By Joanne Bump
Historic Rollback in Federal Health Insurance Funding — The administration supported significant cuts to health insurance to fund the renewal of the 2017 tax cuts for the super wealthy. The One Big Beautiful Bill Act (OBBBA) is a federal budget reconciliation legislation that has the biggest rollback in federal support for health insurance coverage ever. Americans are projected to lose health insurance from Medicaid, Medicare, and the Affordable Care Act (ACA) or Obama Care.
Transfer of Wealth — See the “A Tax Cut for One Millionaire Can Pay for Health Insurance for Four People” chart. The administration’s tax policy runs opposite of the ability-to-pay principle of taxation that says people with more income should pay more taxes. The OBBBA average tax cut is an estimated $80,000 per millionaire household in 2033. This tax cut is fiscally equal to four middle- or lower-income people losing health insurance, at $20,000 per person, plus others who retained their health insurance, but still faced cuts to their health benefits and reduced access to health care, according to the Joint Committee on Taxation (JCT) and Congressional Budget office (CBO).
OBBBA could affect Americans at every level of income. The CBO estimates that the incomes for the highest 10 percent of earners would rise by an average of 2.7 percent by 2034, primarily due to the tax cuts, while those of the lowest 10 percent would drop by 3.1 percent, mostly from reductions in Medicaid and food aid. OBBBA provides a $890 billion tax cut to millionaires over the decade based on data from the JCT.
Medicaid Cuts — The federal administration falsely justified cuts to Medicaid in the OBBBA, saying it trims “waste, fraud and abuse.” They say nothing meaningful will be cut. However, according to the CBO most of the cuts have little to do with waste, fraud, and abuse as defined by the Centers for Medicare and Medicaid Service. These cuts will remove Medicaid health care coverage for many millions of low-income families, including retirees, without credible proof that these provisions reduce waste, fraud, and abuse.
Medicaid Work Requirements (WR) — WR is the largest cut to Medicaid, estimated at $326 billion out of an estimated total reduction of $911 billion in the law. States are required to condition Medicaid expansion eligibility and coverage on meeting WR by January 1, 2027, but states can implement requirements earlier. It will put at risk the parents, the disabled, and those with chronic illnesses. Even those who are supposed to be protected will lose health insurance. Studies of previous state work requirement programs, like Arkansas, have shown that exemptions don’t work because beneficiaries get caught in bureaucratic red tape. These requirements frequently end up pushing eligible people off Medicaid because they don’t receive or submit the necessary paperwork, or because the state fails to process the paperwork.
Medicaid beneficiaries will need to submit proof of work hours or exemption status, and these individuals could lose coverage. OBBBA requires that the ACA expansion group meet work requirements of 80 hours of work activities per month or exemption criteria.
Loss of Medicaid — A June 4, 2025, CBO analysis of the House-passed bill estimated that 18.5 million people will be subject to the WR yearly and by 2034, federal Medicaid coverage will be cut by a projected 5.2 million adults, with the loss of health insurance due to WR comprising 4.8 million adults. See the “Roughly 15 Million People Will Lose Coverage” chart for more on the 15 million people losing their health insurance.
Few will be able to replace the loss in health insurance with either private insurance or ACA coverage. The new law makes it explicit that those losing or denied Medicaid coverage due to WR are ineligible for the premium tax credits to buy coverage through ACA, making health insurance even less affordable.
Michigan Medicaid Impact — As many as 500,0000 of Michigan’s Medicaid beneficiaries could lose coverage in the first year of the federally mandated WR, according to State estimates, as reported in a Kaiser Family Foundation (KFF) September 5, 2025, article.
Affordable Care Act (ACA) — During Covid, the subsidy for obtaining ACA health insurance was increased through enhanced premium tax credits (PTC). This expanded eligibility and capped premium payments to 8.5 percent of income. When these credits expire at the end of 2025, the premiums paid by beneficiaries are expected to increase by up to 75 percent. This hurts the affordability of the ACA for over 24 million Americans. Millions may lose ACA insurance if these credits are not renewed. Estimates for the cost of renewing the credits are not public, but are estimated at $350 billion over ten years
Medicare Trigger Cuts — The OBBBA didn’t directly cut Medicare. However, as a result of the enormous federal deficit created by OBBBA, Medicare will be cut by $490 billion from 2027 to 2034. The Statutory PayAsYouGo Act of 2010 (S-PAYGO) reduces the deficit if a new law raises federal deficits by $2.3 trillion over ten years. The federal deficit created by OBBBA is estimated to increase by about $4 trillion over ten years so it will trigger sequestration, or the cancellation of budgetary resources. In the past, Congress has taken action to circumvent these trigger cuts so it’s possible for Congress to enact legislation to avoid them. That said, specific changes in Medicare’s insurance benefit coverage, haven’t been announced. The lack of communication by the administration on Medicare reductions is leading to confusion by the American public. It’s hard to react to the unknown.
OBBBA also includes a nine-year ban on implementing improvements to Medicare Savings Programs (MSPs) to help low-income Medicare recipients pay for premiums and out-of-pocket costs. The CBO estimates this will save over $66 billion over ten years.
OBBBA changes are big and complex. The media isn’t highlighting the impact on everyday Americans or giving it the attention it deserves. There’s a general confusion about who is affected by the cuts and when they will start. With such a significant loss of health insurance on the horizon, we should consider how to prepare.
(Editor’s Note: Joanne Bump serves as feature columnist for “Retirement Matters.” Column content is time sensitive and is based on information as of 9/7/2025. Joanne can be contacted by e-mail at joannebump@gmail.com.)