One Big Beautiful Bill Act's Impact on Healthcare

By Vishal Verma, MD, MBA, SFHM, FACP, Zaheer Shah, MD, JD, Desire'e Hardge, MBA, and assisted by Nethra Chintaboina

Digital Exclusive - June 2025

The One Big Beautiful Bill Act (OBBBA) is a comprehensive legislative package proposed by the U.S. Congress in 2025 that consolidates several policy priorities into a single bill. It is a budget reconciliation bill, meaning it is designed to align federal spending and revenue with Congress’s fiscal goals. As of now, it has passed the House and requires a simple majority in the Senate to become law. The OBBBA encompasses major changes to entitlement programs, tax policy, technology governance, and healthcare. Among the most heavily impacted areas are Medicaid, Medicare, and the Affordable Care Act (ACA). Notably, the bill includes proposed cuts to Medicaid insurance totaling $700 billion to $800 billion over ten years. Around 9.3 million individuals nationwide will lose coverage, with 550,000 Arizonans at risk of losing Medicaid coverage.

Hospital Impact

The OBBBA introduces huge changes to how hospitals are funded, particularly through Medicaid provider taxes. States have fees on hospitals and similar providers to help fund Medicaid. For example, if a state charges $100, the federal government may add another $60 (through the Federal Medical Assistance Percentage, or FMAP), so $160 gets used for Medicaid-covered services, often sent back to hospitals. Although the value paid each year varies significantly by state, type of provider, and provider revenue, Arizona, with a hospital provider tax of 5.99%, generated $574 million in state funds for Medicaid services in 2023. Its 2025 projection is estimated to be $1.42 billion, with $680 million allocated to provide the majority of state funding for people covered under Proposition 204 and ACA expansion, and $740 million used for directed payments to hospitals and to increase rates for physicians and dentists. The House version of the OBBBA freezes provider taxes at current levels, while the Senate version reduces the cap to 3.5% of revenues by 2031, leading to an $87 billion loss in federal funding over a decade.

Rural hospitals tend to lose an estimated $50 billion, placing 2 million individuals at risk of losing access to care. This loss of Disproportionate Share Hospital (DSH) payment further strains safety-net facilities. Projected Medicare revenue drops 3-5% for general hospitals, especially those with a payer mix reliant on Medicare and Medicaid, resulting in reduced operating margins by 1.5-2.5% points. Hospitals currently operating at 2-4% margins could see zero or negative margins, risking layoffs, bed closures, and service line shutdowns (Ex: Geriatrics, Behavioral Health, etc.). Institutions may increasingly rely on mid-level providers, freeze hiring, or delay capital improvements.

Healthcare Workforce Impact

Healthcare administrators are responsible for overseeing hospital operations, including budgeting, staffing, billing, and compliance. The OBBBA places huge financial pressure on health systems by proposing $700-800 billion in Medicaid cuts and a 4% reduction in Medicare spending over ten years. These funding reductions force hospitals, especially rural and safety-net institutions, to consider staff layoffs, hiring freezes, benefit reductions, and delays in new infrastructure or technology improvements. In Arizona, where Medicaid provider taxes produce over $1.4 billion in funding, freezes and caps under the OBBBA will result in huge federal funding losses, undermining hospital reimbursement and care delivery.

The OBBBA also imposes significant administrative burdens. Compliance with new Medicaid work requirements (80 hours/month), eligibility redeterminations, and system updates will require new IT infrastructure, staff retraining, and more intensive oversight, diverting resources from direct patient care. Administrators must also plan for heightened numbers of patients, reduced reimbursement rates, and uncertainty in federal-state Medicaid matching, all of which contribute to instability in hospitals. These pressures increase the risk of service reductions or even hospital closures, with long-term implications for community health access and care quality.

Physicians & Clinical Workforce Impact

Physicians, nurses, and clinical staff will face a surge in administrative workload due to enhanced verification, billing, and audit requirements. OBBBA’s work requirements and eligibility checks will increase bureaucracy, pulling clinical staff away from direct patient care. Hospitals experiencing revenue losses may be forced to reduce physician hiring, freeze salaries, or limit benefits. Rural and urban providers serving Medicaid-heavy populations may experience revenue reductions of 12-18% over five years. As uninsured patients turn to emergency rooms, physicians will face increased stress, workload, and moral distress, especially when care is delayed due to coverage loss. Moreover, some patients may place the blame on physicians, intensifying workplace tensions. As a result, these uninsured patients are likely to experience worsening health, requiring more intensive care. This places additional strain on emergency rooms and physicians, undermines value-based care models, and significantly increases the overall cost of care.

Additionally, African American, South Asian American, Latino, Asian- Pacific Islanders physicians are more likely than their Caucasian counterparts to serve Medicaid populations, reflecting both geographic and socioeconomic realities. These physicians often practice in underserved urban and rural areas where Medicaid is the primary payer for a large portion of patients. According to multiple studies, physicians of color are more likely to care for patients facing socioeconomic barriers, including higher rates of chronic illness, disability, and uninsured status.

Medicaid reimbursement often forms a significant share of revenue for practices led by rural and minority physicians. Cuts or restrictions to Medicaid funding thus have a direct impact on these physicians’ financial viability and their ability to maintain or expand services. As a result, many physicians’ risk being pushed out of the very communities they have long served and advocated for.

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Graduate Medical Education (GME) Impact

The proposed legislation includes cuts to Graduate Medical Education (GME) funding, a critical pillar in the training of new physicians. These reductions may lead to fewer residency slots and potentially diminished training quality, particularly in high-cost or specialized fields like surgery and emergency medicine. As Medicare funds 35-50% of hospital revenues in many training hospitals, especially those serving aging populations, these cuts may affect future physician supply, particularly in underserved areas.

Patients & Vulnerable Populations

The CBO (Congressional Budget Office) estimates that 9.3 million individuals, including 7.8 million Medicaid enrollees and 1.5 million ACA marketplace users, will lose coverage by 2034. An additional 4 million are projected to become uninsured due to expired premium subsidies, totaling 16 million. Arizona alone is projected to see 342,564 individuals lose coverage.

Marginalized populations, especially low-income individuals, the disabled, and those with unstable unemployment, will be hit hardest by OBBBA’s 80-hour/month work requirement. These individuals face technological and structural barriers in reporting requirements, resulting in disenrollment. Many will delay seeking care until emergencies arise, worsening outcomes, and increasing healthcare costs.

The OBBBA disproportionately impacts transgender individuals, particularly those relying on Medicaid or ACA coverage for gender-affirming care. Many states already restrict such care, and the bill allows further erosion of access. Transgender patients may face greater discrimination, service denial, and care disruptions, with significantly heightened risks of mental health crises and adverse physical health outcomes. These provisions may contradict ACA Section 1557 and the Equal Protection Clause.

The bill will significantly affect immigrant families, especially undocumented or of mixed status. Though many are not eligible for full Medicaid, they rely on CHIP, emergency Medicaid, and pregnancy-related services. The Children’s Health Insurance Program (CHIP), which insures around 8 million children nationwide, will see reduced federal funding and increased issues with enrollment due to Medicaid cuts. Reduced CHIP funding and stricter retroactive coverage rules result in families losing and avoiding this type of care, worsening health disparities. Through this bill, particularly through the Senate version, states may adopt exclusionary policies, raising fears of deportation, ID scrutiny, and denial of care, even in emergencies. Legally present immigrants, including DACA recipients, may lose ACA coverage due to expired subsidies and higher cost-sharing.

Health & Cost Implications

The healthcare provisions in OBBBA are projected to trigger substantial systemic disruptions. Cuts in Medicaid and Medicare funding, along with the repeal of ACA subsidies, will leave up to 16 million Americans uninsured by 2034. Hospitals, especially safety-net hospitals, face a combined $137 billion shortfall over ten years, triggering service reductions, staff layoffs, and operational instability. Rural and urban hospitals face a projected 1.5-2.5% margin loss, and physician revenue losses may range from 12-18% in Medicaid-heavy hospitals. Moreover, patients will see rising premiums, deductibles, and out-of-pocket costs. This increase in uncompensated care will elevate emergency room usage and late-stage diagnoses. Vulnerable populations, including immigrants and transgender individuals, will have disproportionate burdens. As a result, healthcare workers will experience greater burnout from administrative overload and moral distress.

OBBBA Timeline

2025:

February - The House approves budget reconciliation instructions

May - OBBBA clears the House Budget Committee

May - The House narrowly passes OBBBA 215-214

June - Senate finance committee reduces the medicaid provider tax cap from 6% to 3.5% by 2031.

June - Senate Parliament ruled that several major Medicaid provisions breach Byrd Rule thus must be removed or amended.

June - Proposed passage in House; in Senate negotiation stages

July - White House and GOP leaders look to have the OBBBA finalized and on President Donald Trump's desk by July 4, 2025.

2026:

CHIP outreach and enrollment cuts begin

Affects Low-income children, immigrant families

Medicaid Redeterminations Accelerate

Affects Medicaid patients

Work Requirements Implemented in Pilot States

Affects Adults Ages 19-55 years on Medicaid

Retroactive Medicaid Coverage Window Shrinks from 3 months to 1 month

Affects Uninsured patients visiting hospitals

State waivers on Medicaid Expansion Accepted

Affects Expansion States and Patients

2027:

Hospital Budget Shortfalls Begin

Affects Rural & Urban Hospitals

2028:

Physician Reimbursements Decline

Affects Doctors & Clinical Staff

2030:

CHIP Block Grant Waivers Begin (Senate)

Affects Children in Waiver States

2031:

Provider Tax Cap drops to 3.5% (Senate)

Affects State Medicaid programs and hospitals

Projected Closures of Rural Hospitals

Affects Rural Patients and Healthcare Staff

2034:

Coverage losses peak at 16 million individuals uninsured

Conclusion

The One Big Beautiful Bill Act represents a pivotal moment in shaping the future of American healthcare. Its proposed cuts to Medicaid, Medicare, and related programs risk destabilizing hospitals, threatening access to care, and leaving millions uninsured particularly in vulnerable communities, rural areas, and underserved populations. Arizona alone could see hundreds of thousands lose coverage, while hospitals and providers face significant financial strain.

Policymakers must carefully consider the real-world consequences of these sweeping changes and prioritize policies that protect patients, support healthcare professionals, and sustain the systems that deliver care. Healthcare professionals are called upon to raise their voices and advocate for solutions that maintain quality and access. And the general public should be aware of how these changes may affect their healthcare coverage and outcomes.

As Congress deliberates the final shape of the One Big Beautiful Bill Act, healthcare professionals, policymakers, and community leaders must urgently voice the real-world consequences of these proposed budget cuts. Safeguarding access to care, especially for rural, underserved, and vulnerable populations, requires rejecting provisions that jeopardize hospital solvency, physician sustainability, and patient outcomes. Lawmakers must prioritize evidence-based reform, ensure protection for marginalized groups, and invest in the future of medical education and health infrastructure. Moreover, it is essential to make sure Physician-Experience, Patient-Experience Cost, Access and Quality of healthcare is improved and not negatively impacted by OBBBA.

Protect Healthcare – Speak Out on H.R. 1:

H.R. 1 threatens to unravel essential healthcare coverage for millions and destabilize safety-net medical professionals and healthcare workers across the country. Now is the time to raise your voice. Urge your elected officials to oppose harmful provisions that slash Medicaid funding and jeopardize hospital solvency. Tell Congress to support a bill that puts patients first, protects medical professionals and the healthcare workforce, and safeguards access to care for all.

What can you do?

Call your member of Congress. Their phone numbers below:

Senator Mark Kelly (D-AZ) – 202-224-2325
Senator Ruben Gallego (D-AZ) – 202-224-4521
Representative David Schweikert (R-AZ01) – 202-225-2190
Representative Eli Crane (R-AZ02) – 202-225-3361
Representative Yassamin Ansari (D-AZ03) – 202-225-4065
Representative Greg Stanton (D-AZ04) – 202-225-9888
Representative Andy Biggs (R-AZ05) – 202-225-2635
Representative Juan Ciscomani (R-AZ06) – 202-225-2542
Representative Abraham Hamadeh (R-AZ08) – 202-225-4576
Representative Paul A. Gosar (R-AZ09) – 202-225-2315

About the Authors:

Vishal Verma, MD, MBA, SFHM, FACP, is an experienced physician executive with over 20 years of leadership spanning hospitals, health insurance organizations, and primary care networks. He has a proven track record of driving critical excellence, operational efficiency, and value-based care across diverse healthcare settings. Dr. Verma has been recognized for strategic insight, cross-sector collaboration, and transformative healthcare leadership. Dr. Verma has also served on the executive team of the board of directors of Maricopa County Medical Society (MCMS).

Zaheer Shah, MD, JD, is a board certified internal medicine specialist who also practices law in Arizona. A principal area of Dr. Shah's legal advocacy entails representing Arizona physicians before Arizona medical boards. Dr. Shah is also actively involved in the advocacy of physician interests through various state and federal political channels.

Desire’e Hardge, MBA, is the CEO & Executive Director of MCMS and the Editor-in-Chief for the Arizona Physician magazine. Desire’e brings over 19 years of experience across both for-profit and non-profit sectors.

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