US Medicaid Cuts Begin Phasing In Through 2026 as CBO Projects Millions Will Lose Coverage

The restructuring of the US public health insurance system under the One Big Beautiful Bill Act continues to unfold in 2026, with major provisions phasing in throughout the year. The nonpartisan Congressional Budget Office (CBO) estimates the legislation will result in approximately 11.8 million people directly losing Medicaid coverage, with an additional 3.1 million losing Medicaid-linked marketplace plan eligibility. A further 4.2 million covered under ACA marketplace plans face losing coverage when enhanced premium tax credits expire later in the year.

Several key changes take effect during 2026. Medicaid recipients who do not meet a new 80-hours-per-month community engagement or work requirement face coverage termination — a provision critics argue historically causes coverage losses due to paperwork complexity rather than genuine ineligibility. The experience in Arkansas in 2018, where a brief work requirement led to 17,000 people losing Medicaid in three months with no measurable employment increase, is frequently cited as a cautionary precedent.

From October 1, 2026, the law restricts federal Medicaid funding for noncitizens to a narrow set of immigration categories, meaning states wishing to maintain coverage for affected groups must use state-only funds. A RAND Health analysis estimates state Medicaid budgets will contract by a total of $665 billion over the next decade. KFF projects Medicaid enrollment will be largely flat in fiscal year 2026 even as program spending grows by approximately 7.9%, driven by rising costs for long-term care, pharmacy benefits, and behavioral healthcare.

Health policy experts, advocacy groups, and state governors have raised concerns about the downstream effects, particularly on behavioral health services, which are classified as optional under Medicaid and are often among the first benefits cut when states face budget pressure. Private health insurers and managed care organizations have been reviewing contracts and, in some cases, freezing new provider contracting in anticipation of membership losses. The changes are expected to intersect with broader healthcare affordability debates heading into the November 2026 midterm elections, including the future of ACA marketplace subsidies and efforts to control drug prices.