Summary:
On July 4, 2025, President Trump signed the 2025 budget reconciliation bill into law, significantly altering Medicaid eligibility and financing. The Congressional Budget Office projects $911 billion in federal Medicaid spending cuts over 10 years, potentially leaving 10 million more people uninsured by 2034. Key provisions from Biden-era Medicaid rules are delayed until 2034, increasing administrative barriers to enrollment. States retain some flexibility to implement changes independently.
What This Means for You:
- Increased Administrative Hurdles: Expect more complex Medicaid enrollment processes, potentially delaying coverage for eligible individuals.
- Loss of Coverage: Millions may lose Medicaid eligibility due to stricter work and reporting requirements.
- State-Level Variations: Coverage and benefits may vary significantly depending on your state’s implementation of delayed rules.
- Future Uncertainty: Monitor state-specific Medicaid policies and advocate for streamlined enrollment processes to mitigate coverage losses.
Original Post:
On July 4, 2025, President Trump signed into law the 2025 budget reconciliation bill, formerly known as the One Big Beautiful Bill Act, that makes significant changes to Medicaid eligibility and financing. The Congressional Budget Office estimates the law will cut federal Medicaid spending by $911 billion over 10 years and will increase the number of people who are uninsured by 10 million in 2034.
One source of the law’s Medicaid cuts is a 10-year moratorium on implementation or enforcement of provisions in two rules finalized by the Biden administration that would have reduced administrative burdens to make it easier for people to enroll in and maintain Medicaid and CHIP coverage (See Box 1). In effect, the law delays or pauses implementation of many provisions in the two rules until October 2034. To ease the administrative burden on states, the implementation dates for the changes in the rules spanned a three-year period, with some provisions taking effect in 2024 or 2025 and others with implementation dates in 2026 and 2027. Some provisions are excluded from the 10-year delay, including those that have already taken effect.
Box 1: Medicaid Eligibility Rules
The Medicare Savings Program (MSP) rule , finalized in September 2023, aims to reduce barriers to enrollment of Medicare beneficiaries with low incomes in the Medicare Savings Programs (MSPs), through which Medicaid pays Medicare premiums, and in most cases, cost sharing. Among other changes, the rule requires states to automatically enroll Medicare beneficiaries with Supplemental Security Income (SSI) into the MSPs and more closely aligns the MSP application to the application for Medicare’s Part D prescription drug Low-Income Subsidy (LIS).
The second rule, the Eligibility and Enrollment (E&E) rule, was finalized in April 2024 and seeks to more broadly streamline application, enrollment, and renewal processes in Medicaid. It requires states to simplify eligibility and reduce barriers to enrollment for certain individuals, aligns renewal policies for individuals who qualify on the basis of modified adjusted gross income (MAGI) and those who qualify on the basis of being age 65 or older or having a disability (referred to as non-MAGI groups), facilitates transitions between Medicaid, separate Children’s Health Insurance Programs (CHIP) and the Basic Health Plan (BHP), and reduces barriers to children’s coverage in CHIP.
While the provisions in the final rules involve numerous technical changes to eligibility, enrollment, and renewal policies, collectively, they aim to streamline complex processes that make it difficult for individuals to enroll in Medicaid and CHIP coverage and maintain that coverage, and, therefore, would increase projected enrollment over time. The delay in implementing provisions in these final rules along with other provisions in the law, such as new work and reporting requirements and more frequent eligibility determinations for individuals enrolled in the Affordable Care Act’s (ACA) Medicaid expansion, will increase administrative barriers (or red tape) to Medicaid and CHIP that are projected to result in fewer people enrolling in coverage and many people losing coverage. While some of the people who lose coverage from these changes are no longer eligible, it is expected that most of the projected enrollment declines will be among people who are eligible.
While the law prohibits the Secretary of the Department of Health and Human Services (HHS) from implementing or enforcing provisions subject to the delay until October 1, 2034, it does not prohibit states from implementing the changes. In some cases, states have already made the changes required by the rules, either in anticipation of implementation of the new requirements or as part of other efforts to streamline or simplify processes. Whether states maintain or rollback the changes they are no longer required to keep in place will influence how much the budget reconciliation law’s delay affects Medicaid coverage and federal spending.
Extra Information:
For further insights, explore these resources: KFF Medicaid Resources and CBO’s Budget Reconciliation Analysis. These links provide detailed breakdowns of Medicaid spending cuts and coverage impacts.
People Also Ask About:
- What is the 2025 budget reconciliation bill? It’s legislation signed in 2025 that alters Medicaid eligibility and financing, reducing federal spending significantly.
- How will Medicaid enrollment change? Enrollment is expected to decline due to stricter administrative barriers and eligibility requirements.
- Can states still implement delayed Medicaid rules? Yes, states retain flexibility to adopt provisions independently.
- What are the Medicare Savings Programs? Programs allowing Medicaid to cover Medicare premiums and cost-sharing for low-income beneficiaries.
Expert Opinion:
The 2025 budget reconciliation bill represents a significant pivot in Medicaid policy, with long-term implications for healthcare access. The delayed implementation of streamlined eligibility rules will disproportionately affect vulnerable populations, highlighting the need for state-level advocacy to mitigate coverage losses.
Key Terms:
- Medicaid eligibility changes 2025
- Medicare Savings Program rules
- Medicaid enrollment barriers
- Budget reconciliation bill impact
- Medicaid and CHIP streamlining
- Federal Medicaid spending cuts
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