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Signed into law on July 4, the 2025 Budget Reconciliation Act—also known as the —includes sweeping changes to who is eligible for health insurance in the U.S.

The law, which the  will result in up to 15 million more people without health insurance in 2034, includes over $1 trillion in spending cuts to health care through 2034. ”It is the biggest cut to our social safety net in history,” says Liz Fowler, PhD ’96, JD, distinguished scholar in Health Policy and Management.

The majority of the cuts impact federal support for , the public insurance program that helps cover medical costs for low-income families, older adults, and people with disabilities. The law also changes who is eligible to receive Medicaid and Medicare benefits or access Affordable Care Act plans—which, Fowler says, could increase health care costs for all Americans.

In this Q&A, Fowler and Gerard Anderson, PhD, professor in Health Policy and Management, explain what changes will occur and when, who will be affected, and what people can do in the months ahead to prepare.

Impacts to Medicaid

How does the new law affect Medicaid eligibility?

Gerard Anderson: The most significant change is the new federal work requirement, referred to in the law as a “community engagement requirement.” Most people who receive Medicaid will need to spend at least 80 hours a month working, volunteering, or in school. In order to maintain their coverage, Medicaid recipients will have to verify every month that they have met this requirement, which will create a large burden on both the individual recipients and the state systems managing coverage.

When do the new work requirements take effect?

GA: These new requirements will begin to take effect starting January 1, 2027.

Who does the Medicaid work requirement law apply to? Who is exempt?

GA: The requirement applies to all “able-bodied” Medicaid recipients ages 19–64, but there are numerous reasons someone would be exempt, including:

• They have a child age 13 or younger or a child who is disabled.
• They are a caregiver for a disabled relative.
• They have a disability or health condition that prevents them from fulfilling the requirement.

Why are these new work requirements expected to result in so many people losing access to Medicaid coverage?

GA: There are a few reasons these requirements could result in people losing coverage.

First, most Americans on Medicaid are located in geographic areas where there is no school, there are no jobs, and there is nothing to volunteer for—especially not 80 or more hours a month. Others may be sufficiently incapacitated—even temporarily—that they can’t fulfill the requirement, thus losing their health care coverage due to illness.

We also expect that some people who qualify for Medicaid will not fill out the form every month. Some may forget. Others may not have a computer or internet access to complete the form reliably each month. Consider, for example, a person in rural Louisiana who has lost electricity because of a recent hurricane—or who can’t afford a mobile device or internet access—and still need to fill out this form each month to retain their health care.

How does someone determine whether they qualify for an exception from the work requirement?

GA: While the work requirement is a federal law, Medicaid programs are regulated and operated at the state level. It is up to the states to interpret the law and determine how they will write the rules for their residents.

How states define who qualifies for Medicaid will matter a great deal—including what is considered “able-bodied” and the disabilities or other conditions that qualify for exceptions to the requirements. For example, someone who has trouble walking due to an injury or disability may not be able to work a job at a factory or a grocery store. A chronic illness that flares up unexpectedly could make it hard to hold a job long-term. Are those people entitled to coverage? I think most states believe so and will be pretty generous in their rules, but we don’t know yet.

The U.S. health system is like a balloon: When you squeeze one part of the balloon, the rest of the balloon stretches out.

—Liz Fowler, distinguished scholar in Health Policy and Management

What can people do now if they or a family member currently receives Medicaid or anticipate needing it in the future?

GA: People should look at how their state’s rules are written. Some states, like , already have work requirements in place. Those that don’t have existing rules have until December 31, 2026, to interpret these federal guidelines and write their regulations—though states that show a “good faith effort to comply” can get exemptions through December 31, 2028.

So now is the time for people who rely on Medicaid to try to influence their state’s rules. They can reach out to state representatives or Medicaid directors to explain their specific situations—for example, a caregiving obligation or condition that prevents them from 80 hours of community engagement—and urge them to account for those in their eligibility rules.

People who don’t anticipate qualifying for an exemption can also start planning ahead for how they’ll fill those required hours: Where might I be able to volunteer? If I can’t find a job, can I enroll in classes? Have a backup plan or workaround in place to ensure you can maintain coverage.

Once states have their rules and processes established, people should make a plan for filling out the form each month. Know where to find the form, when deadlines are, and what type of supporting documentation you might need to provide.

Impacts to Medicare

How does the new law affect Medicare?

GA: Two very important changes will result from this law: reduced support for people with  coverage and loss of Medicare coverage for noncitizens.

Who is affected by Low-Income Subsidy (LIS) changes?

GA: About 40% of Medicare beneficiaries receive low-income subsidies, a cost-sharing program within Medicare Part D that makes prescription drugs more affordable. This law reduces the amount of the premium support these beneficiaries receive. This means LIS recipients will pay more for prescriptions.

Liz Fowler:  (MSP) enrollments will also be affected. A  that was set to take effect this past fall would have streamlined the process for enrolling in an MSP and retaining coverage. This legislation blocks that rule from being implemented until 2034.  who need this cost-sharing support to afford things like prescription drugs, medical supplies, hospital stays, and nursing facility care.

 Just because you have insurance coverage through your employer doesn't mean you won't be impacted by this new legislation.

What will this legislation mean for immigrants’ access to health care?

GA: Currently, immigrants with legal status can meet eligibility requirements to qualify for Medicare. The new legislation restricts eligibility to only U.S. citizens, green card holders, and legal immigrants from a few specific locations. This means that even immigrants who have followed the rules—including refugees, people granted asylum, people with temporary protected status, and even permanent residents—will lose coverage.

Impacts to the Affordable Care Act

How does the new law affect health care plans through the Affordable Care Act?

LF: The law is going to make it more difficult to enroll in coverage through the , also known as Obamacare, and then harder to keep coverage, due to a few changes:

• Enrollees will need to update information around their income, immigration status, and other details every year, or risk losing coverage.
• Plans are no longer automatically renewed. Individuals will have to manually reenroll every year during open enrollment. Last year, 10 million people were automatically reenrolled.
• The open enrollment period has been shortened by a month—now ending December 15, rather than January 15. For the current plan year, 40% of people signed up after December 15.
• New enrollees—including those who enroll outside of open enrollment due to a life event or income change—will need to prove eligibility before they can receive subsidies that help offset the cost of their monthly premium. This is a change from the current policy, which allows applicants to get up to 90 days of premium assistance during the application process.

It’s also likely to drive up the cost of ACA plans, due to what’s not in the law: The law does not extend the ACA premium tax credits, which are set to expire at the end of this year. Without those, premiums are predicted to increase for 2026 by an average of 75%.

How are states responding to these policy changes?

LF: Some states have been proactive in communicating the impact this law will have on people in their state. Pennsylvania, for example, has provided a  of what’s going to happen in that state by income and geography if premium tax credits are not extended.

If state officials are concerned about the impending premium increases, they can urge Congress to extend premium tax credits for next year.

What can people do now to make sure they retain their coverage and aren’t caught off-guard by changes?

LF: People who are currently enrolled in ACA Marketplace plans and want to keep that coverage should plan ahead as much as possible so they’re ready when open enrollment begins on November 1:

• Keep an eye on your state’s Marketplace website for information about the new law and any details that might apply to your current plan.
• Gather the information you’ll need to verify eligibility during open enrollment.
• Be prepared to reenroll by December 15.

Even if you’re happy with your current plan, I recommend shopping around once open enrollment begins. The premium for the plan you’re enrolled in today could increase significantly, and you may need to do additional research before reenrolling.

What will this legislation mean for immigrants’ eligibility for ACA coverage?

LF: Similar to the new Medicare restrictions, the law also excludes some lawfully present immigrants—refugees, asylees, and those with temporary protected status—from eligibility for subsidized ACA Marketplace as of January 1, 2027. It also makes DACA recipients ineligible to purchase ACA Marketplace coverage in all states, and the  puts this restriction into effect even sooner, ending DACA eligibility for ACA coverage on August 25, 2025.

Broader Impacts to Health Care Access in the U.S.

How will these changes affect hospitals?

GA: Medicaid represents about 20% of hospital revenue. For some, especially in some rural locations, it’s more like 40%–50% of their revenue. And many rural hospitals are teetering on the edge already.

If a person who has lost their Medicaid coverage comes into the emergency department, the hospital is still required to treat them, according to the . That person is not going to be able to pay out of pocket, so that debt becomes a loss for the hospital.

How hospitals will respond and recover is uncertain. That said, many hospitals are clever and they find ways to get more funds or reduce expenditures. The Congressional Budget Office is not allowed to assume behavior changes like these when they make their predictions, so I am hopeful the impact will not be as bad as they have predicted.

Will the rural hospital funding included in the legislation help mitigate this?

LF: The legislation set aside $50 billion to help rural hospitals deal with the fallout from the legislation—things like newly uninsured patients, increased costs, and increased premiums. I don't think it's possible for that funding to make up for the potentially seismic shifts that could start taking place very soon.

This law cut more than $1 trillion in health spending. That level of health care cuts is unprecedented—it is the biggest cut to our social safety net in history. $50 billion represents a small fraction of those cuts.

How will these changes impact people who don’t get health insurance through the ACA, Medicaid, or Medicare?

LF: The U.S. health system is like a balloon: When you squeeze one part of the balloon, the rest of the balloon stretches out.

Just because you have insurance coverage through your employer doesn't mean you won't be impacted by this new legislation. If hospitals start to see an increase in the number of uninsured people who aren’t able to pay their bills, they’re going to increase rates for other payers. It’s just not possible for 10–15 million people to lose health insurance and not have effects on the rest of the system.

All the parts of our health system are interrelated, and we all pay the cost for a health system that isn’t functioning the way it should.