Cut by Cut: What the ‘Dissecting the Deepest Cuts’ Series Reveals About H.R. 1

Consumer advocates and Families USA forewarned that when congressional Republicans chose to take a sledgehammer to our nation’s health care by passing H.R. 1 and cutting Medicaid by more than $900 billion (the deepest in the program’s 60-year history), it would cause incredible harm to America’s families and communities. Republicans chose to enact this deeply destructive legislation anyway, and so, Families USA began documenting the damage — to hold leaders accountable, and to prevent further damage by keeping the spotlight on the deepest wounds. In the wake of the bill’s passage, we published a series of deep-dive assessments of its most damaging provisions under the banner “Dissecting the Deepest Cuts.” This post traces common threads across that series, highlighting what advocates can do as we approach a new year and a new Congress.

The big picture is this: H.R. 1’s provisions and the Centers for Medicare & Medicaid Services (CMS) implementation choices add up to a coordinated dismantling of the Medicaid program, including its eligibility systems, payment structures and financing mechanisms, with disastrous consequences for families and the whole health care system.

Why People Will Lose Coverage

Ringing in the new year will also usher in two major enrollment hurdles in Medicaid. Starting January 1, 2027, adults covered through Medicaid expansion must 1) prove 80 hours per month of work, school, or other community engagement activity, or qualify for an exemption; and 2) renew eligibility at least every six months instead of once a year. CMS piled on by issuing rules that, starting in 2028, will make it more difficult for people with serious or complex health conditions to obtain an exemption and significantly limit adults’ ability to self-attest to their work or health status. Researchers originally estimated six-month Medicaid renewals and mandatory work reporting compliance would cause 4.9 to 10.1 million eligible people to lose Medicaid access by 2028. CMS’ restrictive medical frailty and self-attestation rules could kick at least 1.8 million more people off coverage each year.

Advocates have long understood that work reporting requirements are a solution in search of a problem. By turning Medicaid eligibility into a paperwork gauntlet of work reporting compliance and twice-yearly renewals, and making the medical frailty exemption a documentation contest, these rules are designed not to protect eligibility but to wear people down until they lose it.

New conditions of eligibility are stacked on top of the improper denials and disenrollments states already produce, making what can already be a daunting process even harder in the future. Paperwork burdens not only push people off coverage but make it harder to enroll in the first place. That’s why people depend on access to retroactive Medicaid to cover medical expenses that happen in the weeks before a Medicaid application is fully processed. But H.R. 1 also reduces access to this critical protection in 2027, meaning people who struggle through application hurdles are at greater risk of medical debt.

On top of these enrollment hurdles, on October 1, 2028, new mandatory cost-sharing requirements for adults who are eligible for Medicaid through the ACA expansion will sharply raise out-of-pocket costs for those who do retain coverage. Even copays as small as $1 to $5 often lead low-income individuals to delay or forgo care, including the preventive and chronic care services that keep them healthy and out of the hospital. Essentially, cost sharing is a tax on health care access, with the sickest people bearing the greatest cost burden.

Sending State Budgets Into Crisis Mode

Not only do these changes make it harder for eligible people to get and keep coverage, they create significant burdens for states that must establish new systems at unreasonable speed and to great expense. By the time it released its more restrictive and complex implementing rules, CMS left states with only six months to make critical system adjustments, giving them minimal federal support to launch new eligibility systems responsible for the health coverage of millions. That work requires millions in state funds for new IT and enrollment systems and the hiring and training of new staff to verify eligibility and compliance. State costs will significantly outspend the $200 million provided in H.R. 1 to support this effort.

At the same time, H.R. 1 significantly narrows states’ ability to raise their share of Medicaid revenue by capping and phasing down the use of provider taxes, an important source of funding for states that supports about 18% of Medicaid costs this year. States losing this funding source will have to consider drastic measures to close the resulting gaps, including cutting critical health services or further removing people from coverage altogether.

Making matters worse, the money states lose through provider taxes is also money they use to pay doctors and hospitals — and H.R. 1 caps those payments too. State directed payments (SDPs) were capped at Medicare rates for hospitals and nursing facilities, a $149 billion federal cut. CMS has proposed going even further than the bill by extending that cap to all providers in its proposed rule, which would eliminate more than $780 billion and cut provider pay by more than half by 2035. While states do still have some choices in how to absorb this change, even in the best-case scenario they are only expected to make up half of lost provider tax revenue.

But implementing work requirements means states will need to rely heavily on health care providers to document both a patient’s condition and their capacity to work. Whether the health care system has the capacity to do this for millions of Americans is a major question, and already low-provider reimbursement may mean it is not feasible for doctors to document medical frailty if they are not paid for the additional time it takes to conduct medical frailty assessments.

The result is a double-sided squeeze: States will have less money to run their Medicaid programs while being asked to do far more, and they’ll depend on providers more than ever just as those providers are paid less.

The Harm Is in How it All Compounds

We dissected the deepest cuts in this series for a simple reason: no one explainer could capture the full harm, because that harm lies in how each new burden compounds the others. New copays of up to $35 per service could deter people with chronic conditions from seeking the recurring care they need, or from documenting medical frailty that would exempt them from work reporting requirements. As payment cuts push providers out of Medicaid, fewer patients will be able to get that documentation at all.

Cuts to provider taxes and SDPs arrive on the scene at the same moment states must absorb the administrative costs of implementing work reporting requirements and six-month redeterminations. Anticipated budget shortfalls mean states are already making tough decisions; California reinstated asset limits for older adults and people with disabilities (i.e. how much someone can have in savings or property and still qualify for Medicaid) and Indiana proposed enrollment caps.

What is left is a vicious cycle: less money for states means fewer providers and tighter eligibility, fewer providers and new copays mean fewer people able to prove they qualify. Every lost enrollee adds to the strain of individuals and families trying to stay healthy in a health care system that has proved time and time again it does not work for them. The lawmakers who penned these cuts and shepherded them into law chose that outcome.

What Advocates Can Do

Since the passage of H.R. 1, advocates have been on high alert to document how changes are restricting access to care and worsening the health care affordability crisis. Now is the time to hold Congress accountable for their policy decisions, and to shine a light on the millions of people whose health is at stake. Each fact sheet in the series has recommendations tailored to one main issue so advocates can focus on what matters most to their specific audience. It’s important to remember that estimated coverage losses and health consequences are not set in stone but depend on how federal and state governments take advantage of the flexibilities in the statute. Advocates can use these explainers to engage policymakers to mitigate harm by:

Even within the narrow environment provided by H.R. 1 and further exacerbated by CMS, states have choices: the maximum retroactive coverage federal law permits, the minimum cost sharing, and mitigating work reporting requirement policies to soften the blow (self-attestation and hardship exemptions, a one-month lookback, and compliance checks only at renewal.)

1. Minimize paperwork that leads to eligible people losing coverage.

Reducing administrative hurdles, streamlining processes, and educating enrollees can cut through red tape that pushes millions of eligible people out of Medicaid.

2. Keep providers in Medicaid.

States can ease the administrative burdens and restrictive managed care policies that drive providers away and leave patients with less access to care and longer waits even when they do find a doctor.

3. Document the harm and make sure decision makers see it.

Collect stories and data and push states to publicly report coverage losses, administrative costs and changes in use of care. Contact your representatives to show them their constituents care about these issues, and urge them to hold hearings and provide proper oversight to the people who elected them.
 

Appendix: What’s Still to Come

As of October 21, 2026