On July 4th, 2025, the One Big Beautiful Bill Act (OBBBA) became a federal law under President Donald Trump’s administration. This law affects people, companies, and different organizations by introducing substantial changes to tax and spending laws, public assistance programs, and other areas. Due in part to the removal of at least 10.5 million participants from Medicaid and Children’s Health Insurance Program (CHIP) benefits by 2034, the nonpartisan Congressional Budget Office (CBO) projected that the OBBBA would result in a $1.02 trillion reduction in government spending on these programs. 

In response to these changes, States will find it more expensive to maintain Medicare and Medicaid programs, particularly if they are barred from enacting new taxes or raising current taxes on health care providers to help pay for their portion of the program’s expenses. States therefore, need to consider three options: increasing taxes, restricting coverage, or lowering/removing essential benefits that are not specifically mandated by federal law.