New Medicaid red tape and the loss of expanded Obamacare subsidies stand to hurt 93 million households
This post has been republished from Professor Patricia McCoy’s Substack. Her new book, “Sharing Risk: The Path to Economic Well-Being for All,” is available from The University of California Press.
In 2033, the Old-Age and Survivors Insurance In H.R. 1, passed on July 4, Congress saddled Medicaid participants with new red tape, while allowing expanded subsidies for Obamacare premiums to lapse at the end of this year. When those changes take effect, they will affect all Medicaid participants (71 million at last count) and 92% of Obamacare policyholders (another 22 million). Together, this is far more than half of the number of people who voted in the latest Presidential election and suggests that the Republican majority in Congress will alienate voters.
At long last, on July 4, the deed was done. That was when President Trump signed the budget reconciliation act (H.R. 1), more famously known as the “One Big Beautiful Bill Act.” With the stroke of a pen, the President, in league with Congress, slashed financial lifelines for economically struggling families to pay for big tax cuts for the rich.
The new law cuts all sorts of benefits to ordinary families, from SNAP food aid to Pell Grants and student loans. But one of the worst blows is to affordable health insurance. In the process, H.R. 1 will gut the remarkable progress that this country made in reducing the number of uninsured since the passage of the Affordable Care Act (ACA) in 2010.
When the ACA became law, 46.5 million people under age 65 (17.8%) were uninsured in the United States. Thirteen years later, by 2023, that number hit a record low of 25.3 million people (9.5%), thanks to some important Congressional reforms. Two of those reforms deserve special credit for the big increase in people on health insurance. First was the ACA’s rollout of Marketplace plans (also known as Obamacare), where people can buy individual health insurance policies with low, subsidized premiums. And the second was Medicaid expansion, which extended Medicaid health benefits to near-poor adults in the vast majority of states.
Tragically, Congress just tanked this landmark achievement. One way was by silently allowing large premium subsidies to lapse for 92% of Obamacare participants. In H.R. 1, Congress also made it harder to sign up for Obamacare coverage every year. Meanwhile, H.R. 1 requires Medicaid recipients to pony up documents proving that they are working every six months. But this is totally unnecessary, because almost every Medicaid participant who can work does work, according to the thinktank KFF. The real reason for concocting this paperwork requirement is to throw hard-working people off of Medicaid by drowning them in red tape.
Vicious Stereotypes
To justify their harsh treatment of blue-collar families, the Republican leadership in Congress trotted out tired, demeaning stereotypes about the supposedly lazy poor. Senator Jim Banksclaimed that “there are 5 million Americans who get Medicaid that are able-bodied, they sit at home, they don’t work, they’re not taking care of a sick kid or a sick mom, and they’re still on Medicaid. ” House Majority Leader Steve Scalisedoubled down on this theme: “the 35-year-old guy sitting at home playing video games in his mom’s basement, he’s going to have to go work . . .” Senate Majority Leader John Thune piled on, saying that “able-bodied, working-age adults . . . should not be relying on taxpayers for their health care unless they are doing their best to find and maintain a job or contribute to their communities.”
But according to Brookings, the 5 million number touted by Senator Banks and others was wildly inflated. In 2022, it found, only about 300,000 Medicaid recipients who could work 80 hours a month “did not work because they did not want to.” That was far less than 1% of all Medicaid recipients that year, and just a drop in the bucket.
If Congress was really serious about stamping out Medicaid fraud, it would have addressed those 300,000 and stopped there. The problem is, that would not have generated nearly enough budget savings to pay for the large tax cuts for the wealthy that the Republicans pushed through in H.R. 1. So, they came up with the money by devising bigger Medicaid cuts to throw millions of working people off the rolls. As a result of those cuts, 11.8 million more people will lose their health insurance by 2034 under H.R. 1, according to the Congressional Budget Office (CBO).
Almost all of those 11.8 million people are already working or have physical activities limitations that impair work. Of those with jobs, most are low-wage workers for employers who do not provide health insurance or charge more for health coverage than they can pay. So, H.R. 1 denies these hard-working families health insurance that they otherwise could not afford. Then, to add insult to injury, Republicans tarred them with false accusations of laziness because they will have trouble meeting bureaucratic requirements to “prove” that they are working. That disrespect will not go unnoticed.
A Dangerous Game
In throwing so many working families off of Medicaid—and insulting them in the process—the Republican majority played a dangerous game. Demonizing public benefits recipients assumes that the number of recipients is small, compared to the number of people who are not eligible for those benefits. But the Republicans ignored two things that upset that calculus.
First, the congressional majority disregarded the fact that chronic financial distress is no longer limited to the poor. Instead, economic insecurity has spread up the income ladder, affecting fully half of U.S. households today. As I show in my book Sharing Risk: The Path to Economic Well-Being for All, one out of every two U.S. households lacks a living income. Lots of them exceed the federal poverty line, but they still do not have enough income to meet their basic needs.
Second, and in response, prior Administrations have expanded public benefits programs to large swaths of families who are above the federal poverty line. In some cases, those benefits now go to the poor and near-poor (i.e., people who are not technically poor but still struggle to make ends meet). In other cases, benefits go to everyone or nearly everyone except the rich. As a result, millions more people depend on these benefits than in the past and are invested in their continuation.
Two examples stand out. Before the ACA’s passage, for instance, Medicaid was mostly limited to the so-called “deserving” poor, consisting of children and pregnant women under the federal poverty line, plus impoverished Supplemental Security Income recipients who were disabled or over age 65. In the ACA, Congress expanded Medicaid eligibility above the federal poverty line to nearly everyone making up to 138% of the poverty level. (In 2025, that came to $44,367 for a family of four). By 2024, expanded Medicaid was available in 40 states plus the District of Columbia. In those states, Medicaid expansion provides health coverage to millions of parents and childless adults who make more than the federal poverty line and who would not have qualified for traditional Medicaid before even if they were poor.
The second example consists of subsidies for Obamacare premiums, which extend even further up the income ladder. In the ACA, Congress approved subsidies (called “premium tax credits”) to help reduce people’s premiums for Marketplace policies. During the Covid-19 pandemic in 2021 and again in 2022, Congress increased those subsidies through 2025. The amount of the subsidies varies according to a sliding scale by income. This year, for instance, a family of 4 making up to $48,225 a year pays as little as $0 in Obamacare premiums. Above that level, families make a contribution toward their premiums, which goes up with their income and tops out at 8.5% of income for a family of 4 making above $128,600 a year.
So many people qualify for these premium subsidies that 92% of Obamacare policyholdersnow receive them. That adds up to more than 22 million people whose Obamacare premiums will shoot up overnight once those subsidies expire on December 31. When that happens, their net premiums will jump by 75% on average. A good number of those people will cancel coverage because they no longer can afford it. In fact, CBO estimated that not renewing the expanded premium subsidies would cause 4.2 million Obamacare participants to become uninsured by 2034. That’s on top of the 11.8 million forecast to lose Medicaid that same year.
Alienating Voters
In contrast with Obamacare and Medicaid, Republicans know there are other benefits programs that they dare not touch. Social Security and Medicare are at the top of the list. In part, it’s because those benefits are so universal in nature. In part, it’s because people depend on them heavily. And in part, it’s because families believe they were promised those benefits.
The question is, did Congress misgauge badly by treating Medicaid and Obamacare so differently? Judging from their vicious rhetoric condemning Medicaid participants as 35-year-old guys playing video games in their mothers’ basements, the Republican leadership in Congress views that group as 5 million at best in size, too small to sway elections. But thanks to Medicaid expansion, more than 71 million people were enrolled in Medicaid in March 2025. They will all have to comply with the new paperwork requirements or risk losing Medicaid. Meanwhile, 22 million more people will see their Obamacare premiums jump January 1.
Add those numbers together and eventually a lot of voters—an estimated 93 million—could feel betrayed about their health benefits. That’s way more than half of the 154 million people who votedin the 2024 presidential election. These people will either endure needless red tape, with the possible loss of Medicaid, or their Obamacare premiums will skyrocket. And that’s apart from any extra inflation resulting from the Administration’s tariff war.
These numbers drive home the fact that the Republicans are playing with fire. Just as inflation gave their party control in 2024, inflation could usher them out of office, at least eventually. I say “eventually,” because the Republicans realize more than they let on. Cleverly, they provided in H.R. 1 that the new Medicaid work verification requirements will not take effect until December 31, 2026, which is after the 2026 midterm elections. But when those requirements do take hold, residents in some states will be hammered so hard that some Republican Senators actually protested the Medicaid cuts. They included Senators Josh Hawley of Missouri, Lisa Murkowskiof Alaska, Thom Tillis of North Carolina, and Susan Collins of Maine.
At the end of the day, of the four, only Tillis and Collins actually had the courage to vote against H.R. 1 (with Tillis further announcing that he would not run again for the Senate). Although Republicans inserted the December 31, 2026effective date to delay the inevitable, already the word is out that H.R. 1 will suck dollars away from working families and hand them to the rich. CBO estimated, in fact, that H.R. 1 would cause households in the bottom tenth by income to lose $1,600 a year on average (in part by losing Medicaid) while enriching the top 10% by an average $12,000 a year. Ka-ching! Meanwhile, 22 million people will get sticker shock on their Obamacare premiums this January 1.
Working families are not stupid, and they will notice these cuts when they kick in. As Josh Hawley said before he flipped his vote, it was “politically suicidal” not “to aid . . . working families, to make their health care better and more affordable.” I couldn’t have put it better.
This post has been republished from Professor Patricia McCoy’s Substack. Her new book, “Sharing Risk: The Path to Economic Well-Being for All,” is available from The University of California Press.
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