On July 3, Congress passed its reconciliation bill, aimed at instituting the key components of President Trump’s agenda. The House passed its version in late June. The Senate then passed their version, which was then passed in turn by the House. The key concerns for Faces & Voices of Recovery are the impact on Medicaid, as well as the Supplemental Nutrition Assistance Program (SNAP), as food insecurity plays a considerable role in recovery. There will be work requirements (or community service requirements) for those who are covered by Medicaid under the Affordable Care Act expansion. As for SNAP, there are changes which would kick in fiscal year 2028. This includes a partial push of the costs of the Supplemental Nutrition Assistance Program onto states based on their payment error rates. However, states that have error rates above roughly 13.33 percent in 2025 and 2026 would be exempted for up to two years before they need to start paying.
The bill will terminate coverage for adults without dependent children (age 19-64 in the ACA Medicaid expansion) who do not regularly report on their work, school, or “community engagement” activities that total 80 hours a month, beginning December 31, 2026 (states have an option to start earlier, or no later than December 1, 2028) Those who fail to complete the paperwork would lose Medicaid coverage and also would be locked out from obtaining tax credits for private insurance in the marketplaces. The Congressional Budget Office (CBO) estimates this will cut $325.8 billion in Medicaid coverage over 10 years.
The federal government now pays 90 percent of the costs of covering Medicaid enrollees who gained coverage through the expansion. Under the new law, the 90 percent matching rate would be reduced to the states’ regular matching rates, which range from 50 to 74 percent in expansion states. Given the high rates of turnover among Medicaid enrollees, however, the proposal would merely serve to phase out the 90 percent expansion rate over several years instead of ending it immediately. KFF estimates that after five years, only 8 percent of expansion enrollees would still be subject to the 90 percent matching rate, effectively phasing out the higher matching rate in only a few years. Eventually, no enrollees would be subject to the 90 percent matching rate. KFF estimates that this provision would shift $93 billion in federal funding to states from 2031 to 2034. States would be forced to pay between 103 and 255 percent more to maintain their Medicaid expansions over this period as a result. In nine states, state laws require ending the expansion automatically if the federal government’s matching rate drops. In these states, expansion enrollees will immediately lose coverage if expansion is eliminated, reducing Medicaid enrollment by almost 2 million people by 2034. Many of the expansion states without “trigger” provisions — three of which have explicit provisions that would require state lawmakers to revisit expansion if federal support is reduced — would not be able to make up the difference in federal funding necessary to maintain expansion. If all states were forced to drop their expansions, 10.6 million enrollees would have their coverage taken away, after accounting for coverage losses due to other parts of the bill, effectively repealing the ACA Medicaid expansion.
The bill codifies standards for budget neutrality for Medicaid 1115 waivers in statute and creates a path for the HHS Secretary to redefine how states spend any savings, putting certain services provided under Medicaid waivers at risk, including public health and community supports. This will have a colossal impact on recovery support services, as many are funded across the country via 1115 waivers.
The bill establishes a Rural Health Transformation Program as well. This provision attempts to address the impact of the massive cuts on rural hospitals by allowing states to establish a rural health transformation plan, to be approved by the CMS Administrator, to improve access to rural hospital care and health outcomes for rural residents. The bill would allocate $50B over 4 years to fund this program, which is a fraction of what rural hospitals may stand to lose. SUD services are an allowable use of these funds, but only in certain clinical settings.