The budget reconciliation bill signed into law in July 2025 contains a series of policy changes for Medicaid, the health insurance program for low-income individuals. The authors of this report combined publicly available data, published literature, state and federal agency reports, and other sources of information to build state-level estimates through 2034 of Medicaid budget impact and enrollment changes associated with the new law.

State-Level Impacts of Key Medicaid Provisions in the One Big Beautiful Bill Act

Preethi Rao, Lawrence Baker, Federico Girosi, Elaine Li, Rose Kerber, Christine Eibner

ResearchPublished Feb 26, 2026

Cover: State-Level Impacts of Key Medicaid Provisions in the One Big Beautiful Bill Act
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Includes Annex: Database of State Provider Taxes on Hospitals, Ambulance Services, and Managed Care Organizations

On July 4, 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (Public Law 119-21), a massive budget reconciliation package with implications for many sectors of the U.S. economy. The law contains a series of policy changes that aim to reduce federal spending and improve program integrity in Medicaid, the nation's joint state-funded and federally funded health program for people with low incomes and disabilities. Broadly, these Medicaid changes impose work requirements on non-disabled adults, increase the frequency and stringency of eligibility determinations and redeterminations, limit spending on immigrants, and tighten provisions that have historically enabled states to increase their federal funding. The authors of this report combined publicly available data, published literature, state and federal agency reports, and other sources of information and developed customized approaches to build state-level estimates through 2034 of Medicaid budget impact and enrollment changes associated with several key provisions of the law.

Key Findings

  • In total, state Medicaid budgets will be reduced by $665 billion over the 2025–2034 period. State general funds will be reduced by $86 billion.
  • Estimated federal savings amount to $714 billion.
  • Medicaid expansion states with substantial use of state-directed payments (SDPs) and provider taxes — Arizona, Iowa, and Nevada — stand to see reductions of more than 15 percent of their Medicaid budgets (a combined impact of reduced federal and state spending). California and New York similarly have substantial use of SDPs and provider taxes and see the largest dollar-value reductions to Medicaid budgets, on the order of $112 billion and $63 billion, respectively.
  • As a non-expansion state without substantial use of SDPs or provider taxes, Florida sees minimal budgetary impacts of the provisions studied (a <0.5-percent change to its Medicaid budget). Some expansion states, such as North Dakota and Nebraska, that similarly do not rely heavily on SDPs and provider taxes will also see minimal budgetary impacts of the provisions studied because expected gains from a rural health program in the law are likely to offset the majority of the losses from other provisions.
  • A few states, such as Wyoming and South Dakota, will see increases in Medicaid budgets; these states have small populations (and therefore smaller Medicaid budgets overall), so they stand to gain substantially in percentage terms from the rural health program and see little to no impact from other provisions.
  • Across the provisions examined, the authors estimate a joint impact of 7.6 million fewer Medicaid enrollees in 2034.

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Rao, Preethi, Lawrence Baker, Federico Girosi, Elaine Li, Rose Kerber, and Christine Eibner, State-Level Impacts of Key Medicaid Provisions in the One Big Beautiful Bill Act. Santa Monica, CA: RAND Corporation, 2026. https://www.rand.org/pubs/research_reports/RRA4098-1.html.
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This research was sponsored by Arnold Ventures and conducted in the Financing and Organization Program of RAND Health.

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