On July 4, President Donald Trump signed into law his sweeping legislative package H.R. 1, the “One Big Beautiful Bill Act,” which contained many changes to safety net programs, such as food stamps, Medicaid and the Affordable Care Act, that are expected to impact health systems and low-income families.

The package also included boosts to border funding, extended tax cuts and made policy changes to immigration, energy and defense.

The Process

The U.S. House of Representatives passed the “One Big Beautiful Bill Act” on May 22 by a narrow 215-214 vote. The Senate went through its own process of drafting text and weeks of negotiations along with multiple Parliamentarian rulings (a process known as the “Byrd bath”) before passing the bill with a vote of 51-50 on July 1, with Vice President JD Vance breaking a tie. Republican Sens. Susan Collins of Maine, Rand Paul of Kentucky and Thom Tillis of North Carolina joined Democrats and voted against the bill.

The House then approved the Senate-passed legislation by a final vote of 218-214 on July 3. Republican Reps. Brian Fitzpatrick of Pennsylvania and Thomas Massie of Kentucky joined Democrats in opposition to the bill.

President Trump then signed the bill into law on the Fourth of July.

The budget reconciliation process that was used by the U.S. Congress to pass this bill with a simple majority vote is independent of the Appropriations process, which addresses government funding. Fiscal Year 2025 funding expires Sept. 30, and the House Appropriations Committee has begun this Fiscal Year 2026 process.

High-Level Impacts

The bill will raise the national debt ceiling by $5 trillion, while the Congressional Budget Office estimates the bill could add $3.4 trillion to federal deficits over the next 10 years. Previous draft provisions that were not included in the final legislation include a ban of gender-affirming care in Medicaid and an AI regulation moratorium.

Key Provisions

AI Moratorium Removed

The Senate voted 99-1to remove a proposed moratorium on enforcing state and local AI laws. Sen. Thom Tillis (R-N.C.) was the lone nay vote. The measure proposed moratorium on AI regulation was largely led by Ted Cruz (R-TX), who has indicated that he would consider introducing similar standalone legislation.

Additional AI News

A last-minute addition to the bill allocates $150 million to the Energy Department to organize and prepare its extensive scientific data collections for training artificial intelligence models through engagement with the Department’s 17 National Laboratories to collaborate with various U.S. industry sectors.

Healthcare

• Medicaid
  • Starting January 2028, work requirements will be implemented for Medicaid programs. Non-disabled, non-elderly adults (ages 19–55) must complete at least 80 hours per month of work, job training or community service with exemptions for certain populations such as pregnant women, people with disabilities and full-time caregivers. If an enrollee fails to meet requirements for three months within a 12-month period, they will lose Medicaid coverage for the rest of the year. This provision starts in 2027.
  • Eligibility checks for Medicaid are also increased every 6 months and increased eligibility verification based on address and income starting 2027.
  • Provider taxes for Medicaid expansion states are frozen until 2028, after which they must gradually reduce to 3.5% by 2032, with exceptions for nursing and intermediate care facilities. Non-expansion states may keep existing tax arrangements but cannot modify them, and no new provider taxes may be added by any state. $20 million is allocated to HHS for implementation.
  • In addition to the end of various Biden-Era regulations to Medicaid and CHIP eligibility, the bill ends the 5% temporary FMAP increase offered under the American Rescue Plan to incentivize Medicaid expansion. States that expand Medicaid in the future will no longer receive this bonus, though states already receiving it — such as North Carolina and South Dakota — are unaffected.
  • Starting Oct. 1, 2026, states will only receive federal Medicaid funding for applicants who are U.S. citizens or fall into specific lawful immigration categories, ending the requirement for states to provide Medicaid coverage during the period when an applicant is verifying their immigration status. The bill also limits FMAP for emergency Medicaid for certain immigrants to the same rate given for non-expansion Medicaid, even if they would otherwise qualify under expansion rules.
  • Lastly, the bill prohibits healthcare providers that offer abortions from accepting Medicaid funding for any other reproductive healthcare services.
    • This provision is already facing a lawsuit, and a federal judge in Boston granted a temporary restraining order that blocks the Trump administration from implementing this.
      
• Medicare
  • Asylum recipients, refugees and individuals with temporary protected status will be deemed not qualified for Medicare coverage and will lose access 18 months after enactment.
  • There will be a one-year 2.5% increase for payments made under the Physician Fee Schedule for CY 2026 (this is rather than the previous House legislation that ties Medicare updates to the Medicare Economic Index and creates updates related to inflation).
  • The Medicare drug price negotiation exemption for “orphan drugs” is expanded to include medicines that treat multiple rare diseases. These orphan drug medicines often have less financial incentive for coverage.
    
• ACA
  • Individuals ineligible for Medicaid due to their status will no longer qualify for premium tax credits. Beginning in 2027, only certain lawfully present immigrants — such as green card holders, specific Cuban nationals and those covered by Compacts of Free Association — will remain eligible for these credits.
  • Starting in 2026, individuals who enroll in coverage through the monthly special enrollment period (SEP) for those earning under 150% of the federal poverty level will no longer be eligible for ACA premium tax credits. Additionally, the bill removes limits on the repayment of excess premium tax credits, requiring all individuals regardless of income to repay any overpayments in full.
    
• Additional Healthcare
  • The bill provides $50 billion over five years to support rural hospitals and mitigate the effects of anticipated healthcare cuts. Half of the funding will be distributed equally among all states, while the other half will be allocated using a rural-focused formula set by the HHS Secretary. States may direct these funds to any healthcare facility — not just rural ones — if they determine the support benefits of residents of rural communities.
  • The law permanently reinstates the safe harbor that allows high-deductible health plans (HDHPs) to cover telehealth and other remote care services before enrollees meet their deductibles. This change ensures continued access to pre-deductible telehealth coverage under HDHPs.
  • Beginning in 2026, individuals enrolled in direct primary care (DPC) arrangements will be allowed to contribute to health savings accounts (HSAs), as long as the DPC costs no more than $150 per person per month (adjusted annually). Additionally, bronze and catastrophic plans offered on the ACA Exchange will become HSA-eligible, expanding access to tax-advantaged savings for individuals enrolled in these lower-premium, high-deductible plans.
  • Most of the federal minimum staffing requirements for long-term care facilities will be delayed until Sept. 30, 2034, in response to industry concerns about cost, workforce shortages and potential facility closures. However, the rule's facility assessment requirements, originally set for Aug. 8, 2024, will still take effect as planned.
    

Supplemental Nutrition Assistance Program (SNAP)

The Supplemental Nutrition Assistance Program (SNAP) is impacted by new work requirements and requires states to pay a higher share of the program’s cost. New work requirements include raising the age limit for mandatory work requirements from 49 to 55 years old. Exemptions to this requirement include people who are physically or mentally unfit for work, pregnant or caring for dependents.

The bill also introduces a cost sharing provision, which requires states to share the cost of overpayments due to their own administrative errors. Starting in FY 2028, it requires states to cover at least 5% of benefit costs within certain error rates, rising to 15-25% if states exceed certain error rates. It also cuts federal reimbursement for administrative costs from 50% to 25% starting FY27. If a state’s error rate is below a set threshold, it may avoid cost-sharing. One last-minute provision, aimed at winning over swing vote Sen. Lisa Murkowski (R-AK), that exempts states with the highest payment error rates such as Alaska from paying for SNAP for up to two years.

Tax and Economic Provisions

• The Tax Cuts and Jobs Act, which lowered taxes for corporations and for individuals across most income brackets, was set to expire in December but are now made permanent. This provision is estimated to cost about $3.7 trillion over the next 10 years, according to the non-partisan Tax Foundation.
• The bill also phases out of Biden-era federal clean energy tax credits and goes further to singling out clean energy, particularly solar and wind, for harsh treatment.
• Businesses will be able to fully write off their U.S.-based R&D costs in the year they’re incurred, rather than gradually over time. It also makes 100% bonus depreciation a permanent feature, letting businesses fully write off equipment purchases upfront. Finally, the bill preserves a more generous interest deduction formula based on EBITDA (a financial metric used to assess a company's profitability), giving businesses additional tax relief.
• The bill also creates several new tax breaks such as eliminating taxes on tip income, a key Trump campaign promise. There will be new deductions for up to $25,000 in tip income, $12,500 in overtime income, $6,000 for seniors, and a deduction for interest on loans for new US-made cars. The bill also creates savings accounts for children called “Trump accounts,” in which the government would invest $1,000 per child.
• The bill incorporates language from the “Freedom to Invest in Tomorrow’s Workforce Act,” updating 529 accounts that are traditionally used for college and graduate tuition to expand to also cover certification and credentialing costs as qualified expenses.
• The child tax credit is raised from $2,000 to $2,200 and then will be adjusted for inflation.
• The state and local (SALT) deduction, which is capped at $10,000, is raised to $40,000 but will last only through 2028.
  

Tech

The bill increases an investment tax credit to 35 percent for building manufacturing plants in the U.S., up from 25 percent in the 2022 CHIPS and Science Act.

The Federal Communications Commission’s spectrum auction authority (which lapsed in early 2023) was renewed for 10 years and frees up 800 megahertz of spectrum for the private sector. The final version exempted two key bands — the lower 3 gigahertz and 7.4 to 8.4 GHz — from auction.

Larger Impacts

Projections show the bill would lower tax revenues by $4.5 trillion and reduce federal spending by $1.2 trillion, with significant impacts expected on low-income, rural and underserved populations. The healthcare provisions would result in over $1 trillion in cuts to healthcare programs and could lead to over 12 million people losing their health insurance, according to the Congressional Budget Office.

The changes to Medicaid eligibility and social benefit programs are likely to place added pressure on health IT infrastructure, especially for tracking compliance and managing increased administrative burden. They could also significantly increase operational and financial strain on healthcare providers, particularly safety-net and rural facilities already operating on thin margins, and lead to facility closures, especially in rural and marginalized areas.

As states absorb higher administrative burdens and cost-sharing responsibilities, many may divert funding from other critical areas — potentially including public health, health IT infrastructure and innovation. Experts warn that cybersecurity investments could be among the first to face reductions, leaving providers more vulnerable to cyber threats amid a surge in healthcare-targeted attacks. The combined effect risks undermining efforts to modernize digital health systems, ensure data security, and maintain equitable access to care.