New Medicaid Law Slashes $1 Trillion Placing Health Coverage at Risk for Twelve Million Americans

The One Big Beautiful Bill Act, signed into law by President Donald Trump on 4 July 2025, will slash roughly $1 trillion (£749 billion) from Medicaid and the Children's Health Insurance Programme over the next decade, stripping health coverage from nearly 12 million Americans who can't afford to lose it, according to the Congressional Budget Office.

The law scraped through Congress on razor-thin margins. The Senate passed it 51-50 following an overnight session on 1 July to 2 July, with Vice President JD Vance casting the tie-breaking vote, and the House cleared it 218-214 two days later. Every Democrat in both chambers voted against it.

What the Law Changes for Medicaid Enrollees

Starting in January 2027, Medicaid expansion enrolees aged 19 to 64 must report at least 80 hours per month of 'community engagement' activities to keep their coverage. Qualifying activities include paid work, community service, and half-time student enrolment. States must also verify eligibility every six months rather than annually.

Nebraska has already moved ahead of schedule. New work reporting rules took effect on 1 May 2026, making it the first state in the nation to enforce the law's provisions, the American Medical Association confirmed.

Rural Communities Stand to Lose the Most

The cuts fall hardest on rural America, where roughly 40% of children receive their health coverage through Medicaid. Georgetown University's Center for Children and Families has warned that the funding reductions will disproportionately harm rural communities, where hospitals operate on thin margins, and clinics depend on Medicaid reimbursements to stay open.

Provider groups have warned that shrinking the programme could force hospitals in low-income areas to scale back services or close altogether. Rick Pollack, president and CEO of the American Hospital Association, said the Medicaid reductions 'will impact all patients' in every community, not just those enrolled in the programme.

More Than 90 Physician Groups Opposed the Bill

The American Medical Association (AMA), along with more than 90 physician organisations, opposed the legislation throughout the process. In a statement following the bill's passage, the AMA said the law would cause an estimated 11.8 million people to lose health coverage and warned that work reporting rules will create administrative barriers that knock eligible patients off the rolls.

When Arkansas tested a similar work requirement before the federal law took effect, thousands of residents lost Medicaid coverage despite still qualifying for the programme. The AMA has said the law will lead to delayed care, worse health outcomes, and financial hardship for families across the country.

Johnson's Past Statements Clash With Assurances

House Speaker Mike Johnson told CNN in February 2025 that 'we're not gonna touch Social Security, Medicare or Medicaid' and called the commitment ironclad. But in a 2018 speech at the American Enterprise Institute, Johnson called entitlement reform the 'number one priority' for the Republican Study Committee, which he then chaired. More recently, he stated that mandatory spending on these programmes 'is something we have to address, and we have a plan to do it.'

Health and Human Services Secretary Robert F. Kennedy Jr has also denied the law cuts Medicaid, telling lawmakers that federal spending on the programme will still rise 47% over the decade. Health policy experts rejected that framing. Michael Sparer, chair of health policy at Columbia University's Mailman School of Public Health, called the claim 'simply false,' noting that Medicaid spending growth 'would be far greater' without the law.

The CBO has also projected the law will trigger automatic sequestration of an estimated $45 billion (£33.7 billion) from Medicare in 2026, adding pressure to a programme that covers more than 66 million Americans. The legislation Johnson pushed through Congress doesn't just plan to address these programmes. It already has.