In July 2025, the 2025 Federal Budget Reconciliation bill, known colloquially as the One Big Beautiful Bill Act (OBBBA) and officially as H.R.1, was signed into law.
This act introduced major, immediate reforms to Medicaid, adding new administrative requirements and eligibility conditions (including work requirements) for patients seeking to enroll in or maintain Medicaid coverage. It also lowered the cap on state-directed payments—the supplemental payments states pay to increase reimbursement rates for specific providers that serve a large number of Medicaid patients.
Beginning in January 2026, OBBBA will also end enhanced Affordable Care Act (ACA) subsidies, also known as premium tax credits, for enrolled members. According to an analysis from the Kaiser Family Foundation, enrollees who are currently receiving premium tax credits will experience an increase of more than 75%, on average, in their out-of-pocket premium payments.
The bill’s provisions also revise marketplace tax credit and enrollment rules and limit eligibility for Medicaid and CHIP, subsidized Marketplace coverage, and Medicare to a smaller subset of lawfully present immigrants.
To better understand the anticipated coverage impacts of OBBBA, MMIT conducted a quick-turnaround Indices Market Event Primer survey of payer and PBM stakeholders in July 2025.
Reduced Access to Care and Coverage
Most (64%) payers expect the new bill to negatively impact the healthcare industry, while almost one-third (32%) are reserving judgement until more specifics are known.
The majority of payers are concerned that the bill would reduce access and coverage for many members, particularly those in rural areas. As one large national payer wrote, “This will impact both hospitals and providers that depend on Medicaid revenue. As a result, we will see higher medical costs due to delays in care.”
Other payers concurred, stating that fewer people will have access to care due to the combined effects of reduced retroactive coverage, new cost-sharing provisions, and the expiration of enhanced ACA premium subsidies. Most expect that lower ACA and Medicaid enrollments will drive up costs for their commercial lines of business.
Expected Increases in Premiums and Cost-Sharing
Payers expect the new law to significantly impact their commercial line of business, with rising costs driving increases in premiums, cost-sharing, and benefit reductions. One payer said their organization is “preparing for hospitals, health systems, and providers to increase rates significantly and push harder in contracting to help offset losses from Medicaid and ACA lines of business.”
In response to expected cost shifting, several commercial payers say they may need to increase premium rates for members to offset reduced membership and increased medical costs. Several said they anticipate reducing provider reimbursement rates, while others say they may be unable to provide members with as many benefits.
While all surveyed payers expect the new law to have some impact on the Medicare line of business, they note this impact will not be as significant as it is for commercial plans. Medicare payers speculate that if overall costs increase due to OBBBA, they may be forced to reduce benefits and reimbursement rates, and increase premiums.
As one large national plan noted, “Cost-sharing is one of the most visible and impactful areas for members, especially in Medicare. If the bill includes changes like out-of-pocket caps or expanded coverage for high-cost medications, that would significantly shift how plans structure member cost responsibilities. These kinds of changes can require system updates, benefit redesigns, and communications, all of which have a meaningful operational impact.”
Added Pressure on Healthcare Systems
Most surveyed payers (68%) also expect that the bill will increase or significantly increase the burden on healthcare systems over the next three years, due to the potential rise in uninsured patients.
As one payer noted, “If coverage gaps widen or more patients become underinsured, we could see more delayed care, higher use of emergency services, and increased financial strain on systems already working near capacity. Even with policy improvements, the timeline for meaningful coverage changes can lag behind, so the short- to mid-term impact could still be substantial.”
Many payers commented that hospitals and ERs will likely treat more underinsured or uninsured patients, and predicted higher levels of uncompensated care. Some also noted the bill’s potential to drive up medical spend and burden on rural or safety net hospitals, and one national payer said, “The operational impact of using ERs for non-emergent cases will be significant.”
Increased Strain on Providers
With the introduction of the OBBBA, many payers anticipate operational challenges with billing systems and existing manufacturer contracts, leading to increased compliance costs for providers and payers. Many payers say that though the bill aims to simplify billing, it may inadvertently increase the administrative burden on providers and payers and potentially reduce flexibility in billing practices.
As one PBM noted, they foresee “increased administrative burden from billing standardization, interoperability issues between provider systems, potential disruption to value-based and rebate contract models, possible cost shifting to patients or plans, and unclear compliance and enforcement pathways.”
On the other hand, some payers anticipate the new bill may offer benefits such as improved price transparency, streamlined claims processing, and reduced waste. As one national payer said, “If the One Big Beautiful Bill lives up to expectations, it could make the whole system a lot more transparent. . . Streamlining billing and reimbursement could help reduce all the back-and-forth we deal with and free up time for actual patient care.”
Payers Likely to Make Formulary Adjustments in Response
Overall, 76% of surveyed payers expect their organization’s overall costs will rise because of the likely reduction in covered Medicaid recipients. Payers expect higher costs due to the anticipated increase in uninsured and uncompensated care—especially in the emergency room setting—resulting in the need to cost-shift to other insurance lines.
Most responding payers (57%) expect to adjust their formulary strategies or tier placement for both commercial and Medicare plans in response, and more than half (61%) expect to shift services to lower-cost care settings to help manage rising expenses.
According to one large national payer, “We expect to make some adjustments across both commercial and Medicare formularies to help manage rising costs. That could mean moving certain drugs to different tiers, expanding prior auth or step therapy, or being more selective about what gets preferred placement. The goal is to stay ahead of the pressure while still making sure members have access to what they need.”
Approximately one-third of payers are taking a wait-and-see approach, and say they plan to make no formulary adjustments at this time. Just as with the ACA, the sweeping healthcare reforms introduced in OBBBA will have far-reaching implications, many of which are still unknown. As many changes set to take effect in early 2026, payers and providers will need to adapt quickly to navigate new cost dynamics and safeguard patient access.
Access to monthly Market Event Primers, which provide payer and IDN perspectives on disruptive events, are part of a client’s subscription to either MMIT’s Oncology Index or Biologics & Injectables Index.
For custom quantitative research, consider MMIT’s Rapid Response solution, which allows your team to pressure-test hypotheses and scenarios with stakeholders of interest.
