What the 'big, beautiful bill' means for health coverage

The sweeping tax breaks and spending cuts bill that President Donald Trump signed into law this month could have significant repercussions for Texas hospitals and patients.

The law includes roughly $1 trillion in Medicaid cuts over the next decade, with Texas projected to lose $39 billion in federal Medicaid funding over that timeframe, according to projections from the nonpartisan Congressional Budget Office.

Those cuts, coupled with changes to the Affordable Care Act marketplace, could lead to nearly 12 million more Americans becoming uninsured by 2034, according to the CBO. Another 4.2 million Americans could become uninsured if a subsidy that makes health insurance more affordable is allowed to expire at the end of this year.

"This bill was not framed as a health care reform effort, but it represents the biggest change to the health care system since the passage of the Affordable Care Act," Drew Altman, the president and CEO of the health policy organization KFF, said in a recent media briefing.

The final version of the law is not as harmful to Harris Health, Houston's largest safety net health system, as earlier proposals that had been considered, said Dr. Esmaeil Porsa, Harris Health's president and CEO.

However, the Medicaid cuts present a challenge at a time when Harris Health is expanding its health clinics and building a new replacement hospital for Lyndon B. Johnson Hospital to keep up with the demand for health care in the rapidly growing Houston area.

"We have been planning on expanding our operations, not limiting our operations," Porsa said. "We're trying to react to the population growth." Here's what experts and health care leaders in Texas say about the law's impact on everyday Texans and the health care industry: What the law means for Texans

The Medicaid cuts and changes to the ACA marketplace are projected to lead to about 300,000 more Texans becoming uninsured by 2034, according to a KFF analysis.

Studies have found that people who lack health insurance are more likely to delay or forgo care, which can lead to worse health outcomes.

That can also lead to higher costs for hospitals, because federal law requires them to provide emergency care to patients who can't afford it.

"It means that they go without care, and then they end up getting much, much sicker, because a lot of times they have chronic diseases like diabetes or hypertension," said Jana Eubank, the CEO of the Texas Association of Community Health Centers.

Texas is exempted from some of the law's changes - and steeper cuts - that only apply to states that adopted Medicaid expansion under the Affordable Care Act.

Texas is among 10 states that did not.

One of the most notable provisions in the law requires certain Medicaid recipients to verify they are either working, in school, or doing community service 80 hours per month. But it only applies to able-bodied, childless adults who are eligible for coverage throughMedicaid expansion, according to KFF.

What hospitals are saying

Each state runs its own Medicaid program, but those programs are jointly funded by the federal and state governments.

The portion provided by the federal government varies from state to state, but in Texas, the federal government covers about 65% of Medicaid costs, according to KFF.

The law shifts more of the financial burden away from the federal government and onto the states and health care providers, many of which are still evaluating how the law will affect their operations.

The Texas Hospital Association said an earlier version of the legislation that was proposed by House Republicans would have a "catastrophic impact" on Texas.

But the final version of the lawincluded several changes that protected billions of dollars in Medicaid funding, the organization's president and CEO, John Hawkins, said in a statement.

"The bottom line is that Texas Medicaid - and the hospitals that make its care possible - have not suffered the hit that was initially feared," Hawkins said in the statement.

The Children's Hospital Association of Texas is also still evaluating the legislation to determine the impact on children's hospitals, which are particularly reliant on Medicaid dollars.

The HOPE Clinic, a federally qualified health center with five locations in Houston, may need to cut back on outreach, educational programming and other services that don't generate revenue due to Medicaid cuts and other changes in the law, CEO Andrea Caracostis said.

"We're definitely going to have to cut somewhere think this is sustainable." Subsidies set to expire

The lawdoes not extend the enhanced premium tax credits that were adopted during the Biden administration. Those credits have made ACA health insurance more affordable for roughly 22 million Americans by lowering monthly premiums by an average of $705 annually, according to the KFF.

The credits are due to expire at the start of 2026.

If Congress does not extend those subsidies, the CBO projects that another 4.2 million Americans could become uninsured by 2034.

"All of a sudden, your health insurance premium could go from $600 a month to $2,000 amonth," said Lynn Cowles, the health and food justice director at the nonprofit Every Texan. "That's when people just start dropping their plans." Changes to ACA marketplace

The lawchanges the Affordable Care Act marketplace in ways that could make it more difficult for people to sign up for and maintain health insurance, experts said.

In recent years, the ACA marketplace's open enrollment period to sign up for or make changes to health insurance has lasted from Nov. 1 to Jan. 15.

The lawshortens open enrollment by one month, ending on Dec. 15.

The law also requires certain enrollees to verify their incomes and creates a $5 monthly charge for certain enrollees who do not verify they're still eligible for a fully subsidized plan, among other changes.

Cuts to state-directed payments

The Medicaid reimbursements the federal government provides to the states have historically been lower than the actual cost of health care services.

In Texas, Medicaid reimburses hospitals for about 72%of the cost of inpatient care and about 75% of the cost of outpatient care, according to the Texas Hospital Association.

Texas also uses what are known as state-directed payment programs to steer additional Medicaid dollars to a variety of providers, including children's hospitals, urban and rural hospitals and rural health clinics. The programs are designed to improve health care access and quality.

"Medicaid does not even come close to covering the cost of care," Porsa said. "The direct payment program is really meant to close the gap." The law reduces statedirected payments by 10% annually beginning in 2028.

They will eventually be capped at 100% of Medicare rates in states that expanded Medicaid access, and 110% in non-expansion states such as Texas.

The CBO estimates the law will reduce state-directed payments by $149 billion over 10 years. Most states will be unable to replace that funding, Altman said during the KFF media briefing.

The fact the reductions don't go into effect until 2028 gives the THA and other organizations time to keep negotiating to preserve more Medicaid funding, Hawkins said in the THA statement.

Funding for rural hospitals

As Congress debated the legislation, critics raised concerns the Medicaid cuts and changes to the ACA marketplace could disproportionately impact rural areas, where a greater share of residents rely on Medicaid.

The National Rural Hospital Association warned the legislation could increase the risk of rural hospitals closing or reducing services.

"Rural hospitals are already operating on really tight budgets to begin with," Cowles said.

"They'll cut social workers.

They'll cut case managers.

They'll cut whole programs." Senate Republicans sought to address those concerns by creating a $50 billion fund to be distributed to rural hospitals over the next five years.

But that amount is less than one-third of the funding that rural communities are projected to lose due to the Medicaid cuts, according to KFF.

"That will certainly help in rural communities, but it won't fully compensate for the cuts," Larry Levitt, the executive vice president for health policy at KFF, said during the recent media briefing.

"Especially since it's temporary and the cuts are permanent."