CAFP’s H.R. 1 Implementation Series
On July 4, 2025, President Trump signed H.R. 1 or the “One Big Beautiful Bill,” into law. H.R. 1 is a multi-issue budget reconciliation bill that includes changes to federal funding levels, program eligibility rules, and administrative requirements across several policy areas, including healthcare. The legislation advances federal budget objectives and policy reforms, with downstream effects for state budgets, health systems, and health program beneficiaries. H.R. 1 will be implemented in phases, with provisions beginning July 4, 2025, and continuing through full implementation in 2030.
Because H.R. 1 will be implemented over several years, CAFP will provide a series of updates on our blog highlighting key provisions as they take effect and examining what these changes may mean for California patients and family physicians. The series will cover changes to healthcare coverage, Medi-Cal eligibility and financing, provider payments and other policies that may affect the delivery of care across the state. Blog updates will be shared through CAFP’s Legislative Update newsletter and the CAFP 365 app to help members stay informed as implementation dates approach and additional federal and state guidance becomes available.
An overview of the major H.R. 1 provisions expected to impact California patients, family physicians and the broader healthcare system is provided below.
Impacts on Hospitals and Nursing Homes
- Lower provider and hospital payments: H.R. 1 will reduce reimbursement rates by capping Medicaid state-directed payment (SDP) programs and gradually align payments closer to Medicare levels, which are typically lower than SDP rates. This will place new financial pressure on hospitals and healthcare providers statewide.
- Increased risk for rural hospitals: Although the bill establishes a temporary Rural Health Transformation Program, the funding will offset only a portion of projected cuts, leaving many rural hospitals, already facing workforce shortages and financial challenges, at greater risk of closure.
- Limits on nursing home staffing standards: The Department of Health and Human Services is prohibited from implementing or enforcing nursing home staffing ratios that were finalized during the Biden administration until 2034.
Cuts to Medicaid Eligibility and Financing
- Constraints on Medi-Cal financing: H.R. 1 will restrict California’s use of the Managed Care Organization (MCO) tax that helps fund Medi-Cal and draws down federal matching dollars. Beginning in 2028, tax rates will be reduced, weakening a major state financing mechanism.
- Work Requirements: Certain Medi-Cal enrolled adults will be required to work or participate in qualifying activities for at least 80 hours per month or be attending school part time. These requirements will increase administrative burdens and lead to coverage disruptions for patients .
- More Frequent Enrollment Renewals: Medi-cal enrollees will be subject to more frequent eligibility redeterminations, shifting from annual to semiannual verification. These changes will increase administrative burdens and lead to coverage disruptions for patients .
- Medi-Cal eligibility reductions for certain populations: Some lawfully-present immigrants, including survivors of trafficking and domestic violence, will lose access to full-scope Medi-Cal and will be limited to emergency services only using a fee-for-service model.
- Higher out-of-pocket costs for Medi-Cal enrollees: Certain Medi-Cal expansion enrollees will face new copayments for some services starting in 2028, increasing cost-sharing for low-income patients.
- Reduced retroactive Medi-Cal coverage: Retroactive Medi-Cal coverage will be shortened, increasing the risk of medical debt for patients and uncompensated care costs for providers.
Changes to ACA Marketplace Health Insurance
- Higher premiums due to expired tax credits: Enhanced Premium Tax Credits that helped keep Covered California premiums affordable for nearly 2 million Californians have expired and were not extended under H.R. 1. As a result, many enrollees have already seen significant premium increases.
- Shorter open enrollment period: H.R. 1 shortens the open enrollment period starting in 2027, reducing the time consumers have to sign up for or change coverage. Automatic renewals will be eliminated beginning plan year 2028, giving people less time and more hurdles to enroll in coverage.
- Reduced coverage options for certain immigrant populations: DACA recipients are no longer eligible for health or dental coverage. In addition, eligibility for financial assistance will be limited to certain immigrant groups, including lawful permanent residents, select humanitarian entrants, and Compact of Free Association (COFA) migrants.
- Fewer enrollment opportunities for low-income households: The special enrollment period for low-income households has ended, requiring these families to have a qualifying life event in order to enroll outside of open enrollment.
- Stricter verification and repayment requirements for financial assistance: Automatic extensions to resolve income verification issues will no longer be available, repayment caps on excess premium assistance will be eliminated, and enrollees will be required to confirm eligibility before receiving financial help. Automatic re-enrollment with financial assistance will also be discontinued for individuals who do not update or verify their information.
- Health Savings Account Funds for Direct Primary Care: Certain Covered California plans now qualify as high-deductible health plans, allowing enrollees to contribute to Health Savings Accounts (HSAs). HSA funds can also be used to pay for direct primary care membership fees, within monthly limits.
For California patients and family physicians, many of these changes are expected to create new barriers to accessing and delivering care. Increased eligibility verification requirements, higher out-of-pocket costs, and reductions in coverage options may lead more patients to delay or forgo needed medical care, particularly among low-income families and vulnerable populations. Coverage disruptions and reduced retroactive eligibility could also increase medical debt and uncompensated care costs. At the same time, lower reimbursement rates and new financing constraints will place additional financial strain on physician practices, hospitals, and safety-net providers already facing workforce shortages and rising operational costs. Family physicians may also experience increased administrative burdens associated with coverage verification, eligibility changes, and care coordination for patients navigating insurance disruptions.
CAFP will continue to monitor federal and state implementation of H.R. 1 and provide updates as additional guidance and requirements are released. A complete timeline of H.R. 1 implementation can be found here.
