were those words, relative to the cuts that, you know, this bill is gonna cause to Medicaid. And I think one of their chief criticisms, and and hopefully I will do them justice, is the way that this program is set up, it doesn't require states that put in for it, it doesn't require them to directly fund rural hospitals. There's a whole long list that you can see in their piece of all the different ways states could use this money, and it's every it's important stuff, but it's could be workforce and, you know, recruitment and substance use disorder treatment and value based care. And I think the concern is hospitals might go under because of this change. And so, you know, maybe you could encourage states to put in for ways to directly fund rural hospitals, but it does not appear that that is what this program will necessarily do.
Katie Keith:So I think a lot of questions, and I'm sure the folks at the Centers for Medicare and Medicaid Services are trying to quickly put together what that application process is gonna look like. And again, if you have to get those requirements out and then get states to apply and then, you know, approve or deny before the end of the year, I just think all of this while while all these other changes are also happening, by the way, I I think it's gonna be, a lot for states, a lot for even the feds to to do here too.
Chris Fleming:I know, unfortunately, our time is limited, but, I'd like to touch on there's a whole bunch of other stuff, obviously, that we won't be able to get to, but I'd like to briefly talk a little bit about, what, is in store for Medicare, under the bill, and then maybe what other if you could highlight some of the other parts that we haven't gotten to that that listeners should be aware of.
Katie Keith:On Medicare, I think there was a a policy choice from the White House on down not to make, you know, too many changes to the Medicare program. So you did see a lot lighter touch there, let's say. You know, one of the things that was in the bill was a one year fix to the Medicare physician fee schedule. I think that is important. I will also say the house bill would have fixed it permanently, and that did not carry through to the senate, but at least there's kind of one year relief there for, Medicare physicians.
Katie Keith:And then congress extended the exemption for orphan drugs under the Medicare drug negotiation program, and I know there have been some great forefront authors who have written about this and what the impact will be. So not a huge change there, but not insignificant either. So the changes again to Medicare are relatively small, but still I think would be notable on their own in any other context. It just happens to be that this is a mega piece of legislation.
Chris Fleming:And then, what are some of the other sort of the the pieces that fall outside the categories we've talked about but, you think should be highlighted?
Katie Keith:Yeah. I mean, there's more to say. I think one I might put on the table for listeners in case there's interest is there were some changes to health savings account eligibility. That's been a major priority for, say, you know, employers or pharmacy, know, that kind of thing, folks who work on those issues. But the bill would allow, or the legislation allows, health savings account reimbursement for direct primary care services arrangements, which is something, again, folks have been lobbying for years to get a kind of a carve out or get some clarity there.
Katie Keith:And then another clarification that high deductible health plans can offer telehealth on a predeductible basis without losing their their status that way. So, again, nothing was the house version of this bill had many, many, many more changes on health savings accounts and would have, for example, codified the Trump administration's rule on health reimbursement arrangements, that kind of thing. You really saw modest changes by the time it made it through. And I think folks some folks were quite pleased to see these, HSA changes that I just mentioned.
Chris Fleming:And then, very briefly and finally, you mentioned a couple places, the physician fee schedule, full fix, some of the HSA stuff just now. You mentioned a couple places where there were elements in the earlier versions of the legislation that didn't get into the final law. What other pieces did not get into, the final enacted version that might, come up again as we move forward?
Katie Keith:Yeah. It's a great question, and there were a dizzying array of policies being floated throughout this process that we wrote about. So, I think other things that would be on my list, certainly, you know, there was a proposed limit on treatment for gender dysphoria for transgender people through Medicaid. I will say there is now, earlier this week, what looks like a new proposed rule that would do this through the administrative process. So maybe that comes back in the legislation.
Katie Keith:I think that was kicked out under the Byrd rule, and so, you know, they might be looking for other ways to do that in the future. We could see other attempts on abortion access. Some of those other than the Planned Parenthood provision, there were other you know, the cost sharing reduction funding that might come back. I think there's still some in the some Republicans in the house who seem very committed to making changes to the FMAP, the federal matching amount to Medicaid expansion. That continues to be talked about.
Katie Keith:So, you know, I there were lots of things left on the the cutting room floor that, you know, I I just get the sense aren't necessarily gone forever. So it'll be important to kinda stay vigilant about what's going on in congress.
Chris Fleming:Well, thank you very much, Katie. That was a a heroic tour, and you you almost as quickly as the bill, moved through and was enacted, I think you moved us through, many, many pages of legislation also in record time. So thank you, very much, and I'll throw it back to Jeff.
Jeff Byers:Chris Fleming, Katie Keith, thanks again for joining us today on Health Affairs This Week. If you, the listener, enjoyed this episode, please send it to the Odysseus in your life. Thanks, and we will see you next week.