Big Beautiful Bill Part VIII

I needed to write next weeks article and I have a bunch of finals to grade. While all that takes priority, I am actually getting closer to the end and Medicare is still one of the most talked about aspects of this bill, I can’t just stop now. I still have more finals to grade but I did read over the next section.

Starting with section 71114 these laws make several important changes to Medicaid funding. It ends extra federal bonus money for states that expand Medicaid after January 1, 2026; it reduces how much states that expanded Medicaid can tax healthcare providers from 6% down to 3.5% by 2032; it caps Medicaid payments to providers at 100% of Medicare rates for expansion states and 110% for others, with gradual cuts for previously higher payments, especially affecting rural hospitals. It tightens rules to ensure healthcare provider taxes are fair and don’t unfairly target providers serving many Medicaid patients. Finally, starting in 2027, Medicaid pilot programs must be budget neutral, meaning they can’t cost the federal government more than existing Medicaid spending, with any savings counted in future approvals.

This last paragraph is just what it says, not how it will affect states. I know there are many afraid these changes will affect rural hospitals. While I am not smart enough to understand how, when I searched for reason for this fear this is what I found. These are not my ideas, so take them for what they are. Many rural hospitals rely on higher Medicaid payments to cover their costs because Medicare rates often don’t fully cover expenses. This cap limits their ability to get extra funds through Medicaid. If rural hospitals were already getting special higher payments, those will have to be reduced by 10% each year starting in 2028 until they reach the new caps. That means less money over time, which can strain their budgets. Yet at the same time the law does include some protections for rural hospitals, like recognizing “critical access” and “low-volume” hospitals and sets aside $7 million per year through 2033 to help implement these rules, which could ease the impact somewhat.

The section that starts with 71119 is about increasing personal accountability with Medicare. Basically, starting in 2027, most people of working age on Medicaid will need to work at least 80 hours a month volunteering, going to school, or at an actual job to keep their coverage. There are some exemptions like being pregnant, disabled, a caregiver, living in a high-unemployment or in a disaster area. States must check compliance regularly and give people 30 days to fix any issues before ending coverage. States will receive $200 million in grants to build systems and enforce the rules, and safeguards will prevent conflicts of interest in how compliance is checked. Then, starting in 2028, states must begin charging small copays to some low-income adults who earn above the poverty line. These copays are limited to $35 per item or service, don’t apply to key services like primary care or mental health, and can’t exceed 5% of a family’s income. No premiums will be charged, and providers may still waive the fees.