May 29, 2025
What You Need to Know: Last week, the U.S. House narrowly passed a sweeping bill that would slash Medicaid funding, roll back ACA tax credits, and impose new restrictions on student loans. CMA strongly opposes the health care cuts in this bill, warning of devastating consequences for California’s health care system.
In a razor-thin 215–214 vote, the U.S. House of Representatives last week passed HR 1, advancing President Trump’s flagship budget reconciliation package – dubbed by some the “Big Beautiful Bill.” All California Republicans supported the measure, while all California Democrats voted in opposition. The bill now moves to the Senate, where significant changes are expected.
The California Medical Association (CMA) remains strongly opposed to the bill and has mobilized against it, citing the dire threat it poses to health coverage for millions of Americans. CMA has submitted formal letters to both the California Congressional Delegation and the House Energy and Commerce Committee outlining the organization’s concerns.
“This bill is a cruel and unnecessary existential threat to the Medicaid program, one from which patients and our health care system may never recover,” said CMA President Shannon Udovic-Constant, M.D. “Its consequences will be especially severe in California’s rural communities.”
Key Provisions and Projected Impact
Massive Cuts to Medicaid
The Congressional Budget Office estimates the bill would slash $700 billion from Medicaid, stripping coverage from 7.6 million enrollees – including 3.4 million Californians. California’s state estimates forecast $30 billion in cuts to our state.
Major Medicaid changes include:
- Moratorium and freeze on new provider taxes, jeopardizing Medicaid funding structures in 49 states
- New restrictions on provider tax structures, potentially invalidating California’s Prop 35 MCO and hospital taxes
- Payment caps on public hospital support programs, especially affecting the UC system
- Reduction of federal matching funds for expansion populations, particularly impacting coverage for undocumented immigrants and recent legal residents
- Work requirements and bureaucratic hurdles expected to cause millions of eligible adults to lose coverage
- Cuts to Planned Parenthood Medicaid funding
- New asset tests for long-term care eligibility
- Repeal of recent Biden-era Medicaid access and oversight reforms, including streamlined eligibility.
Cuts to ACA Marketplace Support
- Enhanced premium tax credits would expire, impacting 5.1 million Americans, including 1.5 million Californians enrolled in Covered California.
- Cost-sharing reductions would be scaled back, increasing out-of-pocket costs for patients.
- Abortion coverage and gender-affirming care would be eliminated from ACA plans.
Physician Payment Reforms
While the bill incorporates a long-sought shift to Medical Economic Index (MEI)-based updates for Medicare physician payment, it fails to reverse the 2.8% payment cut that went into effect in January 2025, and fails to keep pace with inflation:
- 2026: 2.25% update (75% of MEI)
- 2027–2034: 0.25% annual increase (10% of MEI)
The bill also decreases support for physicians in Alternative Payment Models.
Student Loan Restrictions
HR 1 proposes sweeping changes to student loan policies for new borrowers after 2026:
- Borrowing caps of $50,000 (undergraduate) and $100,000 (graduate).
- Elimination of Grad PLUS loans.
- Removal of Public Service Loan Forgiveness eligibility for hours worked in non-profit hospitals during residency.
Next Steps
The bill now heads to the Senate, where the health care cuts face opposition from moderate senators. CMA continues to lobby aggressively against HR 1 and urges physicians to contact their U.S. senators to voice their concerns about its potential impact on Medicaid, public health access and the physician workforce. Contact your members of Congress today at PhysiciansForMedicaid.org.
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