Trump's Tax Bill Unleashes Sweeping Medicaid Cuts & Threatens Healthcare Access, Rural Hospitals, and ACA Plans
- Jul 11
- 3 min read
Updated: Jul 12
Major legislative news, as President Donald Trump's "big, beautiful bill" has passed Congress without a single Democratic vote, poised to enact much of his domestic agenda. While the legislation introduces new tax breaks and boosts funding for areas like defense and immigration enforcement, its most significant and debated impacts are on healthcare.
The bill is expected to cut federal health spending by about $1 trillion over the next decade. The Congressional Budget Office estimates that these changes will result in nearly 12 million more people being without insurance by 2034. This reversal of health coverage gains is anticipated to undermine the finances of hospitals, nursing homes, and community health centers, which will have to absorb the costs of treating more uninsured individuals, potentially leading to service reductions or closures.
A core component of these cuts comes from proposed Medicaid work requirements. Millions of enrollees in 40 states and Washington, D.C., will now need to regularly submit paperwork proving they are working, volunteering, or attending school at least 80 hours a month, or qualify for an exemption. Health researchers suggest this policy will have minimal impact on employment, but state experiments have shown administrative issues leading to eligible individuals losing coverage. Furthermore, many Medicaid enrollees will face new out-of-pocket costs, with states allowed to charge up to $35 for some services, a practice studies show prompts low-income individuals to forgo needed care.
Rural hospitals are particularly vulnerable. The plan curtails "provider taxes," a practice states use to increase Medicaid payments. Researchers concluded that the original House version of the bill could push over 300 rural hospitals towards service reductions or closure, many in states like Kentucky, Louisiana, California, and Oklahoma. While a $50 billion fund was added to cushion the blow, many advocates believe it won't be enough to cover the shortfall. For example, Kentucky is estimated to lose $12.3 billion in Medicaid funding over ten years, potentially closing 35 hospitals and impacting 200,000 residents.
For those on Affordable Care Act (ACA) plans, coverage will become harder to get and keep. Policyholders will face new annual requirements to update their income and status, and the open enrollment period will be shortened. People applying for coverage outside this period will have to wait for document processing before receiving government subsidies, unlike the current 90 days of premium help. Additionally, enhanced premium subsidies from the COVID pandemic are not extended in this legislation, which could lead to an average 75% increase in premiums next year if Congress doesn't act. Lawfully present immigrants, including asylum-seekers and refugees, will also lose access to ACA marketplace subsidies, potentially leaving an older, sicker, and costlier population in the marketplaces.
Beyond healthcare, the bill includes significant tax changes, making permanent some provisions from Trump's first term like lower tax rates and an increased standard deduction. It introduces a new $6,000 deduction for middle-income seniors and makes up to $25,000 of tip income per year tax-free for qualifying workers. However, analysis shows that 72% of the value of these tax cuts will go to the top 20% of earners. The legislation also introduces stricter work requirements for the Supplemental Nutrition Assistance Program (SNAP) and increases funding for immigration enforcement agencies like ICE and Customs and Border Protection. It also includes increased defense spending and changes to energy policy, like expanding access for fossil fuels and ending tax credits for new wind and solar projects.
This extensive bill, which also raises the debt ceiling by $5 trillion, is set to have far-reaching implications across the country.
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