The One Big Beautiful Bill Act
What is the One Big Beautiful Bill Act (OBBBA) that just passed?
In early July, Congress passed the One Big Beautiful Bill Act or OBBBA. The legislation, now signed into law, represents the largest cut to healthcare in U.S. history. Analysts estimate that the bill and related provisions will terminate health coverage for over 15 million people. Specifically, OBBBA cuts Medicaid by nearly $1 trillion, the healthcare program for low-income individuals and families; it makes changes to the Affordable Care Act (ACA) marketplaces that restrict enrollment; and it reduces funding for hospitals which threatens their ability to stay open and provide a wide range of care. The bill does not extend funding that helped individuals afford ACA plans, contributing to the increase in uninsured.
How does OBBBA change the U.S. healthcare landscape?
OBBBA primarily impacts healthcare in three major ways:
- Deep Medicaid Cuts: The bill cuts $1 trillion in funding from the Medicaid program over the next decade. Medicaid is a vital government-run health coverage program, jointly funded by federal and state governments, that helps low-income individuals, families, children, pregnant women, the elderly, and people with disabilities pay for healthcare costs. It covers a wide range of services, from childbirth to end-of-life care. The Congressional Budget Office (CBO) estimates that more than 6 million people will lose Medicaid coverage due to new requirements, such as monthly work or community service reporting, and frequent eligibility redeterminations (at least twice a year), which create significant administrative burdens for states and patients.
- Limits Health Insurance Enrollment (ACA Marketplaces): OBBBA adds new requirements to Affordable Care Act (ACA) plans. These changes will make it harder for people to enroll and afford coverage by:
- Shortening the open enrollment period.
- Limiting special enrollment periods (SEPs) for some individuals.
- Ending auto-enrollment, which previously used tax information to renew plans.
- Adding new annual verification requirements.
- Requiring people to pay upfront for plans until verification is complete, as pre-approval for financial help is ended.
- Revising how ACA plan subsidies are calculated, which will lead to increased costs for individuals.
- Barring certain legally residing immigrant groups from accessing financial help and individuals with Deferred Action for Childhood Arrivals (DACA) status from purchasing ACA plans.
- Importantly, the bill does not extend enhanced tax credits that have enabled millions of low and middle-income individuals and families to afford ACA plans, meaning significant cost increases for many. The CBO projects over 4 million people will lose coverage if these enhanced tax credits end.
- Creates Financial Instability for Hospitals: The bill modifies how states can finance their Medicaid programs, restricting methods states use to raise matching funds and enhance reimbursement for targeted Medicaid services. This will increase the financial burden on state governments and lead to reduced reimbursement rates for hospitals, making many financially unsustainable. This is particularly concerning for rural hospitals, which often operate on thin margins and rely heavily on Medicaid reimbursement. Researchers warn that 4 in 10 rural hospitals could close despite a small “Rural Health Transformation Fund” included in the bill. OBBBA also significantly limits retroactive Medicaid coverage (the ability to have medical expenses covered if applying for Medicaid after receiving care), leading to more uncompensated care for hospitals and potentially increasing overall medical debt.
What does OBBBA mean for medical debt?
OBBBA is expected to significantly increase medical debt nationwide. Experts anticipate a 15 percent increase in medical debt, totaling around $50 billion. Beyond the financial strain, studies suggest that over 50,000 people could die annually due to this new law. With almost 15 million people projected to lose their health insurance, the law will also contribute to hospital closures, higher uninsured rates, limited access to doctors, and increased health insurance premiums and out-of-pocket costs for everyone. While many provisions are delayed until after the 2026 election, the immediate impact will be felt in January with a significant increase in ACA plan costs for enrollees, who previously saved an average of $800 annually due to enhanced tax credits.
What is Undue Medical Debt doing to address these challenges?
Undue Medical Debt remains steadfast in our mission to alleviate the burden of medical debt, especially as OBBBA threatens to remove health insurance protection for millions. More than ever, we are committed to:
- Finding and abolishing medical debt by matching donor-raised funds with medical debt acquired from hospitals, debt buyers, and other providers.
- Sharing our expertise and data analysis with partners to better understand who is accumulating medical debt and how to improve healthcare workflows and policies to achieve better patient outcomes.
- Elevating constituent stories to highlight the widespread impact of medical debt and working with any interested partner – from community groups to policymakers – to develop systemic solutions.
- Continuing to work with local and state governments and encouraging policymakers to enact robust medical debt protections for families in their laws.
The road ahead will be challenging, but we believe in the power of local action and collaboration. We are dedicated to working closely with our partners to leverage relief efforts, data analysis, and personal stories to secure better outcomes for patients. Join us in this critical work.
How does OBBBA impact Undue Medical Debt?
Undue Medical Debt is committed to two things: 1) abolishing medical debt and providing people relief in the moment; and 2) ending medical debt by working with stakeholders to improve health coverage, simplify medical billing and end punitive debt practices.
While imperfect, affordable and comprehensive health insurance is the best way we can prevent medical debt from occurring. OBBBA makes significant changes to health insurance access that will affect everyone. These changes will make health insurance more expensive, and many people will go without it. People will be more likely to accrue medical debt and delay needed healthcare if they do not have access to comprehensive health insurance. We understand that the healthcare system overall is complex and does not work for everyone. However, without a thoughtful redesign, these changes simply leave people without any options.
The Federal Credit Reporting Ban
What’s going on with the CFPB and the federal medical debt rule?
In January 2025, the CFPB finalized a rule that would ban creditors and consumer reporting agencies (Transunion, Experian, Equifax, etc.) from including medical debt information on credit reports—a welcome change widely supported by the public. Upon release of the rule, credit industry and collections groups immediately filed a lawsuit, and the court put the rule on hold. After much back and forth in the court system, the rule was ultimately vacated, meaning it will not be implemented, and medical debt can continue to impact people’s credit.
What is the CFPB?
The CFPB (or Consumer Financial Protection Bureau) is a federal agency that was created in 2008 in response to the financial crisis. Its stated goal is to “provide a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace.”
They collect and respond to consumer complaints, issue rules that clarify existing laws, and monitor financial markets for new risks to you and me. As of December 2024, the CFPB has recovered over $21 billion in relief for consumers. In recent months, the agency has been downsized significantly from 1,700 employees to under 200.
What happens now and why does Undue care about credit reporting?
Medical debt is different from other types of consumer debt—no one chooses to get sick or hurt, and no one should be penalized for seeking the healthcare they need. A nationwide medical debt rule would have acknowledged this reality and helped an estimated 15 million people get their financial lives back on track. While the judge’s ruling vacates the federal credit reporting rule, states can (and are) taking action. More than 15 states currently ban healthcare providers from sending medical debt information to credit reporting agencies, and we hope to see that number continue to grow. Check to see if your state is one of the 15 and reach out to your legislator to let them know this is an important issue to you!