Twenty million Medicaid enrollees face new work requirements starting January 1

Urban Institute projects $278 billion in uncompensated hospital care

On January 1, 2027, the most controversial elements of HR 1—the healthcare reform law President Donald Trump signed on July 4, 2025—will take effect, reshaping health coverage for tens of millions of Americans. The bill, also known as the “One Big Beautiful Bill Act,” cut roughly $1 trillion in federal spending from the healthcare industry—the biggest clawback of federal health spending ever, the Guardian reported.

To put that cut in context, Medicaid spent $937 billion in 2024, according to the Centers for Medicare and Medicaid Services, and nearly 40 percent of U.S. health spending in 2024 came from just two programs, Medicare and Medicaid. Paired with Republicans’ refusal to extend subsidies for plans in Obamacare marketplaces, the cuts are expected to result in about 17 million newly uninsured individuals through 2034.

More than 82 million Americans—about 23 percent of the entire U.S. population—currently rely on Medicaid for health insurance, according to the Kaiser Family Foundation (KFF), a health policy research organization. The new work requirements will apply only to people in the 44 states that “expanded” Medicaid, and only to those in the “expansion population”—about 20 million people, according to KFF. To keep their coverage, beneficiaries must demonstrate at least 80 hours per month of work, schooling, or volunteering—or monthly earnings of at least $580. They will also need to re-certify their eligibility every six months, instead of annually. In short, Medicaid will be harder to get and harder to keep.

The law’s cuts target the population that gained coverage under the 2010 Affordable Care Act (ACA), which required states to expand Medicaid to cover people earning up to 138 percent of the federal poverty level—about $16,000 for a single person. Republicans opposed the expansion through a Supreme Court case and dozens of Obamacare repeal votes, but over time 44 states opted in, drawn by the promise that the federal government would cover the overwhelming majority of the cost of insuring their poorest residents.

KFF has developed hypothetical scenarios illustrating how the new requirements could trip up otherwise qualified people. Consider Jane, who has a depressive disorder that does not qualify for an exemption from work requirements. In May, she experiences a depressive episode that makes it impossible for her to work 80 hours. In June, when her work requirement verification is due, her hours mean she is no longer eligible for Medicaid, and she becomes uninsured. Without insurance, she can no longer get her medication, which results in another depressive episode. Or consider John, who loses his job and is out of work in April and May. He gets a job in June, but his state requires people to satisfy three months of work before they are eligible for Medicaid. John does not satisfy this requirement, and is denied Medicaid. September 2026 will be the first month in a “look-back period” in some states.

Other HR 1 changes are also taking effect. Medicaid coverage will be winnowed down from three months of retroactive coverage to two months—or one, depending on the applicant and the state. HR 1 has already made some legal immigrants ineligible for Medicaid, and the law will cut accounting mechanisms that benefit children’s hospitals in the future.

Dr. Luke Messac, an emergency physician at Mass General Brigham and a historian who has written about medical debt, said the new requirements will accelerate the medical-debt burden. “The insistence on these Medicaid work requirements, which is really just a way to decrease the rolls—that was the intention—is really going to increase the number of people with medical debt and the amount of medical debt in the system, which is bad not just for patients but for providers,” Messac said.

Messac pointed to the prior trajectory of medical debt when eligibility was expanded. “There couldn’t be a clearer link,” he said. “We saw that when Medicaid eligibility was expanded the flow of medical debt rapidly declined and sustained that decline. The easiest way to reverse that trend—to make medical debt more of a problem—is to yank people off Medicaid and leave them uninsured and unprotected.”

The financial consequences for hospitals are projected to be substantial. The Urban Institute estimates HR 1 will cause $278 billion in “uncompensated care”—health industry parlance for unpaid bills—by 2034. The figure places hospitals in a bind, many of which operate on the thinnest imaginable margins.

Although rural hospitals were a particular concern during the law’s passage—a closure can leave patients traveling hours for even routine care—new research shows both rural and urban hospitals are now closing at the same rate. “There is a consensus that, particularly in rural healthcare, there is this deepening crisis,” said Dr. John Osborne, a former doctor at the Veterans Affairs administration in Washington state and one of the organizers of a grassroots declaration of a rural health crisis in October. “I would say what’s happening in rural America is a harbinger of things to come throughout healthcare in the US.”

“Loss of access for acute care in-patient hospitals is not just a rural problem—it’s a national problem,” said Dr. Thomas Tsai, a health policy researcher and surgeon at Brigham and Women’s hospital in Massachusetts and an author of the research.

Dr. John McCarthy, assistant dean for rural programs at the University of Washington School of Medicine, predicted long waits at the remaining facilities. “The impact will be profound,” McCarthy said. “Unless you have something that’s obviously really impressive, you have a five-hour wait—if you’re lucky.”

Federal labor data show 80.7 percent of Americans aged 25 to 54 were employed as of October, leaving nearly one in five working-age adults outside the labor force even before any new work requirement takes effect—a baseline that frames the challenge facing the roughly 20 million Medicaid expansion enrollees who must now document qualifying activities each month.

Other provisions of HR 1 will reach additional groups. Advocates for the elderly warn that reduced retroactive coverage for nursing care could harm people who are too sick to apply promptly or who mistakenly believe Medicare covers long-term care. The American Academy of Pediatrics president, Dr. Andrew Racine, raised concerns about spillover effects on children.

“The costs to the family—and society as a whole—cannot be overstated,” Racine said. “When parents lose their health insurance, children may lose their coverage, too, even if they remain eligible.”