The most significant new healthcare legislation is the One Big Beautiful Bill Act, a budget reconciliation law signed on July 4, 2025. It contains over $1 trillion in healthcare spending changes through 2034, primarily through cuts to Medicaid, new eligibility restrictions for insurance marketplace plans, and a $50 billion rural health program. The law reshapes who qualifies for public insurance and subsidized coverage in ways that the Center on Budget and Policy Priorities estimates will leave up to 15 million more people uninsured by 2034.
Major Changes to Medicaid
The biggest portion of the spending cuts targets Medicaid, the program that covers low-income families, older adults, and people with disabilities. The most visible change is a new federal work requirement, labeled in the law as a “community engagement requirement.” Most Medicaid recipients will need to spend at least 80 hours per month working, volunteering, or attending school to keep their coverage.
People who lose Medicaid coverage because they don’t meet the work requirement face an additional penalty: they also become ineligible for subsidized marketplace coverage. That creates a gap where someone who falls out of Medicaid has no affordable path back into insurance.
How ACA Marketplace Plans Are Changing
The law makes several changes to how people enroll in and keep Affordable Care Act marketplace plans (sometimes called Obamacare). Plans will no longer automatically renew. You’ll need to manually re-enroll every year during open enrollment and update your income, immigration status, and other details annually or risk losing coverage.
If you enroll through a special enrollment period outside the normal open enrollment window, you won’t be eligible for premium tax credits or cost-sharing reductions. And if you receive more in premium tax credits than you were entitled to based on your actual income, you’ll have to repay the full amount regardless of how much you earn. Previously, lower-income enrollees had repayment caps.
The law also does not extend the enhanced ACA premium tax credits that were first introduced in 2021 and expanded eligibility for subsidized coverage. These enhanced subsidies are set to expire at the end of 2025, which is expected to drive up the cost of marketplace plans for millions of enrollees. The original, less generous subsidy structure will return, passing more costs onto consumers over time.
New Restrictions Based on Immigration Status
Starting January 1, 2026, lawfully present immigrants with incomes below the federal poverty level lose eligibility for subsidized marketplace coverage. Beginning in 2027, the restrictions expand further: only green card holders, migrants from Compact of Free Association nations, and certain immigrants from Cuba will qualify for subsidized marketplace plans. Refugees, asylum seekers, and people with Temporary Protected Status will no longer be eligible.
The law also eliminates Medicare coverage for noncitizens and reduces support for people with Low-Income Subsidy coverage under Medicare’s prescription drug program.
$50 Billion for Rural Health
One of the law’s largest new investments is the Rural Health Transformation Program, which allocates $50 billion over five years to help states redesign healthcare delivery in rural areas. Funding starts in fiscal year 2026 at $10 billion per year and runs through 2030.
The program is designed to help rural facilities coordinate operations, share technology, and organize primary care, specialty care, and emergency services across regions. States will apply for funding through a cooperative agreement process, and the goal is to help rural communities figure out which services they actually need, from preventive care to post-acute care, and build systems that can sustain them.
Medicare Drug Cost Changes Already in Effect
Separate from the One Big Beautiful Bill Act, several healthcare cost provisions from the 2022 Inflation Reduction Act are now live and affect millions of Medicare enrollees. These changes are already in place, not pending.
As of 2025, Medicare Part D enrollees have their annual out-of-pocket drug costs capped at $2,000. This cap will rise each year with the growth rate of Part D spending. For people who previously took expensive brand-name drugs and were paying around $3,300 out of pocket in 2024, the savings are immediate. The cap also eliminates the old rule where people in the catastrophic coverage phase still owed 5% of their drug costs indefinitely.
Insulin is now capped at $35 for a one-month supply for all Medicare enrollees, covering both Part B and Part D insulin products with no deductible. This applies to everyone on Medicare who takes insulin, including those receiving Extra Help.
Medicare has also begun negotiating prices directly with drug manufacturers. The first round covered ten of the most expensive Part D drugs, and if those negotiated prices had been in effect during 2023, they would have saved an estimated $6 billion, representing 22% lower net spending on those medications.
Stronger Mental Health Coverage Rules
Updated federal rules finalized in late 2024 strengthen the requirement that insurers cover mental health and substance use disorders on equal terms with physical health conditions. The key change is that health plans now have to prove parity, not just claim it. Insurers must document that the criteria they use to approve, limit, or deny mental health treatment are no more restrictive than what they apply to medical or surgical care.
Plans are also required to collect data on whether their policies create measurable differences in access to mental health care compared to physical health care. If the data shows material gaps, insurers must take concrete steps to close them. This shifts the burden from patients fighting denials to insurers demonstrating compliance upfront.
What This Means in Practice
The combined effect of these changes moves in two directions at once. Medicare enrollees, particularly those with high drug costs, are seeing real savings from the prescription drug reforms already in place. Rural communities stand to benefit from a large infusion of federal funding for healthcare infrastructure.
On the other side, millions of people who currently rely on Medicaid or subsidized marketplace coverage face new barriers. Work requirements, manual re-enrollment, immigration restrictions, and the expiration of enhanced premium subsidies all narrow the pathway to affordable insurance. The provisions phase in over the next several years, with some taking effect as soon as January 2026 and others rolling out through 2027 and beyond.