The One Big Beautiful Bill Act (H.R.1), enacted as Public Law 119-21 on July 4, 2025, is one of the largest federal healthcare bills that was signed into law and represents a significant restructuring of federal Medicaid financing and health insurance coverage.  Although enacted federally, its consequences are felt locally in physician practices, hospitals, emergency departments, patient access to care, and communities throughout Arizona.

 

According to the Congressional Budget Office (CBO) it is estimated that 16 million Americans across the United States will be left uninsured by 2034, this including 7.8 million Medicaid beneficiaries, double check 1.5 million Affordable Care Act (ACA) Marketplace enrollees, and approximately 4 million individuals who lose enhanced ACA premium tax credits.

 

Arizona's Current Estimates Projected:

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• National Medicaid funding restrictions 

  • $700 - $800 billion over 10 years​​

• Arizona residents projected to lose health coverage​

  • Approximately 342,564​

• State estimates of Medicaid eligibility disruption​

  • Up to 550,000 Arizonans​

• Arizona Medicaid provider tax revenue at risk​

  • $1.42 billion annually​

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**These figures represent patients receiving essential care through Medicaid and ACA Marketplace coverage.**

 

Arizona is also experiencing sustained population growth, increasing demand for primary care, specialty medicine, behavioral health, emergency services, and hospital capacity. Any disruption in coverage or financing occurs within an already expanding healthcare environment.

 

One of the most significant changes under H.R. 1 is the addition of new Medicaid eligibility verification requirements. Many Medicaid recipients who receive modest wage increases may no longer qualify for Medicaid but still struggle to afford private insurance. A wage increase of just a few cent per hour to $1.00 per hour may push their income above Medicaid eligibility thresholds. While that raise may increase annual earnings by only $600 to $2,000, it can result in the loss of tens of thousands of dollars in annual healthcare costs. This leaves many working families with higher incomes on paper but significantly worse financial protection against medical costs. At the same time, H.R. 1 allows the expiration of the enhanced ACA Marketplace premium tax credits. These expanded tax credits dramatically lowered premiums for middle-income families over the past several years.

 

Without them:

• Marketplace premiums increase substantially

• Deductibles rise

• More patients become uninsured

• Patients face delayed primary care

• Emergency department utilization increases

 

For physicians, this means caring for more uninsured patients presenting later in the course of disease.

Arizona's Medicaid financing relies heavily on provider assessments. In 2025, Arizona projected approximately $1.42 billion in provider tax revenue.

 

That funding supports:

• Physician reimbursement

• Hospital directed payments

• Medicaid expansion populations

• Proposition 204 funding (state funding that supports the Medicaid expansion population)

 

Under H.R. 1, the Senate proposal gradually lowers allowable provider tax rates from 6% to 3.5% by 2031, resulting in an estimated $87 billion reduction in federal Medicaid funding nationwide.

 

For Arizona physicians, these changes are expected to reduce reimbursement while placing greater financial strain on practices serving Medicaid populations.

 

Hospitals with high Medicaid volumes are projected to experience:

• 3–5% Medicaid revenue declines.

• 1.5–2.5 percentage point reductions in operating margins.

• Physician revenue losses of 12–18% over five years in Medicaid-heavy systems.

 

These financial pressures often lead to:

• Hiring freezes

• Delayed physician recruitment

• Reduced support staff

• Postponed technology investments

• Fewer specialty services

• Reduced access to behavioral and mental services

 

Physicians are placed in a unique position to witness the downstream effects of healthcare policy directly. H.R. 1 is not simply a budget bill, it is far more it alters who has access to care, how physicians are reimbursed, and how hospitals remain financially viable.

 

Arizona's healthcare system heavily depends on Medicaid funding. Arizona is a Medicaid expansion state, and approximately 1.8 million Arizonans roughly one in five state residents receive health coverage through Arizona Health Care Cost Containment System (AHCCCS), the state's Medicaid program.

 

Practices with a smaller Medicaid population may experience as much direct financial losses compared to ones with high population but they will still be impacted. The effects of defunding Medicaid are already being seen with these two examples happening now.

 

Elevance Health has announced plans to scale back portions of its Medicaid business by exiting underperforming Medicaid markets over the next 12 to 18 months, while Centene announced it will withdraw from Arkansas Health and Opportunity for Me (ARHOME) Medicaid expansion program, citing funding challenges. These actions highlight the financial pressures facing managed Medicaid organizations and raise concerns about future provider network stability, continuity of care, and patient access to physicians, particularly in states heavily reliant on Medicaid financing.

 

With hundreds of thousands of residents projected to lose coverage, billions in healthcare financing at risk, and increasing administrative requirements placed on clinicians, physicians will be expected to deliver more care with fewer resources. The consequences extend far beyond just reimbursement. They contribute to physician burnout, workforce shortages, safety net and rural hospital instability, and ultimately impacting quality of care adversely. As healthcare policy continues to evolve, physicians must remain engaged in advocacy to ensure healthcare reforms do not impact quality of care, access to care, and sustainability of physician practices adversely.

 

References

Arizona Health Care Cost Containment System. (2025, April). Evaluation of impact of federal Medicaid proposals on AHCCCS: Limit provider taxes. https://www.azahcccs.gov/AHCCCS/Downloads/ProviderTaxReduction_OnePager.pdf

Arizona Health Care Cost Containment System. (2025). AHCCCS budget and financing information. https://www.azahcccs.gov

Centers for Medicare & Medicaid Services. (2025). Health Insurance Marketplace. https://www.cms.gov/marketplace

Centers for Medicare & Medicaid Services. (2025). Medicaid financing and provider taxes. https://www.medicaid.gov/medicaid/financing-and-reimbursement/provider-taxes/index.html

Centers for Medicare & Medicaid Services. (2025). Medicaid and CHIP enrollment data. https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/index.html

Congressional Budget Office. (2025, June 4). Estimated budgetary effects of H.R. 1, the One Big Beautiful Bill Act. https://www.cbo.gov/publication/61461

Congressional Budget Office. (2025, June 12). Distributional effects of H.R. 1, the One Big Beautiful Bill Act. https://www.cbo.gov/publication/61387

Congressional Budget Office. (2025, June 13). How H.R. 1, the One Big Beautiful Bill Act, would affect the distribution of resources available to households. https://www.cbo.gov/publication/61469

Congressional Budget Office. (2025, June 24). Information concerning Medicaid-related provisions in Title IV of H.R. 1. https://www.cbo.gov/publication/61510

Congressional Research Service. (2025, June 13). Health coverage provisions in One Big Beautiful Bill Act (H.R. 1) (R48569). https://crsreports.congress.gov/product/pdf/R/R48569

U.S. Congress. (2025). H.R. 1—One Big Beautiful Bill Act. https://www.congress.gov/bill/119th-congress/house-bill/1

Verma, V., Shah, Z., Hardge, D., & Chintaboina, N. (2025, June). One Big Beautiful Bill Act's Impact on Healthcare. Arizona Physician, Maricopa County Medical Society. https://www.arizonaphysician.com/obbba-impact-healthcare (arizonaphysician.com)

Arizona Health Care Cost Containment System. (2025). AHCCCS budget and financing information. https://www.azahcccs.gov

Arizona Health Care Cost Containment System. (2025, April). Evaluation of impact of federal Medicaid proposals on AHCCCS: Limit provider taxes. https://www.azahcccs.gov/AHCCCS/Downloads/ProviderTaxReduction_OnePager.pdf

Centers for Medicare & Medicaid Services. (2025). Medicaid and CHIP enrollment data. https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/index.html

Centers for Medicare & Medicaid Services. (2025). Medicaid financing and reimbursement: Provider taxes. https://www.medicaid.gov/medicaid/financing-and-reimbursement/provider-taxes/index.html

Congressional Budget Office. (2025). Estimated budgetary effects of H.R. 1, the One Big Beautiful Bill Act. https://www.cbo.gov

Healthcare Dive. (2026, July 8). Centene exits Arkansas Medicaid expansion program, citing funding challenges. https://www.healthcaredive.com/news/centene-exits-arkansas-medicaid-expansion-arhome/824678/

STAT. (2026, July 15). Elevance plots a Medicaid retreat as costs remain high. https://www.statnews.com/2026/07/15/elevance-health-shrink-medicaid-portfolio-high-costs/

Arizona Health Care Cost Containment System. (2025). AHCCCS Data to Inform Decision-Making. https://www.azahcccs.gov/AHCCCS/AboutUs/ahcccsinsights.html