Proposed Medicaid Changes Could Lead to Thousands of Preventable Deaths and Billions in Economic Losses

A new study published in JAMA Health Forum estimated that proposed Medicaid changes in the 2025 Budget Reconciliation Bill could lead to nearly 1,500 excess deaths and $135 billion in lost economic output annually by 2034.

Researchers used a microsimulation model to analyze the broader impacts of the bill, which includes stricter eligibility rules, work requirements and a reduced federal funding match for states. While the Congressional Budget Office (CBO) projects the changes would cut federal Medicaid spending by $698 billion and reduce enrollment by 10.3 million people, the study sheds light on major unintended consequences for beneficiaries, communities and the broader economy.

According to the analysis, the CBO’s forecasted coverage losses would result in 94,802 preventable hospitalizations each year, along with 1.6 million people delaying care due to cost and 1.9 million cases of medication nonadherence. The authors also predicted that 101 rural hospitals would face a high risk of closure, and federally qualified health centers would lose $3.3 billion in revenue—an 18.7% drop.

The ripple effects extend far beyond health care. By 2034, the study estimates the policy changes could lead to 302,000 job losses and an annual economic output reduction of $135.3 billion, along with an $11.1 billion drop in state and local tax revenue.

In a scenario where more people lose coverage—up to 14.4 million—the health and economic toll would be even higher. The toll would result in 2,284 excess deaths, 145,946 preventable hospitalizations, 408,000 lost jobs and nearly $183 billion in lost economic output each year.

Researchers expressed the findings indicate proposed Medicaid reforms would have “far-reaching consequences beyond federal budget savings” and warned that rural and underserved communities would be hit hardest.

This analysis arrived just weeks after President Trump signed the nearly 900-page “Big Beautiful Bill” into law on July 4. Passed by the Senate on July 1 and the House on July 3, the legislation enacts sweeping changes across Medicaid, the Affordable Care Act, Medicare and Health Savings Accounts.

Some areas it covers are work requirements for Medicaid eligibility—at least 80 hours per month for adults ages 19 to 64—and bars individuals who are denied Medicaid for not meeting those requirements from accessing subsidized ACA Marketplace coverage. It also grows the Immigration and Customs Enforcement (ICE) agency by thousands of workers.

In addition, the bill mandates that states exempt certain groups from the work requirement, including parents of dependent children and medically frail individuals, and requires eligibility verification for at least one month prior to application and during two yearly redeterminations.

States cannot waive these requirements under Section 1115 authority. Funding includes $100 million to states for system development and $50 million to HHS for implementation, with the changes set to take effect by December 31, 2026, or earlier at state discretion.

The authors of the JAMA Health study stressed that Medicaid is not just a line item in the federal budget—it is tightly woven into the healthcare and economic fabric of the country. Safety-net providers, particularly in rural areas, rely heavily on Medicaid reimbursement to stay open. When coverage is lost, folks will often delay care, face increased medical debt or end up hospitalized for preventable conditions.

The study follows the CHEERS reporting guidelines and uses publicly available, de-identified data, highlighting its overall strength. While the researchers acknowledge some limitations—including ongoing changes to the bill’s language and potential future amendments—they have made their model open source to allow for updates as the policy evolves.

Overall, the study’s authors cautioned that even if some provisions in the bill are scaled back or changed, the broader message is clear: deep Medicaid cuts are likely to come with significant human and economic costs.