On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was officially signed into law. The legislation is sweeping in nature and is likely to affect many industries with its tax policy and more general provisions. Specific to healthcare, the provisions affecting Medicaid and other healthcare programs are likely to have significant impacts on many healthcare organizations. This article explores some of the potential financial implications for providers, including the impact on financial statements and disclosures for the current fiscal year and beyond.
What Are the Near-Term Projected Impacts & Potential Disclosures Needed?
According to the Congressional Budget Office (CBO) and the American Hospital Association (AHA), the Medicaid provisions are projected to reduce federal spending on the program by nearly $1 trillion over 10 years and may result in the loss of Medicaid or marketplace coverage for approximately 10 million individuals.1, 2
For entities with a fiscal year-end prior to July 4, 2025, OBBBA will likely have no impact on the 2025 annual financial statements; however, these entities should consider disclosing the legislation as a subsequent event, including either the estimated impact this bill may have on the entity or that the entity is in the process of determining impacts.
For organizations with fiscal years ending on or after July 4, 2025, organizations should evaluate the OBBBA’s impacts and help ensure the financial statements and footnote disclosures reflect the impacts and adequately disclose potential risks of this bill.
What Are the Longer-Term Estimated Financial Impacts on Healthcare Providers?
Provisions within the bill, including work requirements, redetermination requirements, increased income verification requirements, and other provisions, are anticipated to increase the uninsured population by approximately 10 million individuals and drive up uncompensated care costs for providers. In addition, impacts to the Medicaid program could potentially put a hospital’s participation in the 340B program at risk.
Another consideration is that the freeze and phased reductions in provider taxes may place financial strain on state budgets, which could impact reimbursement rates. Limitations on state-directed payments (SDPs) and federal matching payments are also expected to reduce organizations’ overall reimbursement amounts.
Further, the projected budget deficit associated with the OBBBA may trigger additional reductions in Medicare spending through sequestration, which is limited to 4%, potentially reducing reimbursement to providers.
As a result, healthcare providers should revisit forecasts and projections for future years based on state-specific impacts, as these may put additional pressure on already strained margins.
What Should CFOs, Controllers, & Those Charged With Governance Consider for the Future?
Because impacts will vary by state, organizations should be aware of future impacts specific to their organization and incorporate these estimates into their strategic plans. Organizations should monitor state-level reactions and implementation of these changes, since these have not yet been implemented and are subject to future regulatory changes. Management also should closely monitor and evaluate accounting implications associated with the OBBBA changes, such as modifications to SDP and provider tax programs.
Be aware that there is an opportunity available for healthcare providers under the Rural Health Transformation Program. This program is expected to provide $50 billion in total funding, with $10 billion distributed to states each federal fiscal year from 2026 through 2030. Organizations should monitor their state’s implementation of this program and/or advocate with their state lawmakers during 2025 about possible funding needs this program could meet, as applications are due by states by November 5, 2025.
How Forvis Mazars Can Help
At Forvis Mazars, we provide assurance, accounting, tax, and consulting services for hospitals and health systems. If you have any questions about the topics raised in this article or need assistance, please reach out to one of our professionals.
This material is for informational purposes only and is not legal, accounting, or tax advice. Decisions should be based on your specific facts and consultation with professional advisors.
- 1“Estimated Budgetary Effects of Public Law 119-21, to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, Relative to CBO’s January 2025 Baseline,” cbo.gov, July 21, 2025.
- 2“CBO Projects OBBBA to Increase Uninsured by 10 Million, Federal Deficit by $3.4 Trillion,” aha.org, July 21, 2025.