From Policy to Practice: Helping Providers Adapt to the One Big Beautiful Bill Act and Future Policy Changes

July 21, 2025 | Issue Briefing

Kevin Sears
Chris Sukenik
Ewa Kisilewicz

The One Big Beautiful Bill (OBBB) Act will have far-reaching consequences for providers and payers alike. Navigating these challenges will require healthcare organizations to define actionable mitigation strategies and proactively monitor key policy areas.

This briefing:

• Summarizes key implications of OBBB and related policy developments for health systems and payers
• Outlines critical questions for health systems to consider when preparing to engage with payers
• Identifies near-term, no-regret actions health systems can take to strengthen system resilience as the regulatory landscape continues to evolve

Overview of Regulatory Changes in U.S. Healthcare

New legislation presents major disruptions for U.S. healthcare due to insurance coverage losses, reduced federal support for state Medicaid programs, and cuts to NIH funding.

Insurance Coverage Losses

The largest change in health insurance coverage since the ACA is on the horizon.^[1]

At the time of the writing of this briefing, when combined, OBBB provisions, the anticipated expiration of ACA enhanced premium tax credits (PTCs), and the 2025 ACA Marketplace Integrity Rule, are estimated to result in 15 million individuals losing health insurance coverage by 2034.^[2] This level of coverage loss would increase the uninsured population by nearly 60% within the next decade.

Reduced Federal Spending for State Medicaid Programs

Beyond reduced federal funding from coverage losses, other OBBB provisions further cut federal Medicaid funding to states.

For example, of the estimated $1 trillion in reduced federal Medicaid spending cuts over the next decade^[3]:

• Changes to provider taxes and MCO taxes, impacting 22 states, will account for $191 billion in reduced funding
• Lowering the cap on state-directed payments cuts an additional $149 billion

Reductions in federal Medicaid support will create a fiscal ripple that will affect all hospitals, particularly those in Medicaid expansion states and those serving a high proportion of Medicaid patients.

Cuts to NIH Funding

Academic medical centers and schools of medicine face additional revenue pressure from further NIH cuts as the ‘FY26 President’s Budget’ reduces NIH spending by about 40% versus FY25 and keeps the 15% cap on indirect cost rates.^[5]

The Impact on Payer-Provider Dynamics

These changes will place significant pressure on both providers and payers. As both parties experience revenue gaps and margin compression, we expect tougher stances at the negotiating table – making a forward-looking payer strategy and a strategic negotiation approach more critical than ever.

Provider Headwinds

Revenue Pressures: At the time of writing of this briefing, the Urban Institute and RWJ estimated that hospitals and physicians could face a $400 billion revenue hit under OBBB due to increased uncompensated care – plus $140 billion more if enhanced PTCs expire. NIH funding cuts to research institutions will further deepen the revenue shortfall.^[6]

Increased Costs: Uncompensated hospital and physician care sought by the uninsured population would increase by over $110 billion for the next decade due to OBBB and the expiration of enhanced PTCs.^[6]

Value-based Contracting: Higher total cost of care for remaining Medicaid and ACA enrollees could reshape value-based contract economics.

Payer Headwinds

Lower enrollment: Payers face shrinking Medicaid and ACA / Marketplace books and lower Medicaid program funding, leading to reduced revenue necessary to operate plans.

Enrollment instability can potentially undermine long-term investment, increase administrative burden, and pose challenges for accurate risk coding. Payers with high Medicaid enrollment (see figure 1) have higher coverage loss exposure.

Higher Medical Expenses Per Enrollee: Additionally, deteriorating Medicaid and ACA / Marketplace risk pools will place upward pressure on MLR and/or premiums.

Considerations for Providers and Payers

Ridgeline Health Group is working alongside health systems to navigate the complex questions introduced by the passage of the OBBB and other finalized regulations.

Below are the sequential questions we are working through as providers prepare to engage with payers:

Step 1: Understand Your Exposure

• How could regulatory changes affect financial performance? What is the size and timing of the projected financial gap?
• Which clinical services, payer contracts, and geographies are most vulnerable?

Step 2: Define Actionable Strategies to Mitigate Financial Impact

• How can payer contracts be rebalanced to stabilize vulnerable services and segments?
• At a granular level (DRG / CPT) are services priced optimally given anticipated changes in volume, payer mix, reimbursement, and margin?
• Which payers will be most resilient in the face of policy changes, and how should this alter your strategy and negotiation playbooks?
• How should existing value-based contracts be modified given anticipated changes in enrollment and total cost of care? What alternative payment models or collaborative programs, across segments, could support improved payer, provider, and patient outcomes?

Step 3: Plan, Prioritize and Execute

• Are there near-term margin improvement opportunities that can be achieved by working with payers?
• Which strategies and tactics will have the most meaningful system-wide and patient impact?
• How should payer negotiations be planned, structured, and executed to achieve desired outcomes? Should multi-year payer strategies be revised to reflect new realities?
• Does the managed care team have the right structure, skills, and leadership in place to execute at pace and scale?

By aligning on the responses to these questions, health system leaders will better anticipate upcoming risks, strengthen their payer partnerships, and support sustainable growth in an uncertain environment.

Future Regulations Expected to Fuel Even More Change

While OBBB focused largely on Medicaid and ACA markets, additional federal policy priorities have been announced – with implications across segments. These changes will affect both what is paid and what is measured. Organizations that prepare now will have the clearest path forward.

Summary

Amidst ongoing policy changes, health systems are shifting focus from headlines to planning and execution. For leading organizations, this means assessing policy impact, refining payer strategies, and actively engaging with payers to build resilience and limit financial risk.

At Ridgeline Health Group, we specialize in navigating the complexities of provider–payer relationships, creating pathways that strengthen financial performance and enable health systems to focus on what they do best: delivering exceptional care.

Sources:

[1] Association of State and Territorial Health Officials, One Big Beautiful Bill Law Summary (July 2025)

[2] Insurance loss combines CBO estimate of impact of OBBB (CBO “Estimated Budgetary Effects of Public Law 119-21, to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, Relative to CBO’s January 2025 Baseline” (July 21, 2025)), expiration of enhanced premium tax credits and ACA marketplace rule (both from Wyden, Pallone, Neal Letter (June 2025))

[3] DHHS, HHS FY2026 Budget in Brief (May 2025)

[4] DHHS, HHS FY2026 Budget in Brief (May 2025)

[5] KFF “What are the Implications of the 2025 Budget Reconciliation Bill for Hospitals?” (June 2025)

[6] Urban Institute & RWJ, “State-Level Estimates of Health Care Spending and Uncompensated Care Changes Under the Reconciliation Bill and Expiration of Enhanced Subsidies” (June 2025)

[7] CMS, “CMS Rolls Out Aggressive Strategy to Enhance and Accelerate Medicare Advantage Audits,” (May 2025)