Rewriting the Safety Net? Inside the Senate’s Changes to Medicaid and the ACA
Over the past few weeks, I’ve been following the progress of the One Big Beautiful Bill Act (OBBBA), which started in the House with sweeping tax reforms and some eye-catching health care proposals. Now, the Senate has released its (highly anticipated) version, and the changes deserve a closer look.
Today, I want to dig into 3 key pieces of the Senate’s draft: Medicaid work requirements, limits on provider taxes, and adjustments to Affordable Care Act (ACA) marketplaces. These are not fringe components of the bill; they sit at the center of a heated debate over how the federal government should support—and regulate—access to care.
Medicaid Work Requirements
The Senate’s version of the bill resurrects and expands on a long-running conservative goal: tying Medicaid eligibility to employment. Specifically, the draft requires able-bodied adults aged 19 to 64 to work, volunteer, or participate in job training for at least 20 hours per week to maintain coverage. Unlike some prior proposals, this one applies to parents of children as young as 14, and includes strict reporting requirements that states must enforce on a monthly basis.1
On the surface, the proposal echoes language about “encouraging independence.” But historical examples offer a cautionary tale. In 2018, Arkansas became the first state to implement work requirements under a federal waiver. The results were swift and dramatic: nearly 17 000 people lost coverage within the first 7 months, not because they refused to work, but because they failed to navigate the reporting process. Many were unaware of the rules or unable to meet technical requirements, such as internet-based documentation systems.2
The Congressional Budget Office (CBO) projects that roughly 5.2 million individuals would be disenrolled from Medicaid by 2034 under the Senate’s policy.3 The AMA and numerous state Medicaid directors have opposed this shift, citing concerns over coverage gaps, increased administrative burdens for states, and the risk of worsening health outcomes.4
It’s also worth noting that many Medicaid enrollees already work—especially in sectors like home health, retail, and food service. But for those with unstable hours, seasonal jobs, or caregiving responsibilities, the administrative complexity of meeting these requirements consistently could make coverage unsustainable.
What’s at stake? If enacted, this policy could mark one of the largest reductions in Medicaid coverage in recent memory, with ripple effects across hospitals, community health centers, and public health programs.
Provider Taxes
One of the less visible yet highly consequential changes in the Senate bill is a new limit on provider taxes, a mechanism that states have long relied on to finance their share of Medicaid spending. These taxes are levied on health care providers, such as hospitals and nursing homes, and then used to draw down matching federal funds. In many states, especially those with tight budgets, provider taxes are critical to sustaining Medicaid reimbursement rates and maintaining hospital operations.1
The Senate bill proposes gradually lowering the allowable cap on these taxes from the current 6% of net patient revenue to 3.5% by 2031.1 That may not sound dramatic, but for states that rely heavily on provider taxes—such as California, New York, and Pennsylvania—it could mean a sharp reduction in the federal funds they can claim.
Rural hospitals, which often operate on thin margins, are particularly vulnerable. Without sufficient Medicaid payments, some may be forced to cut services, reduce staffing, or close altogether.1
In policy terms, this is a shift in federal-state partnership. For decades, the federal government has allowed flexibility in how states generate their share of Medicaid funding. This provision effectively tightens that relationship, with potentially severe consequences for access to care in low-income and underserved areas.
ACA Marketplace Changes
Finally, the Senate bill includes significant changes to the ACA marketplaces, with implications for both coverage affordability and enrollment continuity.1
During the COVID-19 pandemic, Congress temporarily enhanced premium tax credits through the American Rescue Plan Act and extended them in the Inflation Reduction Act. These enhancements significantly reduced out-of-pocket premium costs for middle- and lower-income families, and helped boost ACA enrollment to record highs—more than 21 million people in 2024.5
The Senate version of the OBBBA would let these enhancements expire at the end of 2025.5 In practical terms, that means premiums would increase for many enrollees, especially those earning between 150% and 400% of the federal poverty level.
In addition, the bill eliminates automatic re-enrollment and institutes stricter eligibility verification requirements.1 While the intention may be to reduce improper payments or duplication, these provisions could increase administrative barriers and reduce participation—particularly among lower-income individuals who experience frequent changes in employment or residence.
The Congressional Budget Office estimates that as many as 3 million people could lose ACA coverage by 2034 if the changes are enacted.3 The AMA has raised concerns that this move could reverse years of progress in reducing the uninsured rate, especially for working-class Americans who don’t qualify for Medicaid but still struggle with private insurance premiums.
This isn’t just about affordability; it’s about system design. ACA marketplaces rely on broad enrollment and predictable risk pools. If younger or healthier individuals drop coverage due to rising costs or red tape, it could drive up premiums for everyone else.
The Next Step
Senate Republicans are targeting a vote before the July 4 recess, but the bill’s healthcare provisions remain a source of internal tension. Some House conservatives are pushing for even deeper cuts, while a handful of moderates have expressed unease with provisions that could cause coverage losses ahead of an election year.
If a final bill passes with these healthcare changes intact, the implications will be widespread. Medicaid enrollment could drop significantly. State budgets could face new challenges. ACA marketplaces could become more volatile. And the broader healthcare system—particularly for low-income and underserved populations—could experience another period of uncertainty.
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References
1. Burns T, Frazin R, Weixel N. Here’s what’s in the Senate GOP’s version of Trump’s ‘big, beautiful bill.’ The Hill. June 16, 2025. Accessed June 18, 2025. https://thehill.com/homenews/senate/5353963-senate-medicaid-taxes-green-energy/
2. Sommers BD, Goldman AL, Blendon RJ, Orav J, Epstein AM. Medicaid work requirements—results from the first year in Arkansas. NEJM. 2019;381:1073-1082.
3. Congressional Budget Office. Re: Estimated effects on the number of uninsured people in 2024 resulting from policies incorporated within CBO’s baseline projections and HR 1, the One Big Beautiful Bill Act. June 4, 2025. Accessed June 18, 2025. https://www.cbo.gov/system/files/2025-06/Wyden-Pallone-Neal_Letter_6-4-25.pdf
4. Douthit NT. Medicaid work requirements: the need for local advocacy. J Gen Intern Med. 2018;34(2):169-170.
5. Keep Americans Covered. Enhanced premium tax credits are working for 21 million enrollees. Accessed June 18, 2025. https://americanscovered.org/enhanced-premium-tax-credits-are-working-for-21-million-enrollees/
