What we know about the health care changes in the new federal budget law

Congress passed the One Big Beautiful Bill Act on July 4th — a sweeping federal budget law with serious consequences for families across the country, including right here in Alabama.

What you need to know about the Medicaid cuts

We want to be clear: We do not expect anyone in Alabama to be immediately kicked off their Medicaid health coverage because of this law. However, the long-term consequences are serious and far-reaching. This law makes it more difficult for people to access coverage, and it limits Alabama’s ability to strengthen our health care system in the future.

Here’s what we know so far:

  • Work reporting requirements and six-month eligibility redeterminations target adults covered through Medicaid expansion. Since Alabama hasn’t expanded Medicaid, these provisions are unlikely to affect us directly at this time.

  • The law eliminates key financial incentives created to encourage Alabama and other states to expand Medicaid. We no longer will be eligible for $619 million in additional funding to expand Medicaid in the future, which would have helped pay for the startup costs of Medicaid expansion. 

  • The law also includes restrictions on provider taxes — a key tool Alabama uses to help fund its share of Medicaid. We believe the most harmful restrictions would only apply if Alabama chooses to expand Medicaid in the future. This provision will make it more difficult for Alabama to consider expansion going forward, and the cap on provider taxes for Alabama will put a long-term limit on how our state finances Medicaid as health care costs rise.

What’s changing on Healthcare.gov

The law also failed to renew enhanced subsidies that have made Marketplace plans under the Affordable Care Act (ACA) more affordable since 2021. These subsidies have helped thousands of Alabamians lower their monthly premiums — and thanks in part to this support, the size of Alabama’s coverage gap shrank significantly. Now, those enhanced subsidies are going away at the end of 2025.

Here’s what this means:

  • Monthly premiums will increase in 2026 for many people who buy insurance on Healthcare.gov. 

  • Fewer people will qualify for financial help, especially those with lower or fluctuating incomes. 

  • It will be harder to sign up and stay covered, with shorter enrollment periods and stricter paperwork rules.

These changes make health insurance less affordable and harder to access — especially in a state like Alabama, where many people already struggle to afford care.

What this means for providers and rural hospitals

The law includes a new Rural Health Transformation Program, which allocates $50 billion over five years for rural hospitals nationwide. Half ($25 billion) will be distributed by CMS “equally among all states with an approved application,” which appears to suggest that each state with an approved application would receive the same amount ($500 million) from this pool regardless of the size of its rural population, the number of rural hospitals or other providers in the state, the financial standing of its rural hospitals, or other factors.

Meanwhile, the broader impact of the big budget bill on our health care system is clear:

  • More uninsured patients will increase uncompensated care costs for providers. 

  • Hospitals and clinics will face more financial pressure — especially in rural areas. 

  • Patients may face reduced access, longer wait times and fewer services as a result.

WHAT YOU CAN DO NOW

  • Sign our petition to urge Congress to extend the enhanced Premium Tax Credits.

  • Tell Your Story — Lawmakers need to hear real stories from Alabamians about how health coverage — or the lack of it — affects our lives. 

  • Sign up for Cover Alabama action alerts - Together, we’re standing up for health care in Alabama. Join our alerts to stay informed and take action.