1. Medicaid Cuts (~$700–800 billion):
• Description: The OBBBA imposes stricter eligibility requirements, work requirements, and administrative reforms to reduce Medicaid spending, which supports healthcare for low-income, elderly, and disabled Americans. The House version introduces work requirements for childless adults without disabilities by the end of 2026, two years earlier than initially proposed. The Senate draft adds work requirements for adults with dependent children over 14 and reduces the Medicaid provider tax (a mechanism states use to draw federal matching funds) from 6% to 3.5% by 2031.
• Mechanisms:
• Work Requirements: Expands requirements for “able-bodied adults” up to age 64, with exemptions for parents of children under 14.
• Program Integrity: Removes deceased individuals from rolls, limits retroactive coverage from three months to one month, and freezes new provider taxes to prevent states from inflating federal cost-sharing.
• Eligibility Tightening: Reduces enrollment by enforcing stricter income and asset verification, potentially affecting 10.9 million Americans who may lose coverage by 2034.
• Estimated Savings: The CBO estimates $700–800 billion in Medicaid savings, the largest single category of cuts.
• Criticism: Six Nobel laureate economists, including Joseph Stiglitz and Paul Krugman, argue that these cuts disproportionately harm low-income households, increasing inequality and potentially pushing 3.9% lower after-tax incomes for the poorest 10% of Americans.