After pulling an all-nighter, House Republicans narrowly passed a megabill to enact President Trump’s domestic agenda. The legislation, called the “One Big Beautiful Bill Act” (OBBBA), includes sweeping healthcare cuts, affecting Medicaid and Medicare.
Key Healthcare Cuts & Changes in President Trump’s Bill
- The bill aims to cut at least $625 billion in federal Medicaid funding over the next 10 years, according to initial estimates by the Congressional Budget Office (CBO).
- Medicare could also experience cuts, due to rules surrounding the Pay-As-You-Go Act from 2010, which requires any spending to be offset by automatic cuts, to avoid deficit spending. According to another CBO letter, cuts to Medicare would total about $45 billion in 2026 and $490 billion between 2027 and 2034. The bill is expected to increase the federal deficit by $3.8 trillion.
- There are also new limits on healthcare access and coverage due to new work requirements and stricter eligibility checks. States are expected to pick up more of the administrative burden for enrollment.
- The bill also prohibits Medicaid from covering gender affirming care.
- The proposed changes cause 7.6 million American patients to lose their health insurance over the next 10 years.
- In 2024, 1 in 5 people in the United States were enrolled in Medicaid, or approximately 72 million people.
How does this affect healthcare providers and investors?
Many healthcare advocacy and trade groups have been against the proposed cuts. The American Hospital Association (AHA) estimates that there will be a $28.2 billion reduction in spending on hospitals over the next 10 years.
The AHA has also been vocal against the freeze on state-directed payments, which help support hospital services, especially in rural areas. Rural healthcare and hospitals have been struggling for years; nearly 200 rural hospitals have closed in the past decade due to financial strains and inadequate funding.
The effect on Hospital M&A can go both ways; cuts to reimbursement could hurt margins and a health system’s ability to invest in the M&A market. However, it could also force smaller systems and independent hospitals to find larger partners to avoid closures. Hospital M&A has slowed in 2025, suggesting that current market conditions are hurting M&A volume.
The Republican bill could also have significant consequences in the Home Health & Hospice sector, another industry that relies on Medicaid funding, especially to provide care for low-income seniors and people with disabilities. Operating margins were already in the red for home health agencies in 2022, so further Medicaid cuts could hurt these providers even more.
What’s Next for the Republican Bill?
The bill now heads to the Senate, but some officials, like Senator Rand Paul of Kentucky, want even deeper spending cuts. However, according to reports from other outlets, several senators have issues with the benefit cuts, including Medicaid and Medicare. Even though it only needs a simple majority to pass in the Senate, it seems like the path forward is complicated.
