US Medicaid Cuts Under 'One Big Beautiful Bill' Set to Remove Millions From Health Coverage in 2026

The passage of the One Big Beautiful Bill Act has set in motion what analysts and health policy experts are calling one of the most consequential restructurings of the US public health insurance system in decades. According to the nonpartisan Congressional Budget Office (CBO), the legislation is projected to result in approximately 11.8 million people directly losing Medicaid coverage, with a further 3.1 million losing marketplace plan eligibility as federal subsidies are reduced. An additional 4.2 million covered under ACA marketplace plans face losing coverage when enhanced premium tax credits expire later in the year.

Several major provisions are scheduled to take effect throughout 2026. Starting this year, Medicaid recipients who do not meet a new 80-hours-per-month community engagement or work requirement will face coverage termination. Critics argue these administrative barriers historically cause coverage losses not due to ineligibility but due to paperwork complexity — a dynamic observed in Arkansas in 2018, when 17,000 people lost Medicaid in three months after a brief work requirement was introduced, with no measurable increase in employment.

From October 1, 2026, the law restricts federal Medicaid funding for noncitizens, limiting eligibility to a narrow set of immigration categories. States that want to maintain coverage for affected groups will need to use state-only funds. A RAND Health analysis estimates state Medicaid budgets will contract by a total of $665 billion over the next decade, while net state budget impacts across all sectors will be a $86 billion reduction.

The American Psychological Association (APA), healthcare advocacy groups, and state governors have raised alarms about the downstream effects on behavioral health services — often classified as optional under Medicaid and among the first benefits cut when states face funding pressure. Private health insurers and managed care organizations are already reviewing contracts and, in some cases, freezing new contracting with providers in anticipation of membership losses. KFF projects Medicaid enrollment will be largely flat in fiscal year 2026, even as program spending grows by approximately 7.9%.