The One Big Beautiful Bill Act will reshape healthcare for years to come. While it presents challenges, especially for vulnerable populations, it also opens the door to efficiency and new market opportunities. Healthcare organizations (HCOs) must act now to develop strategies that protect their business and their customers.
Sweeping changes for the healthcare industry
As a result of the legislation, an additional 11.8 million individuals are expected to become uninsured by 2034. The law significantly changes healthcare access and funding, via:
ACA subsidy rollbacks. The expiration of enhanced premium tax credits, along with changes to plan criteria for cost-sharing reductions (CSR), will result in fewer covered individuals. The initial CBO projection estimates 300,000 people will lose coverage.
Medicaid restrictions. Medicaid’s new work requirements and exclusions for certain adults along with shortening the redetermination period to six months will likely increase churn and reduce enrollment. CBO estimates expect at least 10 million fewer individuals will be covered by Medicaid by 2034.
Provider tax limitations leave gaps on Medicaid funding. States that rely heavily on these provider taxes for will face budget gaps that could lead to reduced provider reimbursement rates, narrowed eligibility, fewer covered services, lower provider participation, and limited access for enrollees. For example, New York expected to generate $1.5 billion annually from the tax. However, under the new law, this tax will be eliminated by January 1, 2026.
The addition of a Rural Health Fund. The Senate added a Rural Hospital Relief Fund (RHRF) to soften the impact of restrictions on provider taxes for states that did not expand Medicaid. Nearly 800 rural U.S. hospitals are at risk of closure due to financial problems, with about 40% of those hospitals at immediate risk of closure. The fund will supply some mitigation but not enough to stem the spread of medical deserts for rural America.
Dual eligibles will continue to face complex enrollment processes. The Medicare Savings Programs will face delayed implementation of the final rule, which would streamline Medicaid and Medicare determinations and enrollment, and under which Medicaid can cover the cost of Medicare premiums/cost for low-income seniors and individuals with disabilities. This delay may reduce member enrollment for health insurers offering Dual Eligible Special Needs Plans and lead to members avoiding or delaying care and medication due to lack of affordability.
Expansion of HSAs and related provisions. The legislation expands access to Health Savings Accounts by classifying any ACA marketplace bronze or catastrophic plan as a high-deductible health plan (HDHP). The law allows HDHPs to cover telehealth services on a pre-deductible basis, reclassifying them as preventive care. Additionally, HDHP enrollees may now participate in Direct Primary Care Service arrangements. These changes aim to improve access to affordable preventive care and align with the broader Make America Healthy Again policy agenda.
ICHRA becomes CHOICE. The Individual Coverage Health Reimbursement Arrangement (ICHRA) was based on regulatory guidance. Formally establishing The Custom Health Option and Individual Care Expense (CHOICE) arrangement in federal law provides long-term stability for employers and employees using defined contribution health models.
What to watch for as the industry adapts
The legislation is reshaping the healthcare industry, introducing significant financial and operational changes for providers, insurers, PBMs, pharmacies, and employers, such as:
Providers’ uncompensated care costs will increase. Financial pressures may accelerate industry consolidation and exacerbate medical deserts. While the law allows rural hospitals to convert to Rural Emergency Hospitals, urban areas face significant spread of medical deserts already, and all geographies should prepare for shortages.
Health insurers will feel pain in multiple LOBs. The rollback of enhanced ACA premium subsidies and changes to CSR eligibility could reduce enrollment in individual market plans, particularly among low- and moderate-income consumers. Stricter Medicaid eligibility verification and redetermination rules may increase churn, affecting managed care organizations. At the same time, CHOICE will likely encourage more employers to transition their employees to individual market coverage, leading to more complex enrollment patterns and evolving plan requirements.
PBMs get a [temporary] reprieve. For now, PBMs walk away mostly unscathed but shouldn’t wait until they are forced to transform their business. A ban on spread pricing will require PBMs to disclose actual drug costs, limiting profits from opaque pricing but reducing price volatility. This may lead to PBMs pivoting to value-based, cost-plus, or pass-through pricing models.
Pharmacies gain indirect support for underserved areas. The new RHRF may indirectly benefit rural pharmacies by stabilizing healthcare infrastructure in underserved areas. This creates the opportunity for rural and independent pharmacies to explore partnerships with hospitals and clinics that stand to receive funding through the RHRF.
Employers gain flexibility in the face of rising medical costs. Reduced ACA subsidies could make coverage less affordable for low-income workers. Under CHOICE, employers can offer defined contribution models, and small businesses may now provide both CHOICE and traditional group health plans to the same class of employees—a flexibility not permitted under ICHRA. More employers are expected to experiment with CHOICE and other new models to combat rising medical costs.
Get ahead of the changes
Healthcare consumers are looking for stability and clarity, and so far, have felt little impact from policy change. While Forrester’s April 2025 Consumer Pulse Survey found that 34% of US online adults reported feeling little to no impact from changes in health policy, data from June’s survey shows that number increasing to 42%. Roughly 1 in 5 US online adults also say they don’t know if recent changes to health policy make it easier or harder to access healthcare services. Consumers impacted by the new law’s changes run the risk of being blindsided.
HCOs can respond to federal budget changes by prioritizing empathy, clarity, education, resources, and technology. They should validate concerns, simplify complex policies, and proactively educate communities to reduce confusion and build trust. Leveraging clear resources and adopting resilient, intuitive technologies will enhance care access and improve patient experience.
Let’s dig deeper into the changes and volatility unfolding in the healthcare market. Forrester clients can schedule a Guidance Session and check out our research on How to Thrive Through Volatility. Not a client? Let’s talk about how we can help.
