H.R. 1 and Medicaid: What Healthcare Providers Need to Know About Upcoming Changes

“When you cut one part of the health system, it tends to have a ripple effect on the rest of it,” an expert notes at Webinar

Pietje Kobus

Oct. 16, 2025

5 min read

Key Highlights

H.R. 1 enacts a $911 billion Medicaid reduction over 10 years, with most effects delayed until 2027, potentially increasing uninsured populations by 10 million by 2034.
Eligibility restrictions are expanding for certain immigrant categories, affecting Medicaid access for non-qualified aliens and altering the delivery system.
Federal matching rates for emergency Medicaid services are being cut back, especially impacting states that expanded Medicaid under the ACA.
Medicaid community engagement requirements are being introduced, requiring individuals to demonstrate compliance or risk losing coverage.
States will need to quickly adapt their Medicaid budgets and policies, with significant implications for providers and beneficiaries alike.

Slashed Budgets Will Disrupt Medicaid Program, Law Firm Cautions

On Wednesday, October 15, the national law firm Foley & Lardner hosted a webinar on the new federal budget law, H.R.1, also known as the One Big Beautiful Bill Act, and its impact on Medicaid. The Act, which was enacted on July 4, 2025, makes dramatic changes to the Medicaid program, the law firm stated. The firm advised healthcare providers, plans, patients, and other stakeholders who work with Medicaid populations to prepare for these changes.

Jennifer Walsh, public affairs director at Foley & Lardner, began the webinar by noting that the map from the Congressional Budget Office shows some pretty dramatic projections. Walsh stated, "There's no way that all of these cuts are just targeting waste, fraud, and abuse." She explained that we will see a $911 billion reduction in the Medicaid program over 10 years and anticipate an increase of 10 million uninsured people by 2034. Congress postponed the effects of these cuts, with most not taking effect until 2027. Walsh expressed that she expects to see some of the downstream impacts of this law take effect quickly. “When you cut one part of the health system, it tends to have a ripple effect on the rest of it.”

Anil Shankar, a partner with Foley & Lardner, explained that there are eligibility changes within the new law regarding Medicaid. There will be efforts to reduce the scope of eligibility in the Medicaid program for certain categories of immigrants, he noted. The list, however, will be expanded to immigrants who are not necessarily illegal, including asylees and refugees. “They're going to, depending on how the paperwork works out and what kind of status they have, they're going to be removed from the rules,” Shankar said, “which will have an impact on…the entire delivery system.”

Shankar furthermore pointed out that non-qualified aliens are already ineligible for federal public benefit programs under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWOR), a foundational law in place since the mid-90s. Although, he said, there is a separate effort by the current administration to expand PRWOR's reach to include new programs, benefits such as Medicaid, Medicare, food stamps, or the ACA were already out of reach to non-qualified aliens.

CBO Estimate of Increase in Uninsured Rate

One change with H.R. 1 is that the federal matching rate for emergency services for populations excluded from full coverage is reduced. States that have adopted the ACA (Affordable Care Act) Medicaid expansion currently receive a higher matching rate. That rate is now cut back, but only for these emergency services for the non-qualified individuals, Shankar said.

The H.R. 1 did not undo the Medicaid Coverage Expansion (MCE), Shankar noted. However, he added, they are chipping away at the edges by applying heightened eligibility restrictions specifically to that MCE population. States that have chosen to do the MCE expansion are likely to see reductions in coverage. There will be more frequent determinations of eligibility. Additionally, the H.R. 1 reduced Medicaid retroactive coverage.

About a third of all cuts are due to the introduction of Medicaid community engagement requirements, Shankar highlighted. They are introducing a new set of burdensome rules for individuals in the MCE population to demonstrate their compliance with community engagement requirements. If they don't, they're going to lose their coverage.

States will need to take significant actions quickly to reduce or modify their budget structures for the Medicaid program, Shankar cautioned. “There is every reason to get involved with your trade associations or with your legislatures or with your state Medicaid agency to figure out what their plans are and see if you can influence those to your benefit.”

“The Medicaid financing changes are a double whammy for providers,” Shankar stated. There is a 10 million increase in the uninsured rates over the coming years, which reduces Medicaid reimbursements. It also means there are fewer options for compensating for those losses through creative Medicaid financing and funding. The more the federal government pulls out, Shankar said, the more states will have to make decisions around patients who are not covered.

H.R. 1 also introduced changes to the regulation of healthcare-related taxes specific to Medicaid. That will require restructuring of the tax programs in all states except Alaska, as explained during the webinar. There are three new requirements. One is a reduction in the overall size of established healthcare-related taxes. Then, there will be a restriction on any new healthcare-related taxes that are not already established as of the date of enactment of H.R. 1. Additionally, there will be a review requirement for the uniformity of Medicaid taxes, which prohibits states from taxing Medicaid units of service at a higher rate than non-Medicaid units of service.

The law firm reiterated that the restructuring will have a significant impact and urged Medicaid stakeholders to contact their trade associations or others involved with these issues, as well as the state and the legislature, to understand what might change and how it could affect their business.