What Trump's 'One Big Beautiful Bill' Means for Rural Health Clinics

Sarah Hohman, Director of Government Affairs, NARHC

On July 4, 2025, President Trump signed into law an 870-page bill that advances the majority of his legislative agenda. The House and Senate have been predominantly focused on this legislation nearly the entirety of this Congress in order to meet the Trump-set Independence Day deadline. With 218-214 and 51-50 votes in the House and Senate respectively, the major reforms ultimately won the support of nearly all Republican members, from moderates to fiscal hawks.

The legislation contains a multitude of healthcare, tax, and education reforms, many of which are outlined below. Republicans in Congress and President Trump will celebrate this legislation for its extension of tax cuts and its massive increase in spending for immigration enforcement. They have categorized Medicaid and Affordable Care Act changes as simply a crackdown on waste, fraud, and abuse.

These policy changes, however, are estimated to result in a loss of health insurance coverage for nearly 12 million Americans by 2034.

I want to reiterate that, while many healthcare reforms in this legislation are not the outcome our advocacy had fought for, the RHC community’s relentless advocacy continues to be paramount. These provisions will roll out over the next several years, and we will continue to monitor the bill’s impacts, communicate those to policymakers, and continue our efforts to maintain and improve access to care across all rural communities.

With any questions on these provisions, or to get involved in NARHC Advocacy, please email Sarah.Hohman@narhc.org.

Healthcare Policies

Medicaid Work / Community Engagement Requirements
This legislation requires states to implement work / community engagement requirements beginning in 2027. Individuals 19-64 will be required to work or participate in community service at least 80 hours per month. Exemptions are available for those that care for an individual with a disability or a child under 14, veterans, individuals with disabilities, inmates, pregnant women, and those enrolled in school at least part-time.

Critics of work requirements call them ‘paperwork’ requirements and raise concerns that by increasing the red tape surrounding an already complex eligibility and enrollment process, that individuals who should qualify will unnecessarily lose coverage as they navigate the process. These coverage losses ultimately generate the ‘savings’ in this legislation used to pay for continued tax cuts and other reforms. As states devote more resources to administering Medicaid, they may be forced to limit eligibility, reduce services, etc.

Previous attempts by individual states to establish work requirements as a condition of coverage were challenging to operationalize, and while they didn’t increase employment, they did result in coverage losses and delays in care. Current estimates demonstrate that 92% of Medicaid adults are already working or have an exemption.

While the legislation is explicit in requiring that states provide notice of the work requirements to Medicaid beneficiaries, including how to be compliant, how to report changes, etc., much of the detail falls to states and their bandwidth to implement this properly. By June 2026, HHS will be required to issue an interim final rule implementing the work requirements section of this legislation.

States can apply for a ‘good faith effort determination’ which would provide a delay of work requirement implementation until up to January 2029. States would need to provide quarterly progress reports on their efforts to reach work requirement compliance.

Finally, in order to implement work requirements and eligibility determinations (explained below), HHS will award grants to each state. More information on this will likely come through rulemaking.

Medicaid Provider Taxes
All states but Alaska use a tax levied on providers to help finance their state’s share of Medicaid. This legislation lowers the maximum provider tax rate for Medicaid-expansion states from 6% to 3.5%, incrementally each year from 2028-2031. Non-expansion states will be frozen at their current provider tax rate.

CMS will receive $20 million to implement this provision.

While they have a few years to prepare, many states have expressed that they will be unable to make up for the difference in revenues previously secured through provider taxes. This may result in limiting optional Medicaid services or eligibility, reducing provider reimbursement rates, or raising other taxes.

Medicaid Eligibility Checks
Currently, Medicaid eligibility checks at the state level occur annually. This legislation increases these to at least every six months, beginning in 2027.

Coverage losses resulting from this administrative requirement generates significant ‘savings.’ CMS will receive $75 million to implement this provision.

Physician Fee Schedule Payments
The legislation includes a one-time bump to the Medicare Physician Fee Schedule payments of 2.5% in 2026. Longer term reform to PFS payments previously considered in the reconciliation process and heavily advocated for by providers paid predominantly on PFS did not make it into the final package.

Additional Impacts for Medicaid Expansion States
Cost Sharing – States that have expanded Medicaid coverage to those earning between 100-138% of the federal poverty level will now be required to collect up to $35 per service of cost sharing for many services provided, beginning October 2028. This will likely be burdensome for providers who previously may not have known what patients were covered under Medicaid expansion versus non-expansion.

Cost sharing is not to be imposed on primary care, mental health, or substance use disorder services, or services provided by an RHC, FQHC, or CCBHC. Previous versions of the legislation had not explicitly exempted RHC services, which could have resulted in additional provider and patient burden. NARHC successfully advocated for this important clarity that was included in the final legislation.

This legislation also ends a higher federal match (90%) that is intended to incentivize new Medicaid expansion states.

Affordable Care Act Reforms
The legislation reforms various aspects of Affordable Care Act (ACA) marketplace coverage as well. Changes include a shorter (by one month) annual open enrollment period, an elimination of the low-income special enrollment period and automatic enrollment (requiring re-enrollment manually), and other technical changes.

These changes and administrative hurdles are expected to result in a loss of coverage for over 3 million more beneficiaries.

Further, Congress did not use this legislative opportunity to extend the ACA premium assistance tax credit policy scheduled to expire on December 31, 2025. The ACA caps income-based eligibility for premium assistance at 400% of the federal poverty level (FPL). Since the COVID-19 pandemic, Congress has temporarily eliminated this 400% of FPL cap and also changed the formula to provide more generous subsidy amounts.

While they could still extend these fully or partially before the end of the year, they did not choose to do so in this reconciliation package. The Congressional Budget Office (CBO) has estimated that an expiration of these subsidies will result in an additional 4.2 million Americans becoming uninsured by 2034.

Health Care for Immigrants
Undocumented immigrants are not eligible to enroll in Medicaid, CHIP, Medicare, or ACA marketplace coverage. Legal or lawfully present immigrants may qualify with certain restrictions. Green card holders must wait five years after obtaining their status to enroll, and during that period may purchase and receive subsidies for ACA coverage.

Some states offer state-funded health insurance coverage for immigrants, often for children and pregnant women.

The ‘One Big Beautiful Bill’ reduces the federal match rate for the expansion population if a state provides health care services to non-citizens. Additionally, it will exclude lawfully present immigrants from the ACA marketplaces beginning in 2026. CBO has estimated that 1.3 million legal immigrants will become uninsured due to these reforms, and this number may increase as states further limit access to immigrants amongst budget constraints and fiscal pressure from less federal dollars.

Rural Health Transformation Program

In response to advocacy around the negative impacts of the bill on rural and safety-net providers, Congress established a $50 billion fund entitled the “Rural Health Transformation Program.”

CMS will administer the fund, established at $10 billion per year from 2026 through 2030. States will be required to submit an application by December 31, 2025, to be eligible, which is to contain a 'detailed rural health transformation plan.' This plan is expected to include ways that funding will be used to improve access, outcomes, partnerships, technology utilization, economic opportunity, etc.

50% of appropriated funds will be equally distributed amongst all states with an approved application, while the remaining 50% will be distributed at the CMS Administrator's discretion, amongst at least 25% of the states with an approved application. The Administrator is to consider the percentage of the state’s population in a rural census tract, the proportion of rural facilities in the state relative to the number of facilities across the country, and the "situation of hospitals in the State."

While the program does not require that funding go directly to the following facilities, as the Administrator evaluates the ‘proportion of rural facilities in the state,’ they are to consider: Critical access, sole-community, Medicare-dependent, small rural, low-volume, rural emergency, and other hospitals in rural areas, as well as Rural Health Clinics, Federally-Qualified Health Centers, community-mental health centers, health centers receiving section 330 grants, and opioid treatment programs and certified community behavioral health clinics in rural census tracts.

While this is the type of investment in rural communities that we often advocate for, it will not make up for the revenue losses expected to result from the significant coverage losses due to the bill’s other provisions.

Further, as each state will focus on different priorities within their ‘transformation plan,’ it is unclear if facilities themselves will even see a significant portion, or even a portion of the funding. We will continue to encourage state officials to consult with all different facilities and State Offices of Rural Health as they develop this plan.

Medicare Sequestration
The legislation was originally scored by the CBO as adding over $3 trillion to the federal deficit by 2034. However, in a last-minute budgetary change, Senate Republicans opted to use “current policy baseline” to score the tax cuts, as opposed to scoring based on the assumption that they would otherwise expire.

This choice resulted in an updated score of a net reduction in spending, $400 billion over ten years.

The Pay-As-You-Go (PAYGO) Act – which would result in a Medicare sequestration of 4% -- is automatically triggered when legislation increases the deficit substantially. Under the initial score, this would have been triggered, if not otherwise waived by Congress. It is currently unclear whether CBO will follow the initial or “current policy baseline” score. NARHC will continue to track this and update the RHC community.

Higher Education Policies

Taxing College and University Endowments
The bill includes a significant tax increase for college and university endowments, which are currently taxed at 1.4%. The bill will increase this tax rate on a sliding scale based on endowment size up to a maximum of 8% for endowments valued over $2 billion.

Student Loans

• Caps total federal financial assistance for higher education at the median cost based on the national costs for similar programs.
• Ends the Grad PLUS student loan program on July 1, 2026, but includes a three-year grace period for students already in the program.
• Sets a new maximum annual loan limit for unsubsidized loans disbursed on or after July 1, 2026, to the median cost of students’ program of study.
  • Changes aggregate limits for such loans to students for an undergraduate program ($50,000), graduate program ($100,000), and professional programs ($200,000).
  • Requires undergraduate students to exhaust their unsubsidized loans before parents can utilize Parent PLUS to cover their remaining cost of attendance.
  • Establishes an aggregate limit for Parent PLUS loans of $65,000 for parents per dependent child. The bill includes a three-year exception for students who were enrolled in a program of study as of June 30, 2026.
• Establishes new student loan repayment parameters for loans issued on or after July 1, 2026.
• Sets new income requirements for determining Pell Grant eligibility.
• Requires institutions to reimburse the federal government for a share of student loans based on metrics on how their graduates’ earnings compare to people without degrees.
• Bans new federal student loans from paying for graduate programs where the majority of former students earn less than the median bachelor’s degree recipient in the same field in the same state.

Experts have raised concerns about many of these provisions, primarily that they will reduce the number of potential students, particularly low and middle-income students, pursuing higher education, including graduate and medical education. Lower enrollment will likely result in an end to various programs. Further, as students face stricter repayment parameters, there is concern that they will be disincentivized to practice in primary care and in rural, medically underserved areas.

Other Policies

Supplemental Nutrition Assistance Program (SNAP)
The bill will require states to participate in cost sharing for SNAP benefits, beginning in 2028, at levels between 0-15%, dependent on their error rates (how accurately they determine eligibility for the program). This, coupled with changes to SNAP work requirements, will significantly reduce federal spending and is expected to increase rates of food insecurity and chronic disease as states struggle to make up the difference.

Artificial Intelligence
Previous iterations of the legislation contained a prohibition on states’ ability to regulate artificial intelligence for ten years. This was concerning for the healthcare provider industry, as many insurers use artificial intelligence for prior authorization and other coverage decisions. This provision was ultimately removed from the bill.

Messaging and Political Implications

It is clear from the statements released upon signing this bill into law just how differently the Republican and Democratic parties see this legislation.

“As I said on the House floor the other day, it takes a lot longer to build a lie than to tell the simple truth. Our Republicans are going to be out across the country telling the simple truth,” Speaker Johnson said. “And guess what? It will be demonstrated. Everyone will have more take home pay. They’ll have more jobs and opportunity. The economy will be doing better and we’ll be able to point to that as the obvious result of what we did.”

“This is the biggest debt increase in U.S. history. All so the ultra-rich and big corporations can cash in, while millions of Americans lose health care, food assistance, and jobs.” Senate Democratic Leader Chuck Schumer

This difference in messaging will be continued as the bill’s provisions go into effect, and as we rapidly approach the 2026 midterm elections, during which all 435 members of the House and 33 Senate seats will be on the ballot.

Conclusion

Ultimately, $1 trillion in cuts to healthcare programs so essential to the financial viability of healthcare facilities in rural communities coupled with the expected coverage losses of nearly 12 million individuals is deeply concerning. It is understandable to be overwhelmed by both the expected and unknown impacts.

It is also essential to understand the nuances of these policies and their timelines. We implore you to remain engaged in the advocacy process at the federal, state, and local levels as the provisions are implemented.

NARHC will continue to fight for the access to healthcare that rural communities deserve, and we thank you for continuing that fight alongside us!