House Bill Could Cut $1 Trillion From Healthcare, Study Finds

A new analysis by the Urban Institute warned that the budget reconciliation bill recently passed by the House of Representatives could lead to a massive $797 billion drop in U.S. healthcare spending over the next decade—and a sharp rise in uncompensated care for the uninsured.

They found that the potential impact would hit some of the most populous states the hardest.

More than one-third (36%) of the cuts would be concentrated in just four states: California, Texas, New York and Florida.

Nine additional states—Arizona, Georgia, Illinois, Indiana, North Carolina, Ohio, Oregon, Pennsylvania and Washington—would each see more than $20 billion in reduced healthcare spending between 2025 and 2034.

On May 22, the House of Representatives passed this new bill that combines ideas from several of its committees. It follows the instructions of the 2025 budget plan.

Using its Health Insurance Policy Simulation Model (HIPSM), the Institute conducted the analysis and updated projections from the Congressional Budget Office (CBO), with funding from the Robert Wood Johnson Foundation.

The findings account for the combined effects of provisions in the reconciliation bill and the expiration of enhanced premium tax credits (PTCs) provided under the Affordable Care Act (ACA).

The reconciliation bill’s provisions alone would account for the $797 billion spending cut.

Of that total, hospitals would see a $321 billion drop in funding, physicians would face $81 billion in cuts, other health services would lose $205 billion, and prescription drug spending would shrink by $191 billion, the analysis said.

In addition, the expiration of enhanced PTCs would reduce healthcare spending by another $262 billion, which brings the total projected reduction across all provisions to $1.06 trillion over the 10-year period.

It was also found that uninsured consumers would be expected to seek an estimated $283 billion in uncompensated care, with $85 billion of that falling on hospitals.

“As Congress considers significant cuts to the Medicaid program and ACA Marketplaces, this analysis can help state and local policymakers and stakeholders consider the potential adverse effects on healthcare coverage, access, and affordability, and the financial vulnerability of certain providers in their state,” Fredric Blavin, a senior fellow at the Urban Institute, said in a news release.

Under the bill, Medicaid cuts would be significant.

CBO estimated that 16 million more people could become uninsured if the reconciliation bill is enacted and the enhanced PTCs expire—7.8 million from changes to Medicaid, 4.0 million from ACA Marketplace changes, and 4.2 million from the end of the enhanced PTCs.

Hospitals in states that haven’t expanded Medicaid, such as Texas and Florida, are expected to face especially steep losses. Texas alone would lose $52.6 billion in hospital spending over the next decade, while California and Florida would see declines of $44.3 billion and $40.5 billion, respectively.

Uncompensated care—healthcare services that hospitals are legally required to provide regardless of a patient's ability to pay—would rise quickly.

Hospitals would take on $63 billion more in uncompensated care, straining already vulnerable health systems.

“The Medicaid cuts Congress is considering would be the largest funding reduction in the program’s history, and it is hard to overstate just how devastating the impacts would be,” Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, said in the release. “Such drastic changes to Medicaid financing would have ripple effects that go well beyond people covered by the program, further squeezing hospitals, limiting access to care for entire communities, and destabilizing state and local economies.”

The analysis highlighted that the financial pressure from uncompensated care could ultimately be passed on to those with insurance in the form of higher healthcare costs.