H.R. 1’s health care impacts explained

The AAFP has long opposed Medicaid work requirements, which limit patient care while increasing administrative complexity and medical debt for patients, among other well-researched negative impacts. 

H.R. 1 also requires states to 

• conduct eligibility redeterminations at least every six months for adults enrolled in Medicaid expansion and 

• limit retroactive coverage to one month prior to application for expansion enrollees and two months prior to application for traditional enrollees. 

Another hit to Medicaid: reduction of provider taxes

The law prohibits the implementation of new provider taxes across states (including, in Medicaid-expansion states, local-government taxes) and gradually phases down existing provider taxes in expansion states to 3.5% by fiscal year 2032 (from today’s 6% limit). This will make it harder for states to finance Medicaid and lessen their federal matching funds. (Nursing and intermediate care facilities are exempt.) 

State-directed payments

This revision caps the total payment rate for inpatient hospital and nursing facility services at 100% of the Medicare payment rate in Medicaid-expansion states and 110% of the Medicare payment rate for non-expansion states. It grandfathers state-directed payments higher than these rates if they were submitted prior to enactment of the bill for rural hospitals, and prior to May 1, 2025, for all other providers. 

Family-planning restrictions 

Effective now through July 4, 2026, a provision in H.R. 1 prohibits any Medicaid spending to nonprofit clinicians—entities that, as of Oct. 1, 2025, are 501(c)(3) organizations, described as “essential community providers” in 45 C.F.R. 156.235)—“primarily engaged in family planning services, reproductive health and related medical care” if abortion is among the available procedures. This provision targets Planned Parenthood but applies to any family-planning service, including STI testing, birth control and cancer screenings. 

Cost-sharing

H.R. 1 requires states to impose cost-sharing of up to $35 per service on expansion population adults with incomes within 100% to 138% of the federal poverty line. It exempts primary care, mental health and substance use disorder services from cost-sharing, however, and excludes services provided by federally qualified health centers, behavioral health clinics and rural health clinics. 

Rural health

The law’s Rural Health Transformation Fund dedicates $50 billion in grants for states to use between fiscal years 2026 and 2030 to cover certain costs for rural health care efforts. The Senate added this provision to H.R. 1 just ahead of its passage, in response to outcry over the draft legislation’s $1 trillion reduction to federal health care spending. Early estimates suggest that the fund could offset about one-third of the estimated loss of federal Medicaid funding in rural areas. 

The fund’s listed uses include promoting care interventions, paying for health care services, expanding the rural health workforce and providing technical or operational assistance aimed at system transformation. Eligible facilities include rural health clinics and community health centers but not stand-alone physician practices. 

Supplemental Nutrition Assistance Program (SNAP) changes

The law prevents re-evaluation of SNAP benefits beyond inflation, which would keep SNAP benefits from being updated based on changes to nutritional guidelines. It also implements state-federal cost-sharing for states with payment error rates over 6%, which would apply to 47 states. 

Medicare 

In a provisional win for family physicians, the law increases Medicare physician payment by 2.5% but does so for just one year, starting Jan. 1, 2026.  

The 2026 Medicare physician fee schedule proposed rule, which CMS released shortly after H.R. 1 was signed, uses this temporary statutory increase as the base for a total payment increase of 3.3% next year (3.83% for physicians participating in alternative payment models). The AAFP continues to push for permanent Medicare payment reform that includes annual inflationary updates.  

In another barrier to care, the law restricts Medicare eligibility to U.S. citizens, green card holders, certain immigrants from Cuba and Haiti and people residing under the Compacts of Free Association. It eliminates Medicare eligibility for people not included in these groups, including those with temporary protected status, refugees and asylees. 

ACA impacts

H.R. 1 does not extend the ACA’s enhanced premium tax credits past their scheduled expiration at the end of 2025. The Academy has pushed for legislation supporting such an extension.  

The law additionally 

• treats individual market bronze and catastrophic plans as high-deductible health plans (HDHP) that can be paired with a health savings account, 

• permanently extends a COVID-era flexibility that allows sponsors of HDHPs to provide pre-deductible coverage of telehealth services for enrollees, 

• bars anyone who enrolls in a plan via a non-Qualifying Life Event special enrollment period from receiving either premium tax credits or cost-sharing reductions beginning in 2026, 

• requires pre-enrollment verification of eligibility (a change from returning enrollees having been auto-renewed in the same or similar plan during open enrollment), 

• restricts subsidized ACA marketplace coverage eligibility for certain immigrants and 

• eliminates eligibility for many lawfully present immigrants (including refugees, asylees and people with Temporary Protected Status) beginning Jan. 1, 2027. 

Caps on federal student loan borrowing

H.R. 1 eliminates Grad PLUS loans and caps unsubsidized professional (e.g., medicine) borrowing at $50,000 a year and $200,000 lifetime. The AAFP, both individually and alongside other stakeholders, strongly opposed this and other student loan-related provisions and continues to express strong concern about their potential to further decimate the primary care workforce. 

Some good news for family physicians

Following the Academy’s advocacy, lawmakers stripped from the version of H.R. 1 signed into law 

• a proposal to exclude medical and dental residents from participating in the Public Service Loan Forgiveness Program (PLSF) program and 

• a ban on Medicaid funds being used to pay for gender-affirming care services for any individuals. 

The law will allow individuals with health savings accounts to use those funds to pay for direct primary care (DPC) arrangements, beginning Jan. 1. The AAFP had long called for this change, in line with its DPC advocacy.  

The AAFP also successfully opposed policy in draft versions of H.R. 1 that would have undermined the financial viability of independent practices. The House passed a version of the bill that would have disallowed independent physician practices from being able to take advantage of state work-arounds for State and Local Income Tax (SALT) deductions if the business were also using small business deductions on pass-through income. The AAFP joined numerous other medical associations in opposing this specific provision, and it was removed from the final version.