Approximately 66 million people – about 20% of the U.S. population – live in rural areas, where Medicaid covers 1 in 4 adults (a higher share than in urban areas) and plays large part in financing health care services. In rural communities, Medicaid covers nearly half of all births and one fifth of inpatient discharges. The Congressional Budget Office (CBO) estimates that the Medicaid changes in the House-passed budget reconciliation bill—the One Big Beautiful Bill Act—will reduce federal Medicaid spending by $793 billion, decrease Medicaid enrollment by 10.3 million people, and increase the number of uninsured people by 7.8 million. Senators from both parties have raised concerns about potential impacts on rural hospitals and other providers, particularly given the ongoing trend of rural hospital closures.

To address those concerns, Senate Republicans have proposed adding a rural health fund to the reconciliation bill. Initial reports have pegged the size of the fund at $15 billion, though some Republican Senators have argued it should be bigger. The fund would provide $3 billion per year in fiscal years 2027 through 2031, with half distributed equally across all states and half to be distributed by the Centers for Medicare and Medicaid Services (CMS) based at least in part on states’ rural populations, percent of providers located in rural areas, and the situation of hospitals who serve low-income patients. It is unclear how the funds will be distributed across hospitals, other providers, and various state initiatives and whether the funds would be enough to offset any losses for providers under the bill.

This policy watch estimates how the House-passed reconciliation bill would affect federal Medicaid spending in rural areas and the number of rural Medicaid enrollees.

Building on KFF’s earlier estimates of state-by-state Medicaid cuts, this analysis estimates that Medicaid spending in rural areas could decrease by $119 billion over 10 years (Figure 1). The analysis allocates each state’s estimated spending reductions from the earlier analysis of the One Big Beautiful Bill Act to urban and rural areas using the percentage of Medicaid spending that paid for services used by rural enrollees within each state.

Overall, federal Medicaid spending in rural areas could decrease by 15% ($119 billion), which is far more than the $15 billion that has been suggested for the rural health fund. These estimates may underestimate the effects on rural areas because they do not account for the full change in total Medicaid spending, which would include the federal spending reductions and the associated reduction in state Medicaid spending stemming from lower enrollment. The estimates also do not account for the 8.2 million people who are expected to be uninsured because of changes in the Affordable Care Act. Those coverage losses stem from $268 billion in cuts to Affordable Care Act (ACA) Marketplace coverage from the reconciliation bill, the expiration of enhanced ACA subsidies that were enacted during the COVID-19 pandemic, and the impact of proposed Marketplace integrity rules. Federal spending cuts and coverage losses could have implications for rural hospitals and other providers, including increases in uncompensated care. While providers could potentially offset some of the cuts, financial pressure on hospitals and other providers could lead to layoffs of staff, more limited investments in quality improvements, fewer services, or additional rural hospital closures.

Over half of the spending reductions in rural areas are among 12 states that have large rural populations and have expanded Medicaid under the ACA, each of which could see rural federal Medicaid spending decline by $4 billion or more. Those states include Kentucky, North Carolina, Ohio, Illinois, Virginia, Michigan, New York, Washington, Pennsylvania, Oklahoma, Louisiana, and Arkansas. Kentucky would experience the largest rural Medicaid spending reduction, with an estimated drop of over $10 billion over 10 years. Larger effects in expansion states reflect the fact that expansion states would experience spending reductions under the House-passed reconciliation bill equal to 13% of their projected Medicaid spending, compared with only 6% in non-expansion states. Over half of the estimated federal spending cuts stem from provisions that only apply to states that have adopted the ACA expansions, including work requirements, more frequent eligibility determinations, and new cost sharing requirements. As a result, the effects of the reconciliation bill in rural areas will be larger for expansion than non-expansion states. The $119 billion decline in federal spending does not account for any changes in states’ Medicaid spending.

Building on KFF’s earlier estimates of state-by-state Medicaid enrollment declines, an estimated 1.5 million fewer people could be covered by Medicaid in rural areas under the reconciliation bill in 2034. The analysis allocates each state’s estimated enrollment loss from the earlier analysis of the One Big Beautiful Bill Act to urban and rural areas using the percentage of Medicaid enrollees in rural areas within each state. The same 12 states with the largest spending reductions account for over half of the estimated enrollment losses, each of which could experience enrollment declines of 50,000 or more rural enrollees in 2034. Currently, the uninsured rate is lower in expansion states than in non-expansion states, but it’s unclear whether that could change if the reconciliation bill passes. Research consistently links health coverage to improved health and to reduced mortality. The 1.5 million people who lose Medicaid in rural areas does not account for other increases in the uninsured rate stemming from reconciliation provisions affecting the number of people with coverage purchased through the ACA Marketplaces. It also does not account for the expiration of enhanced premiums tax credits, which were temporarily established during the COVID-19 pandemic, and the impact of proposed Marketplace integrity rules.

On June 26^th, 2025, the Supreme Court of the United States issued its decision in Medina v. Planned Parenthood South Atlantic, finding that Medicaid enrollees cannot seek relief in federal court to enforce Medicaid’s “free-choice of provider provision.” This provision allows Medicaid enrollees to seek care from any provider that is qualified and willing to participate in the program. South Carolina’s policy barring Medicaid patients from obtaining care from clinics that provide abortion care is part of broader efforts by anti-abortion policymakers to exclude Planned Parenthood clinics from the Medicaid program, and ultimately, eliminate all federal payments to Planned Parenthood centers. Medicaid pays health care providers, including Planned Parenthood, for the delivery of health care services, but the program does not pay for abortion care except under very limited circumstances (abortions for pregnancies resulting from rape, incest or that are life-threatening).

This decision means that people enrolled in Medicaid in South Carolina, and in other states that exclude Planned Parenthood going forward, will not be able to use their Medicaid coverage to obtain any preventive services, such as contraceptive care, STI treatment and cancer screenings, at Planned Parenthood clinics. Medicaid is a major source of revenue for Planned Parenthood clinics. The loss of this revenue could result in the closure of many sites or scaling back service hours or staff and affect access for all patients, not only Medicaid enrollees. Nationally, one in three (32%) women and one in ten men (11%) have received health services from a Planned Parenthood clinic.

This case stems from a 2018 executive order issued by South Carolina’s governor that prohibited any clinic that provides abortion care from participating in the state’s Medicaid program. Planned Parenthood South Atlantic, which operates two clinics in South Carolina, and Julie Edwards, a patient who wanted Planned Parenthood to be her provider, challenged this decision to block Medicaid patients from having Planned Parenthood as their provider. The Court ruled that the “free-choice of provider” provision does not create a right enforceable by individuals under the civil right statute Section 1983 because the statute does not clearly confer an individual right. The majority opinion distinguished this case from the Court’s 2023 Talevski decision, which found a private right of action for nursing home residents, because the Federal Nursing Home Reform Act (FNHRA) includes explicit language giving residents’ rights. Without the word “right” in the Medicaid “free choice of provider” provision, the Court concluded that the provision is about states’ duties under Medicaid, but it does not confer individual rights to Medicaid enrollees to sue to get services from the participating provider of their choice.

Justice Jackson wrote a dissent, joined by Justices Kagan and Sotomayor, criticizing the majority and contesting their conclusion that because the word “right” does not appear in the free choice of provider provision, the section does not confer individual rights.

Enforcement of Free-Choice of Provider is Now Limited

The Court states that Planned Parenthood could challenge their exclusion from South Carolina’s Medicaid program through South Carolina’s administrative process and then appeal to state courts and ultimately seek review at the Supreme Court. However, the administrative process at the state level could be prolonged, and in the meantime, patients enrolled in Medicaid would not be covered for care at Planned Parenthood clinics. As a result, the clinics would likely close or reduce the scope or availability of services before the administrative process concludes.

How will this impact access to care for Medicaid patients across the country?

Many states have tried to exclude Planned Parenthood clinics from their Medicaid program, largely due to opposition to including a health care provider that also provides abortion. In the past decade, at least 14 states (AL, AR, AZ, FL, IA, ID, KS, LA, MO, MS, OK, SC, TN, TX) have used state-level policies or sought federal permission to block the provider from participating in their state Medicaid programs, though they have often been blocked by court action, until this ruling (Figure 1).

While the high court’s ruling opens the door for South Carolina and other states to disqualify Planned Parenthood from their Medicaid program, the House-approved reconciliation bill could have an even broader impact if passed by the Senate. It would ban federal health care payments by Medicaid for any services to Planned Parenthood and other providers who also offer abortion care (which is currently not covered by Medicaid) in every state. The Senate Parliamentarian is still reviewing the provision to see whether it can be included in the final Senate version of the bill or whether it runs afoul of the “Byrd Rule” and would therefore require 60 votes to pass. Regardless of the outcome, as a result of the Medina case, patients who rely on Planned Parenthood sites for their contraceptive, STI, and preventive care will be likely in some states to find themselves with fewer or no options to get that care, especially in rural or medically underserved communities where there are far fewer providers.

Marketplace enrollment has grown substantially in recent years, increasing from 11.4 million people in 2020 to 24.3 million in 2025. Insurance coverage is a key determinant in accessing health care services, including mental health services. However, several pending policy changes, such as the One Big Beautiful Bill Act (OBBBA) and the expiration of enhanced premium tax credits, may lead to an additional 8.2 million people losing their Marketplace coverage and becoming uninsured by 2034, according to the Congressional Budget Office (CBO). This potential coverage loss raises concerns about access to mental health care services. One in five Marketplace enrollees report that their mental health is “fair” or “poor”, based on a KFF survey. This brief estimates the number of current Marketplace enrollees with a mental health diagnosis – identified as individuals with a health care claim that included at least one mental health diagnosis – to understand what changes in enrollment may mean for access to services, using 2022 health care claims data from the Center for Medicare and Medicaid Service.

Among Marketplace enrollees, more than 1 in 6 (18.2%) had at least one mental health diagnosis on a health care claim in 2022 (Figure 1). However, the share of Marketplace enrollees with a mental health condition is likely higher. This estimate only captures diagnoses for people with a mental illness diagnosis recorded in their medical claims. This estimate does not account for enrollees with only prescription drug claims for a mental health condition, enrollees with undiagnosed mental health conditions, enrollees in remission from mental health conditions, or those who did not seek treatment for their mental health conditions. Additionally, not all individuals are screened for mental illness, and diagnoses are not always recorded on healthcare claims. Prevalence rates estimated through surveys are generally higher than the prevalence rates observed in claims data. A prior KFF analysis found that among adults – regardless of insurance status – reporting moderate or severe symptoms of anxiety and/or depression, 39% did not receive treatment.

Among the 24.3 million Marketplace enrollees in 2025, over 4.4 million individuals are estimated to have at least one mental health diagnosis on a health care claim (Figure 2). Given that 18.2% of Marketplace enrollees had a health care claim with a mental health diagnosis in 2022, approximately 4.4 million enrollees may seek services associated with a mental health diagnosis in 2025. These mental health diagnoses include, but are not limited to, anxiety disorders (3.0 million), depression disorders (2.0 million), trauma and stressor related disorders (0.9 million), and bipolar disorders (0.3 million). Further, mental health conditions often co-occur. Among Marketplace enrollees with at least one mental health diagnosis, 39% will have health care claims that include two or more mental health diagnoses.

Among Marketplace enrollees, mental health diagnoses were most common among adults ages 26-34 and females (Figure 3). Female Marketplace enrollees were more likely to have a health care claim that included a mental health diagnosis than males (22.8% vs. 12.8%). A prior KFF analysis found that men with moderate to severe symptoms of anxiety and/or depressive disorder were more likely than women to not receive mental health treatment, and as a result not receive a mental health diagnosis in the year. Over one-in-five enrollees ages 26-34 (21.6%) had a health care claim that included a mental health diagnosis, followed by enrollees ages 35-49 and 50-64 (19.5% and 19.2% respectively).

The Congressional Budget Office estimates that up to 8.2 million more people will be uninsured in 2034 as a result of changes to Marketplace coverage, which may affect many enrollees with mental health conditions. Several aspects of Marketplace plans created under the Affordable Care Act have allowed for improved access to mental health and substance use services, including classifying these services as essential health benefits, providing coverage for individuals with pre-existing conditions, including mental health conditions, and parity protections. Access to these Marketplace plans has increased with record enrollment in recent years driven in part by enhanced premium tax credits that lowered costs for most enrollees, as well as policy changes that made it easier to sign up for coverage. However, several pending policy changes, including the OBBBA, recently passed by the House, along with the expiration of enhanced premium tax credits, and provisions in a new CMS Marketplace Integrity and Affordability rule may lead to an additional 8.2 million people losing their Marketplace coverage and becoming uninsured by 2034. This would mean if enrollees with mental health conditions lose coverage at a similar rate as other Marketplace enrollees, over one million more people with a mental health diagnosis could be uninsured in 2034. Separately, CBO estimates that changes to Medicaid via the OBBBA would further increase the number of uninsured people by 7.8 million. Medicaid plays a large part in coverage and treatment of behavioral health conditions, covering nearly one-third of all adults with mental health disorders.

Health care expenditures for those with mental health conditions are higher than those without, making insurance an important part of affording treatment for people with mental health conditions. Insured adults with moderate to severe symptoms of anxiety and/or depression are significantly more likely to receive mental health care compared to their uninsured counterparts (64% vs. 38%) in 2019, highlighting the key role insurance coverage plays in linking individuals to mental health care. Among privately insured individuals, those with anxiety and/or depression face higher out-of-pocket costs annually than their peers without a mental health diagnosis ($1,501 vs. $863 in 2021). Reflecting these financial burdens, a 2023 KFF survey found that 43% of insured adults with “fair” or “poor” mental health said they didn’t get needed mental health care because they couldn’t afford the cost. Loss of insurance coverage would further exacerbate the financial burden of seeking mental health treatment.

On May 22, the House passed the One Big Beautiful Bill Act, which the Congressional Budget Office (CBO) estimated would reduce federal Medicaid spending by $793 billion over 10 years. Almost 10% of those savings came from a provision that would limit state-directed payments to hospitals and nursing facilities in future years. State-directed payments (SDPs) require managed care organizations (MCOs) to make certain types of payments to health care providers, generally aimed at increasing provider payment rates to increase access to or quality of care (see Box 1). The House reconciliation bill would require future SDPs for hospitals and nursing facilities to be limited to 100% of Medicare rates in expansion states and 110% of Medicare rates in non-expansion states but would allow existing SDPs to remain at current rates. The Senate Finance Committee’s draft reconciliation language expands on the SDP provision by reducing existing SDPs 10% each year until they reach the statutory limits applicable to new SDPs.

If Congress passes the reconciliation bill with the Finance Committee’s requirements for SDPs, the required payments to hospitals or nursing facilities would likely decrease in 29 states, and possibly, in more than 31. KFF identified the potentially affected states by reviewing SDP arrangements that have been approved by the Centers for Medicare and Medicaid Services (CMS). Although the focus of this issue brief is payments to hospitals or nursing facilities, which combined account for a major source of Medicaid spending, payment rates for other providers could be affected, and some SDPs apply to multiple provider types but set different payment limits for different types of providers. Payments to other providers are included in this analysis when they are included in an SDP that also targets hospitals and/or nursing facilities (see Methods). Further, this analysis does not consider whether affected states would have to reduce payments to hospitals, nursing facilities, or both. This analysis also does not attempt to project the effects of the provision that will limit any future SDPs to levels that are lower than today’s or for the proposed limits on provider taxes which are one of the ways that SDPs can be funded and the new limits could prompt states to reduce SDPs.

Most states that have SDPs for hospitals or nursing facilities use average commercial rates to benchmark at least one state-directed payment (Figure 1).  The pre-approval documents states submit to CMS before implementing SDPs (“preprints”) generally require states to indicate the payment level required of comprehensive managed care organizations (MCOs), which is sometimes described as a benchmark. Benchmarks are generally established using Medicare or Medicaid fee-for-service rates, or commercial rates and a state can use one or more of these when establishing SDPs. Benchmarks are generally established for specific types of providers and specified categories of services. State-directed payments are often higher than the levels that would be permissible under the reconciliation bill: 24 states have at least one SDP which raises reimbursement to more than 90% of average commercial rates. One state (North Carolina) benchmarks against average commercial rates but its specific rates are only disclosed in attachments to its preprints that are not publicly available. About one fifth (11) of states have at least one payment rate benchmarked to Medicare (half of those payment rates are benchmarked to at least 92% of Medicare rates with one as high as 202%), and relatively few (3) states have at least one payment benchmarked to Medicaid fee-for-service rates.

Tying payments to average commercial rates was intended to ensure access to adequate provider networks and increase the use of value-based payment methods. A 2024 rule on Medicaid managed care codified CMS’ previously informal practice that the maximum payment rate on total payments after accounting for SDPs for hospital services, nursing facility services, and qualified practitioner services at academic medical facilities was the average commercial payment rate (ACR). There is no upper payment limit on SDPs for other types of services, but CMS indicated that it would use the average commercial rate as a standard when considering states’ applications for approval. The change was intended to help Medicaid compete with commercial insurers and to ensure robust access to Medicaid enrollees. Base rates paid to hospitals by Medicaid, without accounting for supplemental payments like SDPs, are often quite low.

Average commercial rates tend to be higher than Medicaid or Medicare rates and SDPs have been a driver of increased federal spending. There have been numerous proposals to restrain commercial prices for hospital care, which have contributed to higher premiums and reduced wage growth, among other effects.  The Congressional Budget Office (CBO) updated its Medicaid spending projections for 2025-2034 to reflect a 4% (or $267 billion) increase with half of the increase attributed to expected growth in directed payments in Medicaid managed care (driven in part by the rule change allowing states to pay at the average commercial rates). The Government Accountability Office noted that the rapid spending growth suggested the need for enhanced oversight and transparency.

Most states would likely need to reduce payments to hospitals or nursing facilities to comply with the Senate Finance Committee’s proposed caps on state-directed payments (Figure 2). The list of potentially affected states includes any state with an SDP benchmark that exceeds 100% of Medicare fee-for-service rates in expansion states, and 110% of Medicare rates in non-expansion states. For SDPs that benchmark rates to commercial payment rates, KFF converted those rates to a percentage of Medicare rates using data from RAND about the relationship between commercial and Medicare payment rates for hospitals (see Methods).

Among the 42 states with comprehensive managed care plans, 36 states had SDPs starting on January 1, 2024 or later, of which 33 states had SDPs targeting hospitals or nursing facilities (in addition to Vermont’s SDP which is through their All-Payer Accountable Organization Model). Among those 34 states:

• 29 states would likely be affected because they have at least one SDP benchmarked to Medicare or average commercial rates that are estimated to be higher than the proposed caps (see Methods). Eleven of these states (Georgia, Iowa, Kentucky, Minnesota, Nevada, Oklahoma, Oregon, South Carolina, Tennessee, Washington, and New Mexico) have at least one SDP raising payments to 100% of average commercial rates.
• Two states, North Carolina and Wisconsin, could possibly be affected by the proposed caps. North Carolina benchmarks some SDPs to commercial rates but does not document the adjusted rate within the preprint. For other SDPs, North Carolina benchmarked payment rates between 146% of Medicaid fee-for services rates (hospital outpatient laboratory services) and 256% of Medicaid rates (for inpatient hospital services). There are no publicly available data to compare states’ Medicaid rates to Medicare rates, so it’s difficult to discern whether benchmarks above 100% of Medicaid rates would also be above the new Medicare-based statutory limits specified in the reconciliation bill. Wisconsin has an SDP that benchmarks payment rates against providers’ costs (up to 124%), which is also difficult to compare to Medicare rates.
• Three states (Indiana, Missouri, and Vermont) have SDPs that would likely not be affected because their SDP rates are estimated to be below the proposed caps.

Among the remaining states, 3 states (Nebraska, Utah, and West Virginia) have SDPs that do not target hospitals or nursing homes, and 13 states and DC do not have any SDPs in this time period.

Reduced payments to hospitals or nursing facilities could potentially lead to reduced access to or quality of care. Increased payments through SDPs are permitted under federal law, with the goal to help ensure sufficient access to care and promote improved quality. They can help support hospitals serving a large percentage of Medicaid patients and rural hospitals, which are more likely to have negative operating margins and could face larger financial challenges with cuts to Medicaid financing and increasing the number of people without health insurance by nearly 11 million. These reductions could also have implications for nursing facilities because Medicaid is the primary payer for over 6 in 10 residents, paying for nearly half of the total spending on institutional long-term care. For both types of providers, they may have to offer fewer services or reduce the quality of care to work with the reduced payment rates expected under the bill, and in some cases, may be unable to remain open.

The effects of limiting SDPs in the reconciliation bill will amplify the effects of limiting provider taxes, a mechanism that many states use to help fund hospital and nursing facility payment rates. Both the House and Senate reconciliation language establishes a moratorium on provider taxes that is expected to save money in future years by limiting the amount of future Medicaid spending growth (some health care provisions of the Senate bill have been ruled out of order by the Senate parliamentarian and may need to be revised or removed from the legislation to pass with a simple majority). That provision is similar to the House’s proposed SDP limits that apply to new SDPs but permit existing SDPs to remain in place. In both cases, the Senate Finance Committee’s language makes deeper Medicaid cuts: by limiting existing SDPs and by reducing existing provider taxes in states that adopted the Medicaid expansion if they exceed new limits. KFF estimates that 22 states would be required to cut provider taxes on hospitals or managed care organizations under the Finance Committee language, which would exacerbate the effects of cutting existing SDPs for the states that are jointly affected. Because provider taxes often fund SDPs, even states with SDPs below permissible levels could be forced to cut their provider payment rates if they are affected by the lower provider tax thresholds.

The budget reconciliation bill (the “One Big Beautiful Bill”) being debated in Congress makes significant changes to the Medicaid program, including requiring states to impose cost sharing on certain adults enrolled through the ACA Medicaid expansion. This requirement marks a departure from current rules that permit, but do not require, states to impose cost sharing on certain populations within limits designed to protect Medicaid enrollees from high out-of-pocket costs. These protections were put in place based on evidence showing that cost sharing, even nominal amounts, can pose barriers to accessing needed care for individuals with low incomes. Cost sharing, such as copays required at point of service, is associated with reduced use of care, worse health outcomes, and increased financial burden. Other research finds that cost sharing often has limited state savings and often means a reduction in reimbursement for providers.

The bill would, for the first time, require states to impose cost sharing of up to $35 per service on Medicaid expansion adults with incomes between 100% and 138% of the federal poverty level (FPL; the federal poverty level is $15,650 for a single adult in 2025). Some services, including primary care, mental health and substance use disorder (SUD) treatment, family planning, emergency care provided in a hospital emergency department, and institutional long-term care, would be exempt from cost sharing. Additionally, cost sharing for prescription drugs would remain at nominal levels as specified by current rules. While $35 is the upper cost sharing limit per service (with the exception of non-emergency services provided in an emergency room, for which cost sharing can exceed $35), states can choose to charge less. As under current rules, states can allow providers to require payment of any cost sharing prior to providing services, which could lead to denial of services if an enrollee is unable to pay.

Under current rules, states are permitted to impose cost sharing on adults enrolled through the Medicaid expansion, though federal rules limit what states can charge given enrollees’ limited ability to pay out-of-pocket costs. Maximum allowable cost sharing varies by type of service and income. Total out-of-pocket costs are limited to no more than 5% of family income, and states are required to establish a process for tracking incurred cost sharing that does not rely on enrollee documentation and stops cost sharing once a family meets the cap, which the bill would maintain. Prior to the start of the COVID-19 pandemic in January 2020, over half of states that had adopted the Medicaid expansion charged cost sharing on some services for adults enrolled in the expansion. Most of these states imposed cost sharing regardless of income, though three states limited cost sharing to adults with income at or above 100% FPL. States were prohibited from imposing new cost sharing or increasing existing cost sharing from January 2020 through December 2023 in exchange for enhanced federal Medicaid funding. States could impose new cost sharing starting in January 2024, though some states have since eliminated all cost sharing.

Because the bill only addresses cost sharing for a limited group of expansion enrollees, it does not appear to affect existing cost sharing policies states have in place. States that currently impose cost sharing on the expansion population will likely maintain that cost sharing, though they may be required to apply the cost sharing to a wider range of services for expansion adults with incomes 100%-138% FPL. If a state has a cost sharing requirement above $35 per service, they will likely have to reduce the amount for the specified expansion adult population. Cost sharing on populations other than the specified expansion adults will likely be able to remain in place as long as it complies with existing rules.

This brief uses 2021 Medicaid claims data to examine utilization among Medicaid expansion adults and estimate how much cost sharing these enrollees could be required to pay under the new requirement if all states imposed the maximum cost sharing amounts. This is an illustrative analysis intended to describe which enrollees may be subject to the most cost sharing under the new provisions rather than estimate exactly what expansion enrollees may actually pay. The estimates are based on utilization among all adults enrolled through the expansion (income data to identify adults with income 100%-138% FPL are not available) who had utilization that would be subject to the cost sharing and assumes cost sharing of $35 per non-exempt service. The $35 represents the upper bound of what states could charge for most services, though not all states would be expected to impose cost sharing at this amount on all services. It does not, however, include cost sharing for prescription drugs, which the bill mandates must be limited to nominal amounts. Many states currently charge nominal cost sharing for prescription drugs. See methods for more details and limitations of this analysis.

Under the proposed cost sharing rules, the average expansion enrollee could pay $542 in a year if maximum cost sharing amounts were imposed on non-exempt services (Figure 1). Overall, 31% of Medicaid expansion enrollees would not be subject to the cost sharing requirements either because they did not use any services in the year or they only used services, such as primary care, mental health treatment, or family planning services, that would be exempt from the cost sharing requirements. Among the remaining expansion enrollees in the 2021 claims data who used services potentially subject to cost sharing, the average enrollee received 15.5 services and could pay up to $542 annually for those Medicaid services.

Expansion adults who are older or who have multiple chronic conditions could face a much higher cost sharing burden than the average enrollee. Copayments that are required at the point of service have a greater impact on enrollees with higher health care needs who use more services. Compared to younger enrollees and those with fewer chronic conditions, adults ages 50-64 and those with multiple chronic conditions utilize more health care services and, therefore, are subject to higher cost sharing. Adults ages 50-64 could pay, on average, $736 per year or one-third more than the average enrollee and more than twice the $349 that younger adults ages 19-26 could pay (Figure 1). Medicaid enrollees with three or more chronic conditions would have the highest average cost sharing and could pay up to $1,248 per year, or more than twice what the average expansion enrollee could pay, and more than five times what Medicaid enrollees with no chronic conditions could pay.

Because of higher utilization, average cost sharing for single Medicaid expansion enrollees ages 50-64 and those with multiple chronic conditions who have income at 100% FPL could come close to exceeding or could exceed the cap of 5% of family income on out-of-pocket costs. While the required cost sharing for many Medicaid enrollees would not exceed 5% of family income, some expansion enrollees with particularly high utilization could face cost sharing amounts that would exceed the cap. Average cost sharing could amount to 4.7% of income for single Medicaid expansion enrollees ages 50-64 with income at 100% FPL, which is close to the 5% cap. For single enrollees with three or more chronic conditions, average cost sharing could be 8% of income at 100% FPL, exceeding the cap by three percentage points.

Nearly 53 million people of all ages in the United States live in households that experience food insecurity, meaning they are unable to access adequate food due to lack of money or other resources. The Supplemental Nutrition Assistance Program (SNAP) was established in 1964 as a federal aid program to address food insecurity among low-income households by providing a monthly benefit to help participants purchase food.

The GOP’s House and draft Senate budget reconciliation bill, known as the One Big Beautiful Bill Act, is working its way through Congress and would reduce federal spending on SNAP by $287 billion over 10 years. Cuts to SNAP would produce budgetary savings but could produce higher rates of food insecurity and poorer health outcomes in the long run. Several studies indicate that individuals who receive SNAP benefits have better health and lower rates of food insecurity than similar people who are eligible but not receiving these benefits. Food insecurity is associated with multiple chronic conditions, poorer self-reported health status, higher health care utilization, and lower rates of medication adherence.

In addition to SNAP cuts, the reconciliation bill would cut federal health program spending by more than $1 trillion over the next decade, including $793 billion from Medicaid and $268 billion from the ACA Marketplaces – the largest cuts to federal support for health programs in the nation’s history. According to Congressional Budget Office (CBO), the bill will increase the number of uninsured by 10.9 million within ten years. The combination of federal spending reductions on SNAP and health programs would mean many people are at risk of losing both food assistance and health coverage, primarily those enrolled in Medicaid.

This analysis, based on the U.S Census Bureau’s 2023 Survey of Income and Program Participation (SIPP), examines the distribution of SNAP recipients and rates of food insecurity, by source of coverage.

The majority (78%) of people who received SNAP benefits in 2022 were covered by Medicaid, including 18% who were covered by both Medicaid and Medicare.

Nearly 30 million of the 38.3 million people receiving SNAP benefits in 2022 were enrolled in Medicaid (Figure 1). The overlap between the two programs reflects similar eligibility requirements for Medicaid and SNAP, though rules vary by state. Among Medicaid enrollees receiving SNAP benefits, 23.3 million were solely covered under Medicaid, while 6.7 million were also covered by Medicare (otherwise known as dual-eligible individuals). Medicaid was the primary source of coverage for children receiving SNAP, covering 88% of kids with SNAP, or approximately 13 million children.

A total of 9.2 million Medicare beneficiaries received food assistance benefits under SNAP, accounting for one in four (24%) SNAP recipients. Most Medicare beneficiaries with SNAP benefits (18% or 6.7 million) had supplemental coverage under Medicaid. In 2023, one in four Medicare beneficiaries lived on incomes below $21,000 per person.

Over 500,000 people who purchase health insurance coverage directly (mostly from ACA Marketplaces) received SNAP benefits in 2022. In addition, 2.4 million SNAP recipients were uninsured in 2022.

Some Medicaid enrollees who receive food assistance benefits from SNAP could lose both health insurance coverage and financial resources to supplement their food budgets as a result of the reconciliation bill.

Proposed changes in eligibility rules in both SNAP and Medicaid may jeopardize some people’s access to both adequate food and health care if various provisions of the bill take effect, in part because there is a significant overlap in eligibility requirements for Medicaid and SNAP across states. Four in 10 (40%) Medicaid enrollees receive SNAP benefits, compared to only 3% of those without Medicaid.

Recent KFF polling shows a majority of the public is worried about the consequences of significant reductions in federal Medicaid spending, and half of low-income adults reported their households having difficulty affording necessities, including food.

A CBO analysis of the House version of the reconciliation bill estimates that households in the lowest income decile could see a 4% decrease in resources by 2034, primarily due to changes in Medicaid and SNAP, while the highest income decile households would see a 2% increase in resources as a result of proposed tax cuts.

Many people enrolled in the programs slated for cuts in the reconciliation bill, including Medicaid and those receiving SNAP benefits, already experience food insecurity.

People living in households with and without SNAP report that they had problems affording food over the prior year. Overall, 52.8 million people lived in a household with food insecurity in 2022, including 30% of people enrolled in Medicaid (22.4 million), 13% of Medicare beneficiaries (8.7 million people), 26% of the uninsured, and 12% with coverage they purchased directly, including from ACA Marketplaces (Figure 2). A total of 14.6 million children lived in a household that experienced food insecurity in 2022.

Many households already struggling with food insecurity may be at risk of reduced SNAP benefits, or losing eligibility, at the same time they face new eligibility restrictions or higher costs for their healthcare. 22.4 million people enrolled in Medicaid experienced food insecurity, including 9.3 million children. Nearly 2 million people enrolled in direct purchase coverage in 2022 lived in a household experiencing food insecurity. Many of these households will face higher premium costs if Marketplace enhanced premium tax credits expire at the end of this year, increasing demands on some household budgets. Almost half of ACA Marketplace enrollees have incomes below 150 percent of the federal poverty level, $23,475 for an individual in 2025.

Among the 52.8 million people who reported food insecurity in their households in 2022, more than two-thirds (73%, or 38.6 million) were not receiving SNAP benefits. At the same time, even SNAP participants can experience food insecurity. Among the 38.3 million people receiving SNAP benefits in 2022, 37% (14 million) reported being unable to access adequate food due to lack of money or other resources.

Proposed cuts to SNAP could increase the number of people experiencing food insecurity and worsen affordability challenges for those already struggling to access food, as well as for those at risk of losing health insurance due to other changes in the legislation.

Originally published on June 2, this Policy Watch has been updated to reflect subsequent developments related to the reconciliation bill.

The House of Representatives recently passed a budget reconciliation bill that would appropriate funding for cost-sharing reductions that insurers are required to provide to low-income enrollees in the Affordable Care Act marketplace. The Congressional Budget Office (CBO) has estimated that this action will reduce the deficit by $31 billion and increase the number of people without health insurance by 300,000 through 2034. This provision was ruled out of order by the Senate parliamentarian (Byrd rule) on June 26, 2025 and may need to be revised or eliminated for the legislation to pass with a simple majority.

This brief explains what these cost-sharing reductions are, how they relate to federal spending, and how appropriating funding impacts premiums and the uninsured rate.

What are cost-sharing reductions?

The Affordable Care Act (ACA) has two types of financial assistance for lower-income enrollees: assistance with monthly premiums (“premium tax credit”) and assistance with out-of-pocket expenses when people get medical care or fill a prescription (“cost-sharing reductions”).

The ACA requires insurers to offer plans with reduced patient cost-sharing (e.g., deductibles and copays) to marketplace enrollees with incomes between 100 and 250% of the poverty level (an annual income of $15,650 to $39,125 for a single person in the contiguous U.S.). The reduced cost-sharing is only available in silver level plans, and the premiums are the same as standard silver plans.

The cost-sharing reductions (CSRs) significantly lower deductibles in these plans: for plans where there is a combined deductible for medical care and prescription drugs, the average deductible is reduced for those with incomes below 150% of poverty from $4,902 to $87; for those with incomes between 150% and 200% of poverty, the average deductible is reduced to $682; and for enrollees with incomes between 200% and 250% of poverty, the average deductible is $3,620.

During the Obama administration, from the start of ACA implementation in 2014, the federal government paid insurers directly to offset the cost-sharing reductions. To compensate for the added cost to insurers of the reduced cost-sharing, the federal government was making 7 billion dollars in annual payments directly to insurance companies by 2017.

In 2016, a federal district judge ruled that direct CSR payments without explicit congressional appropriation were illegal, but stayed the ruling after it was appealed by the Obama administration. However, in October 2017, the Trump administration stopped the appeals process and chose to end the CSR payments, saying at the time the ACA was “dead.”

What is silver loading?

In response to the federal government ending cost-sharing reduction payments, most insurers raised silver premiums substantially to compensate for the loss of CSR payments. Most states either allowed or encouraged insurers to “load” the cost of CSRs onto silver premiums only (not onto other metal levels), since silver plans are the only plans where cost-sharing reductions are available. The practice of increasing silver plan premiums to compensate for the loss of federal CSR payments is known as “silver loading.” From 2017 to 2018, average benchmark silver plan premiums rose by about 17 percentage points more than bronze premiums did.

In August 2018, the Trump administration issued guidance encouraging state regulators to allow insurers to increase only the premium on silver plans offered on-exchange, so that off-exchange silver plans could be priced lower. The 2026 Notice of Benefit and Payment Parameters (issued by the Biden Administration in January 2025) codified the practice of silver loading so long as it is permitted by the state regulator and the insurer does not receive other reimbursements for cost-sharing reductions.

What is the cost of silver loading to the federal government?

While the federal government saved money by no longer making CSR payments, those savings were offset by higher payments for premium tax credits that result from silver loading. That is because the ACA’s premium tax credits are based on the premium for a benchmark plan in each area: the second-lowest-cost silver plan in the marketplace. The premium tax credit is calculated as the difference between the premium for that benchmark plan and a premium cap calculated as a percent of the enrollee’s household income. Any systematic increase in premiums for benchmark silver plans increases the amount of premium tax credits.

The increased tax credits completely cover the increased premium for subsidized enrollees covered through the benchmark silver plan. Enrollees who apply their tax credits to other plans (e.g., bronze, gold, or other silver plans) would also receive increased premium tax credits even if they do not qualify for reduced cost-sharing and even if the underlying premiums in their plans might not have increased at all. After 2017, increased premium tax credits allowed many more individuals to purchase bronze – and sometimes even gold – plans with zero out-of-pocket premium costs.

For this reason, ending federal payments for cost-sharing reductions ended up costing the federal government more money than if the cost-sharing reduction payments had continued. Additionally, subsequent research has pointed to the practice of silver loading having an upward effect on ACA Marketplace enrollment.

An August 2017 CBO report projected that ending CSR payments would increase the federal deficit by $6 billion in 2018, $21 billion by 2020 and $26 billion by 2026, and added that after taking premium tax credits into account, most enrollees would pay similar or lower premiums than they had been paying before.

What does the House reconciliation bill do with CSR funding?

The budget reconciliation bill passed by the House in May 2025 appropriates funding for cost-sharing reductions, returning to the pre-2017 federal payment system practice. The bill does not explicitly ban silver loading, but if insurers receive federal CSR payments, they will no longer have a justification to silver load under current regulations.

The bill also bans federal CSR payments to insurers for Marketplace plans that include coverage for abortion, which will raise conflicts with state laws in a dozen states requiring abortion coverage. It is not yet clear how those states will respond (e.g., whether they will restrict abortion coverage in ACA marketplace plans and allow insurers in their state to receive federal cost-sharing reduction payments).

Although the federal government would resume CSR payments to insurers, this is expected to reduce the federal deficit by effectively ending silver-loading, thus lowering benchmark silver plan premiums, which in turn reduces the dollar amount of premium tax credits paid out to subsidized enrollees.

What might be the effect on premiums and enrollment?

Premiums for silver plans – before accounting for premium tax credits – are expected to decrease as silver-loading would no longer be necessary if funding for CSRs is appropriated. Given that silver premiums rose by about 17 percentage points more than bronze plans did in 2018, it is likely there could be a similar drop in gross premiums for silver plans if this legislation passes. Meanwhile, funding CSRs is likely to have little or no effect on what insurers charge for bronze and gold premiums (before accounting for the premium tax credit).

However, the vast majority of ACA Marketplace enrollees receive a premium tax credit and therefore do not pay the gross premium. Generally speaking, subsidized enrollees who pick a silver level plan may see no difference in their monthly out-of-pocket premium payments resulting from the funding of CSRs. Meanwhile, enrollees who pick a bronze or gold level plan will likely pay more for their monthly premium. This is because bronze and gold gross premiums would be unaffected, while the total amount of the premium tax credit is smaller, resulting in people in those plans paying more than they would have with silver loading.

Because enrollees in bronze and gold plans would face higher premium payments if CSRs are appropriated, it’s likely some of these enrollees would drop their coverage, thus having an upward effect on the uninsured rate. The enrollees who drop their coverage as a result of CSR appropriation are likely to be middle-income people (those making between two and four times the poverty level).

However, the appropriation of CSRs is just one of many changes the reconciliation package makes to the ACA Marketplaces. Other provisions of the budget reconciliation, as well as expiring enhanced subsidies, will have separate effects on premiums and the amount of financial assistance enrollees receive.