Red Wave Health Care Tsunami is Coming:

Can States Survive the “Big Bad Bill”?

It may be shrewd politics, but it’s disastrous policy: offer upfront benefits like tax cuts but delay the painful provisions for future years. That’s exactly what Congress has done with the so-called “One Big Beautiful Bill Act” (OBBBA). Don’t be misled by the name. This partial repeal of the Affordable Care Act (ACA) is, in effect, the largest cut to health care in U.S. history.

The bill is projected to cut federal Medicaid spending by $793 billion and reduce financial assistance to those who buy insurance through ACA Marketplace by another $268 billion over the next decade. Admittedly, the bill will provide some tax benefits, primarily to those with higher incomes, but at tremendous costs to many of our friends and neighbors.

States are now scrambling to assess the impact on their residents and budgets. According to Congressional estimates, this bill—combined with anticipated regulatory changes—could leave 16 million more Americans uninsured, including those on Medicaid and those who gained coverage through the ACA marketplaces. The consequences won’t be immediate, but they will be profound.

Budget Deficit Hawks Should be Screaming

If you care about balanced budgets, you should hate this bill. While its supporters tout cuts to federal spending, the “One Big Beautiful Bill Act” actually increases the national deficit—and shifts significant costs onto states and local governments. The nonpartisan Congressional Budget Office projects that the bill will add $3.4 trillion to the deficit between 2025 and 2034. Even the business-friendly Tax Foundation, using a model that includes projected revenue growth, estimates a $3.0 trillion increase over the same period. That’s a staggering amount of debt—and a warning sign for anyone who cares about fiscal responsibility.

How OBBBA Rolls Back Health Care Gains

In 2017, Trump also tried to kill the Affordable Care Act (ACA), but one vote—-Senator John McCain’s in the U.S. Senate—- prevented that from happening. Not this time. Republicans voted in lockstep with the President, and the result threatens to undo much of the progress achieved since the ACA was enacted. By 2023, the uninsured rate in the U.S. had dropped to just 8%—the lowest in history and nearly half of what it was in 2010. Among the elderly, the uninsured rate is below 1%. In Virginia, the ACA and Medicaid expansion in 2018 made a major difference: the Virginia Health Care Foundation reports the nonelderly uninsured rate fell from 14.3% to 7.6% between 2013 and 2023.

Now, the so-called One Big Beautiful Bill Act (OBBBA) threatens to unravel these gains. How will this happen?

[NOTE TO READER—MANY OF YOUR FRIENDS WHO SUPPORTED TRUMP REFUSE TO BELIEVE THAT THIS BILL WILL HAVE SUCH EFFECTS. WHILE THE ANALYSIS BELOW MAY SEEM DENSE, PASS IT ALONG TO THOSE WITH WHOM YOU DISAGREE. IF THEY STILL SUPPORT THE BILL KNOWING WHAT IT WILL DO, THAT IS UNFORTUNATE BUT REMAINS THEIR RIGHT]

First, millions will lose Medicaid benefits. The precise numbers will depend on how states interpret the work requirements in the bill (a June, 2025 Urban Institute study found 69% of Medicaid expansion enrollees already work or go to school), but the CBO projects that by 2034, those with Medicaid coverage would decrease by about 7.8 million adults. This is one reason why the bill is so unpopular, even in rural areas known for their conservative politics.

Second, tax subsidies available to citizens to help them purchase private insurance on the health care exchanges will be cut. Experts predict that those insurance premiums will then skyrocket, and many people will drop their insurance simply because of cost. Apparently, Republican Congress members either ignored ---or did not care about ---the analysis of the Congressional Budget Office, which concluded that changes in the subsidies would lead between 3 and 5 million Americans to lose health insurance in the next decade by abandoning the marketplace.

The collapse of the exchanges will also affect hospitals forced to serve those who need care but cannot pay. And since the healthiest are more likely to take the chance of abandoning insurance altogether, the pool of those remaining in the program will be costlier to service, therefore raising health insurance premiums in general.

Moreover, some insurance companies, believing that they will lose money providing health insurance through the marketplaces, may leave the program altogether. In early July, Aetna announced it would pull out of the ACA marketplace in Virginia and 16 other states as part of a strategy to reduce its participation nationwide. If other companies do the same, there will be fewer choices for consumers, and higher prices will likely result. Market forces are strong, and Trump and his allies ignore them at our peril.

If You Like Local Hospitals, Worry about this Bill

A recent analysis by the Center for Healthcare Quality and Payment Reform indicated that more than 700 rural hospitals nationally already risk closing because of financial problems, including seven in Virginia. This bill will make those challenges greater. First, even if people lose Medicaid or drop out of the exchanges, they will still need treatment and will go to emergency rooms to get it. But with no insurance available to pay for the services, hospitals will either be forced to eat the expenses or turn to their states, which may or may not reimburse this uncompensated care. Academic medical centers like the University of Virginia Health System and VCU Health will be squeezed by new restrictions on what they can charge for care.

But it is a lesser-known provision in the federal legislation that will hurt the most. In the last decade, states were permitted to collect what are called “provider fees” from hospitals, surcharges on all patients for care and services. Those fees were then used by the states to draw down additional federal monies to reimburse hospitals for Medicaid patient care. Under the OBBBA, provider fees will decrease each year beginning 2028, making less money available for states seeking to draw down federal dollars, and likely reducing state reimbursements to hospitals.

At the last minute, the Senate included $10 billion in one-time funding in the bill to lessen impacts on rural communities. Lawmakers from rural areas and swing districts like Virginians Rob Wittman and Jen Kiggans, both of whom initially expressed concerns about Medicaid cuts, will likely explain their final support for the bill by referencing this provision.

Don’t let them duck the real impacts! Half of the $10 billion each year will be distributed evenly across states that apply for it. The other half will be distributed by the head of the federal Centers for Medicare & Medicaid Services — currently Dr. Mehmet Oz. But even if states can access the money, it is not enough to fix the problem. Research from the Kaiser Family Foundation (KFF) finds that the money would only offset about one-third of the estimated Medicaid cuts in rural communities.

Watch Your Medicare

Remember Trump and Republican pledges that they would not touch Medicare? Well, this bill potentially does just that. Provisions of PAYGO legislation of 2010 requires certain cuts to federal programs if subsequent legislation increases the deficit. Since the OBBBA will increase the deficit, it would trigger, absent Congressional action, about $500 billion in mandatory cuts to the Medicare program between 2026 and 2034, including a 4% reduction in payments to hospitals. Trump promised not to touch Medicare, but without Congressional action, that is precisely what this bill will do.

State Budgets will Suffer

Reduction in “provider fees” will mean less money coming to states from the federal government. States like Virginia, who were using these to pay their 10 percent cost share for services to the Medicaid expansion population, will have to find another source to replace those lost fees or cut services.

Since the federal reimbursements for Medicaid will decline, states will need to absorb additional costs in their budgets, tighten Medicaid eligibility, or both. Even as the Medicaid population declines, then, state funding obligations will not necessarily follow. The bill imposes new work requirements on recipients and compels states to reduce error rates administering the program. Both are admirable goals, but they come with costs that will be assumed by state and local governments. When work requirements were implemented in Arkansas and Georgia, administrative costs increased dramatically. As part of the 2018 deal to expand Medicaid in Virginia, the state imposed work requirements on the expansion population but abandoned them shortly thereafter when they were found to be unworkable. And hospitals will be seeking larger reimbursements for uncompensated care. Taxpayers will pay, one way or the other.

The Battle Now Moves to the States

Republicans structured many of the OBBBA’s deepest cuts to take effect after the midterms. New rules like Medicaid work requirements won’t begin until 2027, and some analysts say the most severe consequences won’t occur until 2028. The federal government will have to issue guidance to the states about how to implement the bill. Still, the fiscal trajectory is clear: federal Medicaid reimbursements to states are expected to drop by over $1 trillion over the next decade.

Some states will feel the pain more than others. According to the Kaiser Family Foundation, more than half of the cuts in rural health care spending will be concentrated in just twelve states—all of which expanded Medicaid under the ACA. Topping the list is Kentucky (a $12 billion hit), followed by North Carolina and Virginia. Kentucky and North Carolina have Democratic governors and Republican legislatures. Virginia is the opposite, with a GOP governor and Democratic legislative control. Virginia’s Governor Youngkin has embraced OBBBA, dismissing concerns about its effects as “exaggerated” and “made up.” That could be a political miscalculation: polls suggest that Virginia Democrats may secure full control of state government this fall. Four of the twelve hardest-hit states—Missouri, Louisiana, Ohio, and Oklahoma—are led by Trump-aligned Republicans who have long supported ACA rollbacks.

While states cannot stop the elimination of federal tax subsidies that help people afford Marketplace insurance, their policies will make a huge difference in how their residents will experience the changes. States will still have some control over Medicaid eligibility, implementation, and funding levels. How will they enforce, for example, work requirements? Will they use rural health grants to protect Medicaid recipients’ access to health care—or just channel them into supporting the bottom line of hospitals? Will they use state dollars to replace federal subsidies that will be lost by those who have insurance through the ACA marketplace? State decisions on how to interpret new federal rules and allocate funds will shape how much coverage remains—and for whom.

This is where your vote matters. Virginia and New Jersey both hold statewide elections this fall, and, in addition to elections for the U.S. House and Senate, voters in 36 states will choose governors in November 2026. The OBBBA’s full impact will be determined by these elections. Polls show the public sees through this bill. Hopefully, that awareness will translate into electoral wins that can blunt the damage ahead.

David J. Toscano is an attorney in Charlottesville, Virginia and former Mayor. He served fourteen years in Virginia’s House of Delegates, including seven as the Democratic Leader. He is the author of two books, Fighting Political Gridlock: How States Shape Our Nation and Our Lives, University of Virginia Press, 2021, and Bellwether: Virginia’s Political Transformation, 2006-2020, Hamilton Books, 2022. His FREE Substack, “Fights of Our Lives” discusses threats to Democracy and the role of states.