THE BIG UGLY IMPACTS OF THE BIG BEAUTIFUL BILL: HOW H.R. 1 IS HURTING CHILDREN'S HEALTH ONE YEAR IN

The following information was released by First Focus:

One year ago this month, President Trump signed into law the biggest cuts to Medicaid in U.S. history in H.R. 1, the One Big Beautiful Bill Act (Public Law 119-21). At the time, First Focus on Children predicted that the nearly $1 trillion in cuts to Medicaid and the Children's Health Insurance Program (CHIP) in H.R. 1 would harm kids, even as Congress insisted the cuts targeted only the childless adult population.

Unfortunately, Congress miscalculated. New data shows that only one year later, H.R. 1's dozen or so Medicaid provisions are already reducing children's coverage and access to health care and the law isn't even fully implemented yet. Medicaid and CHIP together cover approximately 36 million babies, toddlers, school-aged kids, teens, and young people transitioning into adulthood. Because these youth comprise nearly half of all Medicaid and CHIP beneficiaries, states have little choice but to reduce children's eligibility, children's benefits, and pay for pediatric providers in response to federal Medicaid cuts of this magnitude.

State-Specific Funding Reductions under H.R. 1 Are Becoming Clear

A recent report released by the nonprofit, nonpartisan research organization RAND sheds new light on the state-specific impacts of H.R. 1. Overall, the cuts will reduce state Medicaid funds by a whopping $679 billion by 2034, according to the report, and state general funds will decline by $82 billion in total. The analysts expect nearly all states' Medicaid funds to decrease, with 26 states facing losses of 5% or more of their Medicaid funds by 2034. Three states Arizona, Iowa, and Nevada can expect Medicaid program reductions of more than 15%.

The deepest Medicaid reductions, according to RAND, are due to three provisions of H.R. 1: work reporting requirements, restrictions on states' use of provider taxes, and caps on state directed payments. These provisions hamstring states by both increasing state costs (e.g., forcing states to hire more case workers to administer more intensive eligibility checks) and then prohibiting states from raising additional funds to pay for those costs through traditional means (e.g., through previously permissible provider taxes), resulting in a major strain on states' ability to maintain the levels of eligibility, services, and payment rates they currently provide.

At Least One State Has Downsized Children's Coverage to Prepare for Medicaid Cuts

Although the federal cuts have not been fully implemented, most states don't have the luxury of waiting for the funds to stop flowing before scaling back their programs, thanks to ubiquitous (save Vermont) constitutional and statutory requirements for state legislatures to adopt balanced budgets. With the fiscal year beginning this month in more than 40 states, many state lawmakers have been working diligently for months to address the impending Medicaid shortfalls resulting from H.R. 1. For them, the budget squeeze is not hypothetical or somewhere off in the distant future; states are cutting now.

For example, in April, North Carolina enacted a Medicaid funding bill scaling back coverage to the bare minimum that the state is federally required to provide for non-citizens starting October 1, 2026 and in so doing, eliminated coverage for 27,000 lawfully present children and pregnant women. This bill, cutting state costs in anticipation of H.R. 1's federal cuts, dropped Medicaid coverage for a population of children that it had covered for more than a decade under the Immigrant Children's Health Improvement Act (ICHIA) option. Although some legislators later called the cut unintentional, and the governor lamented the coverage loss in his signing statement, the bill was signed into law anyway. Damage done.

As of April, three-quarters of states (38) and the District of Columbia use the ICHIA option to provide coverage for lawfully present children without a five-year wait. Most states (32) offer this coverage to pregnant women, according to the independent health policy organization KFF. In theory, these states are prohibited under federal law (42 U.S.C. 1397ee(d)(3)) from implementing children's Medicaid or CHIP eligibility standards, methodologies, or procedures that are more restrictive than they were in 2010 through September 2029. Yet in North Carolina, children's advocates, including NC Child, have had to spend the past three months working to clean up the fallout from their state's decision to downsize children's coverage by building legislative support to pass a new law restoring it. How many other states could follow suit? How much time, effort, and legislative favor will the clean up take that could be spent on other child health priorities? Pregnant women certainly can't wait for a months-long legislative process to get the health care they need to safely deliver healthy babies. Kids can't wait, either.

States Have Undercut Children's Benefits to Prepare for Medicaid Cuts

Since President Reagan became personally involved in establishing Medicaid's provision of home- and community-based services (HCBS) in 1981, Congress has provided states with the option, under section 1915(c) of the Social Security Act, to use Medicaid funds to provide HCBS to individuals who would otherwise require admission to a hospital, nursing facility, or other similar institution. All states and DC, have chosen to provide HCBS benefits to Medicaid beneficiaries through various authorities, and this plays a vital role in ensuring children with disabilities can live and receive care at home with their families, rather than living in a more expensive institutional setting away from home.

However, due to federal Medicaid cuts, state lawmakers have advanced efforts to reduce or eliminate service lines including HCBS that support children with disabilities and complex medical needs. For example, this spring, Governor Brad Little of Idaho proposed cuts to home care services for children and adults with disabilities as well as occupational therapy and physical therapy for children to save state costs. In Arizona, parents have been working for months to stave off the imposition of age caps proposed for Medicaid coverage of services for medically complex children and adults in the state. These states are far from alone. According to the HCBS Impacts Tracker Project, led by the George Washington University's Hirsh Health Law and Policy Program and others, more than a dozen states have proposed or implemented restrictions on Medicaid HCBS, including several that expressly target children's service lines, such as in Idaho and Arizona. In theory, under Medicaid's early and periodic, screening, diagnostic, and treatment benefit, states are required to cover any Medicaid-coverable service that is medically necessary for a child, regardless of whether it is covered for adults under the state plan or a waiver. In practice, reductions in HCBS services make it harder for children with disabilities to use their benefits and access care.

Work Requirements Create Red Tape, Downward pressure on Children's coverage

Although children under the age of 19 and parents of children under the age of 14 are among the populations exempt from federal work reporting requirements in H.R. 1, families are already feeling the impact in the states that have elected to start early. For example, Nebraska imposed work requirements within the state in May, a full eight months before the federal requirements begin nationwide. In the state's rush to roll out the new policies and procedures, even state case workers were not entirely clear on who would be exempt. Advocates at Nebraska Appleseed report the troubling story of "Jane," a mom from Lincoln:

In March 2026, "Jane," a mom in Lincoln, was erroneously told by a DHHS worker that she was going to lose Medicaid because the worker believed she wouldn't meet the work requirements or an exemption. She scheduled a major medical procedure because she thought she would have no health care coverage. After spending more than an hour on the phone with multiple DHHS workers and her lawyer, she ultimately found out that she is not in the expansion category, so the work requirements don't even apply to her.

Getting the implementation of work reporting requirements right is an extremely tricky policy and communication exercise. States face a very short window to overhaul their eligibility systems, policy nuances exempting certain parents can easily be lost in the shuffle, and there are high stakes for families with no other source of health coverage. In other words, avoiding unnecessary coverage loss hinges on careful state implementation. This was the lesson learned from states that have fully or partially implemented Medicaid work requirements in the past, such as Arkansas, New Hampshire, and Georgia: work requirements cause many coverage losses among individuals who are actually compliant or exempt, primarily due to administrative and informational barriers, such as difficulty accessing online portals or confusion related to state notices, rather than failure to work. Taken together, these dynamics put many parents at risk of coverage loss, despite qualifying for an exemption.

Unfortunately for kids, research shows that when a parent loses coverage, it often means their child loses coverage, too even when the child remains eligible. The Congressional Budget Office now projects that 3 million more children will lose their Medicaid or CHIP coverage by 2036 due to H.R. 1. This news comes on top of reporting from Georgetown University Center for Children and Families that in the past year alone more than 2 million children have been dropped from the programs. And when child enrollment in Medicaid and CHIP goes down, the child uninsured rate often goes up. With children's uninsurance already sitting at 6% as of 2024, these coverage loss projections would appear to put the U.S. on track to see more than 10% of the country's children uninsured by 2036 largely as a result of the policy choices in H.R. 1.

Payment cuts reduce access to care for moms and babies, especially in rural areas

Access to prenatal care, particularly in rural areas, has been a longstanding problem in the United States, which suffers from persistently poor maternal and infant health outcomes relative to other high-income countries, with Black women facing more than three times the risk of pregnancy-related death as their white counterparts. The March of Dimes found that in 2024 more than one-third of all U.S. counties were "maternity care deserts," meaning there was not a single birthing center or obstetrics clinician in the county.

Under H.R. 1, states that had addressed the maternity care crisis by directing additional funds to prenatal care providers through Medicaid state directed payments are now facing new caps, which CBO projected would save $149.4 billion over 10 years. Proposed implementing guidance from the Centers for Medicare and Medicaid Services (CMS) goes even further: the agency's own analysis shows Medicaid providers are now facing triple the cuts that were included in H.R. 1, or about $515 billion in reduced federal spending. Under the financial strain of this and other H.R. 1 provisions reducing funds for Medicaid providers, many maternity care providers have closed, cut back services, laid off employees, or suspended plans to expand services since the law was enacted last summer. Most states 44 and the District of Columbia have at least one hospital at heightened risk of closure due to the loss of federal funds, with 446 hospitals at risk of closure or reducing services, disproportionately affecting Black, Hispanic, and low-income families. For the more than 40% of births, and 47% of rural births, that depend on Medicaid, this is a major setback in the fight to improve maternal and infant health outcomes and disparities.

And This Is Just the Beginning ...

Despite largely targeting the childless adult population, the historic cuts to Medicaid in H.R. 1 have already begun to affect the budgets of states, hospitals, and clinicians, and the lives of parents and, ultimately, children. But the impacts surfacing now are only the beginning. The full impact of H.R. 1's Medicaid provisions is yet to come, with new guidance expected any day on provider tax limitations, the nationwide rollout of work reporting requirements in 2027, and the phase down of certain state directed payments in 2028 not to mention myriad forthcoming changes to Medicaid eligibility for immigrant families, limitations on retroactive coverage that will increase costs for families of NICU babies and children with asthma, and a fresh layer of bureaucratic red tape at the state level that threatens to upend years of progress streamlining eligibility and enrollment for children and families. The early effects are concerning enough on their own. More concerning still is what they foreshadow for children's health coverage and access to care as H.R. 1 takes full effect with at least two years of implementation left to go.