One big beautiful bill considers historic Medicaid reduction, job requirements
The Senate version of One Big Beautiful Bill Act (OBBBA) has cleared a significant hurdle, but it is not without substantial changes that have sent concerns through the healthcare industry. While the initial fear of wiping out Medicare cuts appears to have been avoided, the bill's impact on Medicaid funding and eligibility requirements poses considerable challenges for healthcare providers and patients.
An important focus for industry watchers is the bill's stance on provider tax. Although not completely ruled out as some people fear, the Senate version of the bill takes a tougher approach than its home counterparts, reducing the maximum allowable provider tax rate the state can offer to 3.5% by 2034, from the current 6% tax rate. The state uses revenue generated from provider states to fund Medicaid payment rates to hospitals. The cuts could narrow down state budgets and even provider refunds while maintaining funding mechanisms.
More importantly, the Senate OBBBA proposes a total of $864 billion in Medicaid cuts over the next decade. These historic rate reductions are tied to a strict approach to Medicaid's work requirements. The Senate bill now requires work requirements for individuals with dependents over the age of 15.
Take home
Hospitals and healthcare services may be challenged by potential policy changes regarding new Medicaid labor requirements. These changes could lead to 7.8 million people being uninsured over the next decade. Given that over 70 million people rely on Medicaid, such a significant loss in coverage raises potential concerns regarding affordability and access to healthcare across the country. Healthcare providers should anticipate these changes and model their financial exposures using forecasting techniques for potential changes in refunds.
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