Changes to U.S. Health Care ‘Like Nothing I’ve Ever Seen’

But first: Fielding constituent questions about potential Medicaid cuts, Sen. Joni Ernst (R-Iowa) was told by a yelling audience member that, because of those cuts, “people are going to die.” Ernst’s response: “Well, we all are going to die.” A challenger immediately jumped into the race against her in 2026.

The staggering scope of proposed budget cuts

On May 22, the House passed and sent to the Senate the “One Big Beautiful Bill Act” (HR 1’s 1,038 pages take a few moments to open), which enacts President Donald Trump’s agenda of major tax cuts, increased spending on defense and border security and huge cuts to Medicaid and the SNAP food assistance program. It applies to the remainder of the current fiscal year 2025, which is already almost three-quarters over (it ends on Sept. 30) but also sets budget directions for the next 10 years. Trump separately proposed a budget for FY2026, and on May 30, the Department of Health and Human Services released initial details of its part of the budget.

The cuts are so sweeping and massive that many analysts struggle to describe their impact. Julie Rovner, chief Washington correspondent for KFF Health News, said on a podcast released yesterday that the past four months of the Trump administration have unleashed changes that are “like nothing I have ever seen or experienced before“ in 40 years of covering health policy.

The changes take special aim at the Affordable Care Act and Medicaid, the joint federal-state health insurance program that pays for the majority of mental health and substance abuse treatment in the U.S. Cuts to these two programs would cause massive harm, as the following studies describe:

“The Past and Future of Medicaid and the Affordable Care Act –  Support or Sabotage?” Medical journals tend not to be strident – even in commentaries – so this JAMA headline startled me. It notes that both Medicaid and the ACA are likely to suffer critical damage. The ACA created new health insurance “marketplaces” for people who earned too much to qualify for Medicaid but too little to afford private insurance. Additional subsidies passed during the Biden administration enabled 60% of eligible uninsured individuals to get insurance with no premiums. If these subsidies are not extended, more than 3 million people are projected to lose health insurance – something the Republican-controlled Congress is highly unlikely to do.

One of the huge achievements of the ACA was that it enabled tens of millions of people to get Medicaid in the 40 states that agreed to expand the program. Now, new work requirements included in the “Big Beautiful Bill” will likely lead to many of those beneficiaries losing coverage. This article estimates that at least 5 million people are likely to lose health coverage as a result – the left-leaning Center on Policy and Budget Priorities says it could be as many as 14 million. 

The nationwide ripple effect of Medicaid cuts: Another JAMA commentary analyzes the “reverberating” ecosystem impacts of proposed and expected Medicaid cuts. Mitchell H. Katz, president and CEO of NYC Health + Hospitals, the largest municipal health care system in the country, describes each one. Besides low-income people, the Medicaid cuts would affect:

• States: Federal cuts to Medicaid will force states to decide between leaving people uninsured or paying the difference by siphoning money from education, transportation and other priorities.
  
• Hospitals: Many nonprofit hospitals report operating losses. Cuts that reduce the number of Medicaid-covered patients, most of whom would become uninsured, would force some to close and the rest to eliminate services. More uninsured patients and various other cuts would also strain the budgets of teaching hospitals.
  
• Physicians: Doctors who see Medicaid beneficiaries could be forced to decide between keeping long-time patients, despite their inability to pay, or sending them elsewhere for care. 
  
• Federally Qualified Health Centers: These clinics are bedrocks of the safety net. They are reimbursed by Medicaid at an enhanced rate in exchange for also accepting all uninsured patients, but if they start seeing fewer Medicaid patients, they may be unable to cover all the newly uninsured. 
  
• Certified nursing facilities: Medicaid is the primary payer for 63% of nursing home residents. Changes in benefits and eligibility is likely to make community care for disabled people and older adults more difficult. 
  
• People with commercial insurance: Private insurance subsidizes the costs of treating uninsured patients. If the number of uninsured people rises, hospitals will negotiate higher rates from insurers, who will then pass those increases on to purchasers. 

• Employers: Medicaid expansion saves many employers the costs of insuring low-income workers. If states limit eligibility due to federal cuts, employers would have to either purchase insurance (stifling future wage increases) or leave their workers uninsured (leading to more sick days and reduced competitiveness).

• The wider economy: A large number of businesses support the “medical care ecosystem,” including pharmaceutical companies, laboratories, insurers, medical equipment suppliers, device manufacturers, hospital construction companies and food and laundry providers. All would experience job losses and a fall in output due to Medicaid cuts.

And then there’s FY26: Next year’s proposed budget cuts will go even further, as shown in the administration’s “Budget in Brief” for the Department of Health and Human Services. The proposal would leave intact just three of the current institutes – the National Cancer Institute, the National Institute of Allergy and Infectious Diseases, and the National Institute of Aging – but would cut their budgets by more than a third, Stat reported (in a paywalled article). Other institutes would be eliminated or consolidated into new structures such as the National Institute on Body Systems and the National Institutes for Behavioral Health that will receive significantly less money in total than the institutes they replace.

A JAMA Health Forum commentary co-authored by Harvard economist David M. Cutler, called the cuts an $8 Trillion Health Care Catastrophe.” Mary Woolley, CEO of the science advocacy nonprofit Research!America, said in a statement that “If the proposal is enacted, Americans today and tomorrow will be sicker, poorer, and die younger.” 

“Dismantling Medicaid Expansion by Design”: Proposals in the House bill to impose work requirements on people enrolled in Medicaid  “virtually guarantee that millions of low-income adults will become uninsured starting in 2027,” according to an analysis by Manatt Health, a health industry consulting firm. 

“Mass health coverage terminations for Medicaid expansion enrollees are inevitable,” according to the analysis, titled “Medicaid Work Requirements: Dismantling Medicaid Expansion by Design.” It estimates that 5 million people will lose coverage from state Medicaid programs.

It adds that the House-passed bill not only bars individuals who can’t prove they meet the work requirement from continuing to be covered by Medicaid, it also would keep them from getting subsidized health insurance through state Marketplaces provided through the ACA – an underreported point that was news to me, and a real threat to keeping people insured.

In other news…

Can financial advisers help clients with behavioral health issues? People making investments need to trust their financial advisers. Can they also be enlisted to support clients with mental health and substance use problems?

That idea is being pursued by Recovery Within Reach, a nonprofit group that is offering free continuing education training to financial and insurance professionals. Training sessions will use behavioral health experts, data and resources to provide “critical information needed to help clients and their families navigate the financial and emotional costs of substance use and mental illness,” according to a press release.

The course consists of three, self-paced video modules lasting about 20 minutes each. Financial professionals can register here.