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The Truth About the One Big Beautiful Bill Act’s Cuts to Medicaid and Medicare [1]

['Mia Ives-Rublee', 'Kim Musheno', 'Senior Director Of Broadcast Communications', 'Senior Director', 'Federal Affairs', 'Senior Manager', 'State', 'Local Government Affairs']

Date: 2025-08

This column is a collaboration between the Center for American Progress and The Arc.

Authors’ note: The disability community is rapidly evolving to use identity-first language in place of person-first language. This is because it views disability as being a core component of identity, much like race and gender. Some members of the community, such as people with intellectual and developmental disabilities, prefer person-first language. In this column, the terms are used interchangeably.

On July 3, Congress passed the sweeping, regressive One Big Beautiful Bill Act (OBBBA). Amid the self-imposed rush to deliver the bill to President Donald Trump’s desk by July 4, many Americans will be looking for information about the bill, which was largely debated in the dead of night and pushed through at breakneck speed. This confusion has only been exacerbated by misleading and inaccurate statements about how and whether the bill’s cuts will affect people with disabilities. In this column, the Center for American Progress and The Arc address the rhetoric surrounding the bill and unpack the devastating impacts that its deep cuts to Medicaid and Medicare, in particular, will have on people with disabilities. Those who need Medicaid most, including people with disabilities and the elderly, will be affected by the bill’s cuts The nonpartisan Congressional Budget Office (CBO) estimated that the OBBBA will cut federal spending on Medicaid and Children’s Health Insurance Program (CHIP) benefits by $1.02 trillion, due in part to eliminating at least 10.5 million people from the programs by 2034. With new federal limits on Medicaid eligibility likely increasing the number of uninsured, along with other provisions that restrict states’ ability to raise revenue to fund their Medicaid programs, states will have to reevaluate their budgets to either supplement the spending or cut services. Research shows that when federal funding for Medicaid decreases, states tend to cut optional benefits such as home- and community-based (HCBS) first. It is nearly impossible to carve out a specific population, such as disabled people or elderly people, because the cuts to Medicaid funding will affect everyone due to hospital closures and health care workforce layoffs. The bill will make it harder for states to fund home- and community-based services The OBBBA creates a new category in 1915(c) HCBS waivers that will cover people who do not meet the existing requirement of needing an institutional level of care to receive HCBS. States would be allowed to apply to access this funding as long as their proposed program does not increase the average HCBS wait times for people who meet the need for institutional care. In order to implement this additional category, the federal government will provide $50 million in fiscal year 2026 and $100 million in fiscal year 2027. In 2020, average Medicaid per capita spending on HCBS was $36,275. Yet in the first year of the bill’s new HCBS waiver, funds from the bill would only be able to cover HCBS costs for about 27 people per state—without accounting for overhead spending or inflation. Moreover, states will be contending with massive federal funding losses due to the bill’s Medicaid cuts, which will likely lengthen wait times for HCBS, making them ineligible to establish the new category at all.

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See also

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[1] Url: https://www.americanprogress.org/article/the-truth-about-the-one-big-beautiful-bill-acts-cuts-to-medicaid-and-medicare/

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