Medicaid – Cuts & Changes – The Big Ugly Bill – Part II

Medicaid Cuts & Changes Part II - Eligibility, Fed Match To States, Funding Cuts thru New Fed Rules, All BAD! An Aside Story! Links to Research & More at end... Share Everywhere!

Welcome to Part II of the Changes and Cuts to Medicaid that were enacted on July 4, 2025, but will trickle in over the next 4-5 years. The real impacts will not really be felt by anyone until after the Midterms in 2026 in the hopes that the “R’s” will get re-elected before anyone finds out exactly what they did. Well, I am here to tell you what they did and when each part of it is going to begin.

Part II covers how much home equity you can have and still qualify for Medicaid and how interest is treated; eligibility and who is considered an “alien;” prohibiting certain entities from receiving Medicaid; eliminating the rules on standards for staffing in nursing homes and long-term care services; how much the feds will match the States to assist with Medicaid programs; stopping payments to prohibited entities (trying to defund Planned Parenthood), provider taxes, and state directed Medicaid payments. All of these changes impact every single one of us whether we are on Medicaid or not because all of these changes impact our providers, facilities and people resources for our medical care.

There is a lot of information here and I have listed all the referenced documents in the Research section at the end. There are summaries of each change at the beginning of each section. If you want to get into the details, you can read those if provided, or look at the Research section for the original documents.

If it feels overwhelming or if it is too much information or you start to go on overload, walk away, come back later. Read only what interests you and/or what applies to you, skip the rest.

Nothing Is Forever Or Permanent

Remember that nothing is permanent. Legislation can be altered or repealed. So while they made changes and cuts to Medicaid, these changes can be restored or made better by Congress, current or future. Keep pounding on Congress at your displeasure at what they have done and how it will impact you or someone in your family, or even someone you may know.

From Michael Popok and Legal AF - “Can Congress Be Sued? You Bet.

Some might wonder: can you sue Congress over a law they passed? Absolutely. Laws—even budget bills—can be struck down as unconstitutional if they infringe on rights enshrined in the Constitution. It’s happened before, and it’ll happen again.” https://substack.com/home/post/p-167919554

Image by Freeimages.com

Home Equity Limit to Determine Eligibility for LTC Under Medicaid

This section revises the eligibility requirements for how much home equity you may have and whether interest can be included in order to qualify for Medicaid and still get long term care services.

These are the paragraphs that are being amended/changed regarding this topic. Skim over them if you want. The changes are in bold/italics.

Section 1917(f) of the Social Security Act (42 U.S.C. 1396p(f)(1)

These changes shall take effect on January 1, 2028, after the Mid-terms, but before the Presidential election in 2028.

Note: The wording in the bill is confusing about what they wanted changed, where, but it looks like they changed the amounts of equity you may have in a home or a home on a lot zoned for agricultural use. The changes to the paragraphs are bold/italic.

(f) Disqualification for long-term care assistance for individuals with substantial home equity (1)

(A) Notwithstanding any other provision of this subchapter, subject to subparagraphs (B) and (C) of this paragraph and paragraph (2), in determining eligibility of an individual for medical assistance with respect to nursing facility services or other long-term care services, the individual shall not be eligible for such assistance Page 4229 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1396p if the individual’s equity interest in the individual’s home exceeds $500,000.

(i) A State (B) A State may elect, without regard to the requirements of section 1396a(a)(1) of this title (relating to statewideness) and section 1396a(a)(10)(B) of this title (relating to comparability), to apply subparagraph (A), in the case of an individual’s home that is located on a lot that is zoned for agricultural use, by substituting for ‘‘$500,000’’ the amount specified in subparagraph (A), an amount that exceeds such amount, but does not exceed $750,000.

(ii) A State may elect, without regard to the requirements of section 1902(a)(1) (relating to statewideness) and section 1902(a)(10)(B) (relating to comparability), to apply subparagraph (A), in the case of an individual’s home that is not described in clause (i), by substituting for the amount specified in such subparagraph, an amount that exceeds such amount, but does not exceed $1,000,00.

(C) The dollar amounts specified in this paragraph (other than the amount specified in subparagraph (B)(ii) (relating to certain non-agricultural homes)) shall be increased, beginning with 2011, from year to year based on the percentage increase in the consumer price index for all urban consumers (all items; United States city average), rounded to the nearest $1,000. (2) Paragraph (1) shall not apply with respect to an individual if—

(A) the spouse of such individual, or

(B) such individual’s child who is under age 21, or (with respect to States eligible to participate in the State program established under subchapter XVI) is blind or permanently and totally disabled, or (with respect to States which are not eligible to participate in such program) is blind or disabled as defined in section 1382c of this title, is lawfully residing in the individual’s home. (3) Nothing in this subsection shall be construed as preventing an individual from using a reverse mortgage or home equity loan to reduce the individual’s total equity interest in the home. (4) The Secretary shall establish a process whereby paragraph (1) is waived in the case of a demonstrated hardship. In the case that application of the preceding sentence would result in a dollar amount (other than the amount specified in subparagraph (B)(i) (relating to certain agricultural homes)) exceeding $1,000,000, such amount shall be deemed to be equal to $1,000,000.

Changes to Section 1902, Social Security Act (42 U.S.C. 1396(a))

(r)

(2)(A) The methodology to be employed in determining income and resource eligibility for individuals under subsection (a)(10)(A)(i)(III), (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), (a)(10)(A)(i)(VII), (a)(10)(A)(ii), (a)(10)(C)(i)(III), or (f) or under section 1905(p) may be less restrictive, and shall be no more restrictive, than the methodology—

(i) in the case of groups consisting of aged, blind, or disabled individuals, under the supplemental security income program under title XVI, or

(ii) in the case of other groups, under the State plan most closely categorically related.

(B) For purposes of this subsection and subsection (a)(10), methodology is considered to be “no more restrictive” if, using the methodology, additional individuals may be eligible for medical assistance and no individuals who are otherwise eligible are made ineligible for such assistance.

(C) This paragraph shall not be construed as permitting a Sate to determine the eligibility of an individual for medical assistance with respect to nursing facility services or other long-term care services without application of the limit under section 1917(f)(1).

Subsection (e )(14)(D)(iv)

(14)[67] Income determined using modified adjusted gross income.—

(D) Exceptions.—

(iv) Long-term care.—Subparagraphs (I) IN GENERAL – Subparagraphs (A), (B), and (C) shall not apply to any determinations of eligibility of individuals for purposes of medical assistance for nursing facility services, a level of care in any institution equivalent to that of nursing facility services, home or community-based services furnished under a waiver or State plan amendment under section 1915 or a waiver under section 1115, and services described in section 1917(c)(1)(C)(ii).

(II) APPLICATIONS OF HOME EQUITY INTEREST LIMIT – Section 1917(f) shall apply for purposes of determining the eligibility of an individual for medical assistance with respect to nursing facility services or other long-term care services.

Alien Medicaid Eligibility

This section just covers who is eligible and the funding for Fiscal Year 2026 (10/1/2025 – 9/20/2026) to implement eligibility enforcement. As you can expect, it just covers U.S. resident citizens and anyone else here legally only and not temporary. It defines who is here legally and not a citizen and is pretty much the same wording as what was in the Medicare post on this same subject. It applies to CHIP as well.

Expansion of FMAP (Federal Medical Assistance Percentage) for Emergency Medicaid

FMAP is the percentage of the Medicaid program that the Federal government will pay to States to help with the Medicaid programs in their State. Each State has a different federal multiplier to determine how much it gets. This article goes into more detail: Federal Medical Assistance Percentage (FMAP) for Medicaid and Multiplier - https://www.kff.org/medicaid/state-indicator/federal-matching-rate-and-multiplier/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D

Change: Whatever percentage an alien may receive, it cannot exceed the percentage for each State.

The feds, beginning on October 1, 2026, will be given $1,000,000 to make sure that aliens are only getting what is prescribed depending on what State they legally reside in and probably to check their legal status.

Long Term Care/Nursing Home Staffing Minimums

HHS Secretary is required to NOT enforce or support any staffing standards (those set up by the Biden Administration to improve care in these facilities) beginning July 4, 2025 and ending September 30, 2034, so for 9+ years.

Medicaid, CHIP, Pregnancy-Related Assistance

Reducing Medicaid Costs

These changes will take effect after the Midterms on the first quarter after December 31, 2026. To make sure that this amendment is enforced, HHS will have a budget of $10 million dollars.

Assistance will be available, if you are eligible, in the month or the month after you apply, or, in or after the 2^nd month before the month in which the application was made.

In the case of CHIP, if assistance is given before an application is made, then “such assistance is not made available to such individual for items and services included under the State child health plan (or waiver of such plan) that are furnished before the second month preceding the month in which such individual made application…for assistance.” You would like to think they would make it read so the average person could understand it, but it seems to be more fun for these people to make it as ambiguous as possible so that when it comes time to litigate, there can be multiple interpretations. {shaking my head!}

Payments to Prohibited Entities – Example, Planned Parenthood

Prohibited entities are providers, their affiliates, subsidiaries, clinics, etc. who are NOT to be paid for services from the Medicaid funds. This provision took effect on July 4, 2025 and will end July 3, 2026. HHS will be given a budget of $1 million to make sure no prohibited entities receive any Medicaid funding.

There is a very detailed explanation of what a prohibited facility is and an example would be Planned Parenthood. This bill explains out the language used in many “anti-abortion bills” to describe what services the facility provides that would prohibit them from receiving Medicaid.

This looks like the attempt to defund Planned Parenthood which is currently blocked by the courts and we will have to watch and see what happens here.

A Note from Popok on Planned Parenthood and what it really is: “What it does provide is reproductive health counseling (including abortion, where legal), STI screening, birth control, and cancer screenings. The vast majority—90%—of its centers are in states where abortion remains legal. So let’s shut down the right-wing lie that Planned Parenthood is some abortion mill. It’s not. It’s a critical healthcare provider for millions, especially low-income women.” https://substack.com/home/post/p-167919554

Sunsetting Increased FMAP Incentives to States

In 2021, The American Rescue Plan added a 5% incentive of federal assistance to States that expanded their Medicaid coverage for their residents – which could be as low as 50% or as high as 95%. All but 10 States took advantage of this expansion. In the current Big Ugly Bill, Congress does not want these 10 States to expand their Medicaid and have removed the incentives to discourage any such expansion, which will mean several million people will not have health care.

Provider Taxes

Some States have ‘provider taxes’ to help support their Medicaid programs. Beginning on October 1, 2026, the Big Ugly Bill puts limits on these provider taxes and then decreases them year over year after that. For States that charge provider taxes, they will be frozen into whatever they have as of July 4, 2025.

States cannot increase their provider taxes or enact provider taxes on any new providers, thus hamstringing the Medicaid programs in the States and forcing them to cut the number of people receiving this type of medical care insurance. That is the government’s goal - to take people off the program. The fewer people on the program in each State, the fewer dollars the federal government has to match and can give to the Uber wealthy so they can do things like buy up all the media.

“As a result, states would have zero flexibility on provider taxes moving forward which is likely to be highly problematic, especially in light of the other Medicaid, SNAP and other cuts in the bill that shift costs to states.” https://ccf.georgetown.edu/2025/05/27/medicaid-and-chip-cuts-in-the-house-passed-reconciliation-bill-explained/

Beginning on October 1, 2027, the tax currently at 6% decreases by ½ percent per year through 2032 and remains at 3.5 percent from 2032 forward.

The provider tax changes only apply to the 50 States and DC. Congress is giving HHS $20 million dollars to ensure that the FMAP and Provider tax changes are enforced and Medicaid services in each State are not getting more of federal matching funds than they can squeeze out.

“As a result, for a number of states, this provision would result in substantially less state funding available to finance Medicaid. In order to close budget shortfalls, states would either have to raise other taxes, cut other parts of their budget, or most likely, sharply cut their Medicaid programs.” https://ccf.georgetown.edu/2025/05/27/medicaid-and-chip-cuts-in-the-house-passed-reconciliation-bill-explained/

State Directed Payments

The HHS has been given a budget of $7 million per year beginning on October 1, 2026 and ending on September 30, 2033 to enforce the rules regarding State Directed Payments.

States who expanded Medicaid have been able to implement a program called State Directed Payments to help offer incentives for care providers to accept Medicaid by supplementing Medicaid payments. The Big Ugly Bill freezes State Directed Payments to 100% of the published Medicaid rates and can no longer offer supplements if the state expanded Medicaid. If the State did not expand Medicaid, they can offer 110% of the published Medicaid rates to providers unless and until they expand Medicaid. If they expand Medicaid, then they are restricted to only offering 100% of the Medicaid rates to providers. You will notice, or find out, that there are many Providers who DO NOT accept Medicaid or Medicare because the reimbursement rates are so low that they cannot keep their business open even maxed out with patients. For example, a chiropractor gets reimbursed like $47 for a visit. Do you know a chiropractor who charges $47 for a visit? I do not.

There is a “grandfather” clause for State Directed Payments already in place prior to the enactment of this bill; however, beginning on January 1, 2028, these rates will be reduced by 10% each year until they are at the 100% Medicaid rate. So, plan on providers dropping out of the “accept Medicaid” as part of their patient load.

“Barring new SDPs that exceed the Medicare rate would prevent states from newly increasing payments to providers in order to induce greater provider participation and beneficiary access as well as to support vulnerable rural hospitals with thin or negative operating margins. In addition, the provision would create yet another disincentive to adopt the Medicaid expansion among the 10 remaining non-expansion states.” https://ccf.georgetown.edu/2025/05/27/medicaid-and-chip-cuts-in-the-house-passed-reconciliation-bill-explained/

In other words, this Big Ugly Bill is trying to destroy Medicaid by not paying providers enough to remain in business, thus reducing medical care options for people who will stop seeking medical care, thus not use the Medicaid insurance. Medicaid providers include all the care facilities (hospitals, nursing homes, clinics, specialists, mental health, etc., as well as the doctors, nurses, specialists, radiologists, laboratories, technicians, aides, schedulers, and anyone who works in the medical care field). It means facilities will shut down and people will lose their jobs, as well as medical care will move out of communities, rural areas, and even metropolitan areas as funding declines. People will die.

Summary for Part II

Cuts to Medicaid and squeezing the rules so that States are boxed in impacts everyone in every community, rural, urban or suburban, metropolitan, and everywhere. The loss of facilities and providers and all the people who support medical care will be enormous and devastating for a large swath of our population and put enormous and even breaking pressure on any facilities and providers who are left standing.

Be prepared. Make sure your care provider and the facilities that you use to get emergency care, urgent care, mental health care, substance abuse care, nursing home care, and any other kind of care will still be available after these cuts and changes are implemented. If they are not, find out what options you will have and make plans for what you can and will be able to do when it happens.

An Aside: I retired last year and had to fill a hole to cover my health care by acquiring insurance for the time between my retirement and when I would automatically be signed up for Medicare and no longer have a choice of what insurance I wanted. In the transition, I signed up for an ACA plan, which doesn’t cover all my providers, dental or vision. I kept the Cobra for dental and vision, and I got a medical plan I liked and could afford that at the very least covered my primary care physician.

As I transitioned out of the work world and employer provided insurance, I ran into a blast of bad news about the providers I had been using for years. They did not accept Medicare, or Medicaid for that matter. This was good to know, but I had to find a new Optometrist and another important doctor that is part of my care team. It was devastating to lose one of my most ardent supporters in my health care journey because they do not take Medicare.

I did not have to find a new Primary Care physician, but I wanted one, so when I went to look, I made sure they would take Medicare. Then came the time to select whether I wanted Medigap (Medicare Part C) or a Medicare Advantage package with Medicare. Again, my providers became an issue. While I can get vision and dental, not all providers are in every network for every company that offers an advantage plan.

So, I found out, unfortunately, that not only am I forced into Medicare, the premium of which is taken from my Social Security before I get it, but that I am forced to accept plans from only one insurance company, a company I do not care for. The plan is good. I detest the company. So, I got signed up for that.

Just a heads up that Medicaid, Medicare, and the combination of the two for some can wreak havoc on your medical care. Plus, some programs are not even available outside of large metro areas reducing care availability and increasing the costs. Cutting through all the red tape is a nightmare, and I am thankful for the person who does that for a living and offers their services to me for free – they get paid by the Insurance company. I made him work really hard for his money and I would not be “pushed” into accepting something I did not want regardless of his “insurance salesman” approach.

NOTE: So, take your time and understand where you are with whatever you have for health care. All the changes to Medicare, Medicaid, CHIP, and even SNAP are going to impact every single American whether you use these programs or not. Our economy depends on the funds that these programs use to also provide medical care and food to all of us, not just people who are signed up for them.

Keep Pounding On Congress! What they did was wrong. The worst of it won’t take effect until after the Mid-terms and the “R’s” are hoping that they can convince people that they will go back and “fix” what they are destroying, or that all of us 90% are “bad” and are taking advantage, moochers and spongers off the government – a government who we paid taxes into all our lives and expect a return on our investment. A government the rich and selfish have NOT paid a lot of taxes into and do not need these services.

Part III continues the Medicaid Changes (I have like 90 pages of the Big Ugly Bill to go to complete the Medicaid review).

Research & Additional Reading:

The Big Ugly Bill - https://www.congress.gov/bill/119th-congress/house-bill/1/text

Medicaid Program; Streamlining the Medicaid, Children's Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes - A Rule by the Centers for Medicare & Medicaid Services on 04/02/2024 - https://www.federalregister.gov/documents/2024/04/02/2024-06566/medicaid-program-streamlining-the-medicaid-childrens-health-insurance-program-and-basic-health

42 U.S.C. 1396p - Liens, adjustments and recoveries, and transfers of assets - https://www.govinfo.gov/app/details/USCODE-2010-title42/USCODE-2010-title42-chap7-subchapXIX-sec1396p

42 U.S. Code § 1396p - Liens, adjustments and recoveries, and transfers of assets - https://www.law.cornell.edu/uscode/text/42/1396p

STATE PLANS FOR MEDICAL ASSISTANCE^[6] - https://www.ssa.gov/OP_Home/ssact/title19/1902.htm

Federal Medical Assistance Percentage (FMAP) for Medicaid and Multiplier - https://www.kff.org/medicaid/state-indicator/federal-matching-rate-and-multiplier/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D

Medicaid and CHIP Cuts in the House-Passed Reconciliation Bill Explained - https://ccf.georgetown.edu/2025/05/27/medicaid-and-chip-cuts-in-the-house-passed-reconciliation-bill-explained/

Summary of Health Provisions in the One Big, Beautiful Bill Act (H.R. 1) - https://www.amcp.org/letters-statements-analysis/summary-health-provisions-one-big-beautiful-bill-act-hr-1

Directed Payments in Medicaid Managed Care - https://www.macpac.gov/wp-content/uploads/2024/10/Directed-Payments-in-Medicaid-Managed-Care.pdf

42 U.S.C. 1396a - State plans for medical assistance - https://www.govinfo.gov/content/pkg/USCODE-2010-title42/pdf/USCODE-2010-title42-chap7-subchapXIX-sec1396a.pdf

TITLE 42—THE PUBLIC HEALTH AND WELFARE - https://www.govinfo.gov/content/pkg/USCODE-2010-title42/pdf/USCODE-2010-title42-chap7-subchapXIX-sec1396a.pdf

26 U.S. Code § 5000A - Requirement to maintain minimum essential coverage - https://www.law.cornell.edu/uscode/text/26/5000A

How Will the One Big Beautiful Bill Act Affect the ACA, Medicaid, and the Uninsured Rate? - https://www.kff.org/policy-watch/how-will-the-2025-budget-reconciliation-affect-the-aca-medicaid-and-the-uninsured-rate/

Trump's spending bill cuts Medicaid: Here's what it's called in your state - https://www.axios.com/2025/07/08/medicaid-cuts-states

Trump bill's health effects won't be felt until after midterms - https://www.axios.com/2025/07/07/medicaid-impacts-tax-bill-delayed

Articles By Bluesmurf! How Our Government Works, Your Rights, Medicare, Social Security, the Big Ugly Bill, and More!

Project 20205 Tracker

https://www.project2025.observer/

Thank you for reading my substack and supporting what I do. It is ALWAYS FREE, so RESTACK and share with friends to get the word out! If you want to follow me or subscribe, click the subscribe button.

Note: All commentary on my pages are from research and/or my opinion or interpretation of what I read. The opinions of the writers of the articles are their own. I work to find reliable and highly factual content with a “central” bias. Happy researching and reading! Have a Wonderful Rest of Your Day!!!