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

While many Alabamians were preparing for the July 4 holiday, Congress passed the One Big Beautiful Bill Act — a sweeping federal budget law with serious consequences for families across the country, including right here in Alabama.

The Center on Budget and Policy Priorities put it plainly:

“House and Senate Republicans have now passed a bill that will raise families’ food and health care costs, increase poverty and hunger, take health coverage away from millions of people, and drive up deficits — all to give costly tax cuts to the wealthy and corporations.”

This law is a cruel tradeoff — and it hits hardest in places like Alabama, where many families are already stretched thin and our health care system is fragile.

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 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 from about 340,000 to 200,000 people. 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. But how that funding will be distributed is unclear, and the funding is unlikely to be enough to meet the growing financial needs of rural hospitals.

Meanwhile, the broader impact 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.

How Alabama Arise and Cover Alabama are taking action

Alabama Arise and the Cover Alabama team are taking numerous steps in response to the passage of this law. These actions include:

  • Analyzing the law’s long-term impact on Medicaid financing, ACA Marketplace access and Alabama’s health care infrastructure. 

  • Creating resources for partners, community organizations and the public to explain the changes and what they mean. 

  • Meeting with state and local leaders to discuss options and ensure they understand the financial and human stakes of these changes. 

  • Offering presentations and briefings across the state to help Alabamians prepare and respond.

Even in the face of harmful federal policy, our commitment to the people of Alabama is strong. We are working every day to protect access to care and make sure families have the information and support they need.

We will keep moving forward — and we’ll do it together..