What the One Big Beautiful Bill Act Means for Medicaid and Disabled People

It is early 2026, and we are starting to see states begin efforts to implement changes to their Medicaid policies because of the “One Big Beautiful Bill Act of 2025 (OBBBA).” The legislation, now Public Law 119-21, will cut almost $1 trillion from Medicaid over the next 10 years and will have significant impacts on health care and health care access for people with disabilities.

What is Medicaid?

Medicaid is the primary health provision program for low-income Americans. With more than 76 million people enrolled, it provides comprehensive medical and health-related services to low-income families and individuals, including children, pregnant people, seniors, refugees & asylum-seekers, and people with disabilities. To be specific to disability, that’s more than 15 million disabled adults and children.

Because so many people with disabilities are not employed, they cannot get health insurance or health care from their employment, and so apply for Medicaid to get the health services, medications, and support they need to survive. Looking at all disabled people in America, 1 in 3 (about 35 percent) have Medicaid. For comparison, that is double the percentage of people without disabilities on Medicaid (17 percent). Also of note, Medicaid is the largest source of funding for mental health services in the United States.

History

The very first legislation in the United States to provide healthcare was for people receiving Welfare cash payments in the 1950s. It required matching funds from states. Ten years later, the Kerr-Mills Act expanded the healthcare funds to include Medical Assistance to the Aged (MAA).​

Medicaid itself was formally created in 1965, along with Medicare, as an amendment to the Social Security Act. Over the years, additional groups were added, such as children and pregnant women. The Affordable Care Act (“Obamacare”) expanded Medicaid by adding optional categories of eligible individuals and expanding services. The goal of Medicaid has always been to help states provide a safety net for specific categories of low-income Americans who could not afford traditional health insurance plans.

Structure

Currently, Medicaid is funded jointly by the Federal Government and the States, with federal funding (the Federal Medical Assistance Percentage) ranging from 50 percent to 83 percent. The Federal Government also provides guidelines and sets the baseline of required services. Each state then has flexibility in how it implements Medicaid (including eligibility), and in the optional benefits it can include to secure additional federal funds. However, it is still expensive, representing approximately 20 percent of a state’s funds. Only primary and secondary education accounts for a larger share of state funds.​

As it was when it began in the 1950s and 1960s, eligibility for Medicaid is still based on specific categories. Some are “mandatory” groups, like welfare recipients, adults 65 or older, and people with disabilities receiving cash assistance through the Supplemental Security Income (SSI) program, and children in families with income below 138 percent of the federal poverty level. Only about 30 percent of people with disabilities in Medicaid are in this category. Getting SSI is very difficult, requiring significant documentation and often taking many years.

Most people with disabilities and other chronic health conditions are eligible for Medicaid, though the  “optional” populations were added with the Affordable Care Act. They include people in the mandatory groups listed above, but who have income higher than the Medicaid limit:

• Non-disabled adults with income up to 138 percent of the poverty level (which is $21,597 in 2025);
• Older adults and disabled people who are not receiving SSI with income below the poverty level;
• People who are “medically needy,” meaning they have high medical expenses that drop their income below the Medicaid eligibility (e.g., receiving nursing home care or home-and-community-based services); and
• People with disabilities who have higher incomes who need long-term services and supports (such as personal aides/assistants).

There are only 10 states (Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming) that have not included the above “optional populations.” These categories are important because the majority of changes to Medicaid from the “One Big Beautiful Bill” impact this second group. 

OBBBA Changes

The 2025 One Big Beautiful Bill makes three specific changes to Medicaid that will significantly impact people with disabilities (though several other changes will affect them more broadly).

The creation of work requirements.  Adults aged 19 through 64 in the optional population (and similar populations covered through waivers) who are applying to or already receiving Medicaid are required to participate in at least 80 hours of ”community engagement” per month – working, volunteering, or education/training. For disabled people, these requirements may be impossible because of:

• The nature or severity of their condition. For people with chronic conditions, in rehabilitation or treatment, with intellectual disabilities or mental health needs, they may not have the time or capacity.
• The availability of accessible, inclusive community engagement activities. I’ve seen so many poor rural communities where variants of these kinds of ”work requirements” have failed because those opportunities just did not exist, nor were support services in place.
• Simple discrimination. The US government’s own Department of Labor highlights that only 38.1 percent of disabled people who are seeking work are employed, compared to 74.5 percent of the non-disabled population. 

It is especially frustrating to me because the idea of work requirements isn’t new. Arkansas added a work requirement to Medicaid in 2018. That year, 1 in 4 people lost their healthcare because they could not meet those requirements. In 2023, the US Government’s Congressional Budget Office conducted an analysis and found that, while work requirements lowered federal spending, they also resulted in a loss of coverage and reductions in benefits for people who were actually eligible for Medicaid.

Research studies are showing potential widespread health harm, including increased mortality and deteriorating chronic disease control. If the national work requirement results follow in the same pattern as what happened in Arkansas, we could see a rise of 11,825 deaths each year because people did not get the care they needed.  Work requirements will lead to coverage loss.  And the truth is, most people on Medicaid who can work, do work (69%). Often, they are cobbling together 2-3 low-paying jobs or gig work.  Which leads us to the next change:

​More frequent coverage redeterminations. The OBBBA increases the frequency with which states must reevaluate Medicaid eligibility for certain groups. Previously, states conducted eligibility recertifications once every 12 months, but under the new law, states must review eligibility every 6 months for Medicaid expansion adults and individuals under “waiver” policies. Children, people over 65, and those whose eligibility is based on disability or blindness should not have to meet this new requirement. Almost 70 percent of disabled people in Medicaid are in the optional/expanded category, and documentation to prove disability every 6 months is an incredible burden on the individuals, their medical care personnel, and on the state itself. When a state is unable to verify compliance with the requirements or that the person meets an exemption category (such as “medically needy”), they set a 30-day timer for the person to prove they should receive Medicaid before denying the application or disenrolling the individual from coverage.

Medicaid is a massive health insurance program covering all of the United States, impacting 1 in 4 Americans and featuring many complex, interrelated parts, both federal and state, and private and public entities. It is designed to be flexible and responsive, with 50 states, Washington, DC, and 5 US territories all managing it slightly differently, with different eligibility rules, benefits, and provider payment policies, as well as differing documentation, processes, and electronic systems. Doubling the number of reevaluations is an administrative nightmare.​

This was done to address, as the White House stated, waste and fraud caused by improper payments. The truth is, there is a difference between the technical terms “fraud” or “waste” and “improper payment.” Improper payments mean someone was missing documentation, a provider skipped an administrative step, or even a misspelling of a name or an incorrect address, rather than payments to people who are ineligible. We know from the Center for Medicaid and Medicare’s own data that these “paperwork errors” make up 79.1 percent of the improper payments! We will see more people with disabilities and chronic health conditions – because of the complicated and time-consuming work to get necessary paperwork – losing their healthcare.

​Changes to financing rules. This change is less direct but has a definite immediate impact on Medicaid services. Medicaid is funded jointly by states and the federal government. In addition to their general budgets, almost all states (Alaska is the exception) fund their Medicaid share through provider taxes. With federal Medicaid funding declining, some states are seeking ways to make up the difference and ensure ongoing health care access for their residents.  However, OBBBA now prohibits states from establishing any new provider taxes or from increasing the rates of existing taxes to support Medicaid. In fact, in the 40 states that have incorporated the expansion populations, they will actually have to lower their provider tax rates each year as part of a step-down process.  The new limits also apply to local government taxes in expansion states.

In short, states don’t have an easy way to make up the shortfall. Which means they have no choice but to limit eligibility or provide fewer services, significantly impacting safety-net hospitals, skilled nursing facilities, and rural healthcare access. Already, Medicaid plans pay doctors, hospitals, and other health care providers significantly less (67 percent) than commercial insurers or Medicare would pay for the same care. The result is that fewer health care providers want to participate in Medicaid programs.

The Bottom Line

Supporters of OBBBA describe it as a program to remove fraud, waste, and abuse; a way to increase the integrity of government programs and ensure only those “deserving” receive them. However, as passed, the legislation is more likely to cause eligible people, especially those with disabilities, to lose access to healthcare. What is also terrible is that if they are denied or disenrolled due to work requirements, they are also ineligible for the subsidized Marketplace coverage.

​State Medicaid agencies are working on how to implement the legislation; unfortunately, there has been little guidance from the federal government. The states are required to begin outreach to Medicaid participants at the end of June through regular mail or telephone, text message, website, and “other commonly available electronic means” to inform them of their status. Advocacy organizations are doing their best to ensure that people with disabilities are aware of the changes and helping to support any documentation needs. Right now, people with disabilities are being told to watch for any mail or notifications from their state’s Medicaid agency and to act promptly.

​Regardless of political party, most Americans (77%) hold favorable views of Medicaid. With the US currently involved in two wars overseas with massive price tags, the monetary and human cost of cutting Medicaid is astronomical, and it is people with disabilities who will pay the price.

​No one should have to die. No one should have to suffer because they don’t have money for access to doctors and medicines. You should not have to be “productive” to have access to healthcare. You should not have to “prove your worth” to the government to not die. After all, weren’t we promised the right to “life” as a part of “…life, liberty, and the pursuit of happiness?”

References for Further Information

• Text of House Bill 1
• Policy Basics – Introduction to Medicaid (Center for Budget and Policy Priorities)
• Centers for Medicare & Medicaid Services (CMS), ”November 2025 Medicaid & CHIP Enrollment Data Highlights”
• Health Tracking Poll for Public on Health Care Spending and Other Priorities (Kaiser Family Foundation)
• Centers for Medicare and Medicaid Services – Improper Payments Fact Sheet (2024)
• Five Key Facts about Medicaid Program Integrity (Kaiser Family Foundation)
• The Disability Gap in Medicaid, Implications for the Federal Work Requirement Proposal (State Health and Value Strategies)
• Legislating Medicaid: Considering Medicaid and its Origins (National Institutes of Health)
• Disability Employment Statistics, Office of Disability Employment Policy (US Department of Labor)
• CBO’s Estimate of the Budgetary Effects of Medicaid Work (Congressional Budget Office)
• The Lancet – Work Requirements and Health: Projected Mortality Impacts of Medicaid Coverage Loss
• Centers for Medicare and Medicaid Services – Letter on Implementation of “Eligibility Redeterminations,” Section 71107 of the “Working Families Tax Cut” Legislation (Public Law 119-21) to State Medicaid Directors
• How Medicaid Provider Taxes Work: An Explainer (National Association of Medicaid Directors)

Feature Photo by Charles Criscuolo