Don't rely on Medicaid? Tax bill will drive up costs to your healthcare too

Al Jazeera

a day ago

United States President Donald Trump's signature piece of budget legislation, the 'One Big Beautiful Bill', will likely raise healthcare costs, experts have said. While the Medicaid cuts will directly impact those who depend on the programme, the consequences will extend to others as well.
The 869-page bill, which includes roughly $1 trillion in cuts to Medicaid over the next decade, passed in the House along party lines, with only two Republicans – Representatives Thomas Massie of Kentucky and Brian Fitzpatrick of Pennsylvania – breaking ranks. It will be signed into law by Trump on Friday.
In addition to patients, Medicaid funds also help financially strapped hospitals and other healthcare facilities, and the cuts could lead to their closures.
Apart from this, almost 12 million people could lose health insurance by 2034 due to reductions to both Medicaid and the Affordable Care Act marketplace, according to a Congressional Budget Office analysis.
Experts warn the new law will drive up costs elsewhere in the system. Patients may face higher out-of-pocket expenses, while hospitals could be forced to lower the quality of care, raise prices, or close entirely due to the financial strain.
'There is the mistaken belief that cuts in Medicaid will only affect those on Medicaid. Many hospitals, clinics, and healthcare organisations depend on Medicaid funding for their operations. Therefore, cuts in Medicaid can adversely affect the types and quality of services they provide,' Bruce Y Lee, professor of health policy at the CUNY Graduate School of Public Health and Health Policy, told Al Jazeera.
'In fact, a number of healthcare organisations depend so heavily on Medicaid funding that they could go out of business with significant cuts.'
The cuts would hit rural hospitals hard, according to an analysis from the National Rural Hospital Association (NRHA). About 20 percent of the US population lives in rural areas, where Medicaid covers one in four adults, a higher share than in urban areas, and plays a large part in financing healthcare services.
The cuts are expected to result in a 20 percent reduction in funding for rural hospitals in half of all states.
That will hurt patients like Martha Previte and her partner Jim Earl, who live in rural Maine. Both have type 1 diabetes and rely on regular hospital visits for a range of procedures, including blood tests and kidney treatment.
'I fear that these cuts are going to close hospitals that we rely on to get care, and we're not going to have anywhere to go,' Previte told Al Jazeera.
This bill could result in as many as 338 hospitals closing around the US. There are already nearly 800 hospitals that are facing financial hardship.
'Our goal is to help ensure hospitals can remain open for their communities, and people can get the care they need when they need it. Our nation's health and economic future depend on it,' the American Hospital Association said in a statement condemning the bill's passage and calling it 'an extremely disappointing and very difficult day for health care in America'.
Those that stay open could result in cuts to essential care like chemotherapy and behavioural health services.
The bill does include $50bn for rural hospitals to offset the additional financial strain they will face. But because of cuts to Medicaid, that funding will not make enough of a dent to keep healthcare costs from rising and healthcare facilities from shuttering.
Analysis from the Kaiser Family Foundation found that Medicaid cuts would still lead to a drop of $155bn in federal Medicaid spending on rural hospitals over the next 10 years.
'While the President promised to lower costs for Americans, this bill is set to spike premiums and other healthcare costs,' Elizabeth Pancotti, managing director of policy and advocacy at the Groundwork Collaborative, told Al Jazeera.
Rural hospitals in the state of Missouri will be the hardest hit and are expected to lose an average of 29 percent of Medicaid funding. While Missouri's Senator Josh Hawley, in a May op-ed in the New York Times, said cuts to Medicaid would be 'politically suicidal', he and his fellow Missouri senator, Republican Eric Schmitt, voted in support of the bill before it moved to the House of Representatives on Tuesday.
The cuts are also expected to affect nursing homes disproportionately in urban areas, according to an analysis from Brown University School of Public Health, which forecast that 579 nursing homes could shutter. Those at highest risk have a Medicaid payer share greater than 85 percent. It was found that the Medicaid cuts overwhelmingly affected nursing homes in California, Georgia, Illinois and Texas.
Looming Medicare changes
Medicaid is not the only healthcare programme seeing cuts. While Medicaid is intended for those who are low-income, Medicare covers healthcare for those 65 and older, as well as some others who have disabilities. Some patients, like Previte, receive both.
'Medicare is my primary insurer, and Medicaid picks up what Medicare does not cover. I am a type 1 insulin-dependent diabetic of 41 years with serious complications. Medicare covered my recent hospitalisation and upcoming outpatient procedures,' Previte told Al Jazeera.
The Republican bill could also indirectly lead to cuts in Medicare services because of the statutory Pay‑As‑You‑Go Act of 2010. Under this, the White House's Office of Management and Budget is required to keep a 'scorecard' to track net increases to the deficit, with a goal to 'eliminate the overage'.
Because of that, the programme may not get all of the money allocated to it, a potential $490bn loss in access to funds over the next decade, according to the Congressional Budget Office, affecting coverage for people who rely on Medicare.
'The whole thing [the tax bill] is a stark abandonment of human social responsibility,' Previte's partner Earl said.
Affordable Care Act changes
The upcoming law also makes significant changes to the Affordable Care Act, otherwise known as Obamacare. It shortens the annual enrollment period for healthcare coverage by about a month and drives up premium costs for those who need it.
According to analysis from the Kaiser Family Foundation, insurance premium prices could increase on average by $1,296 a year.
Those who get their healthcare coverage through the exchange will also need to annually update their personal information, which includes income and immigration status, rather than being enrolled automatically.
The changes will cause a strain on the small business economy. Last year, as many as 3.3 million self-employed individuals and small business owners relied on the marketplace for health insurance.
'If you're a young business owner, already stretched thin by housing costs, child care bills, and health premiums, this bill just made your future harder,' Richard Trent, executive director of Main Street Alliance, an advocacy group for small businesses, said in a statement.
Former President Barack Obama, in a post on X, weighed in as the bill strips parts of his signature policy, a key part of his legacy.
'It will increase costs and hurt working class families for generations to come,' the former president said in a post before the bill's passage.
'This will be another branch of a limb of a disastrous tree. I'm concerned about what this means for our future care. The thing with diabetes, like many ailments, they're livable if they're treated properly. You can live a long, happy, healthy life, but when you're deprived of healthcare, maintenance-of-health care, and things like that, then a whole Pandora's box of disasters can happen to your health,' Earl added.