ABA Monthly Newsletter – June 2025

The One Big, Beautiful Bill/2025 Deficit Reduction and Economic Growth Act (DREGA) was signed into law on July 4th.  Best read by AI, and not read completely by at least some legislators, there are some implications we can take to the bank.

Over the 2025 – 2034 window, DREGA enacts $4.85 trillion in new deficit‐increasing measures – about $4.5 trillion from permanent individual and business tax cuts and roughly $350 billion in additional outlays for defense, border security, NASA, and similar items.  Over that period, it also cuts about $1 trillion through reductions in Medicaid and another $186 billion from SNAP and other nutrition programs.

When combining the effects of changes to Medicaid and the Affordable Care Act Marketplaces, Congressional Budget Office (CBO) expects 16 million more people will be uninsured in 2034 than would otherwise have been the case.  Industry reporting suggests a substantial part of the impact will be felt within the first year of implementation.

Because states differ in expansion status and reliance on supplemental payments, the impact varies widely. Kaiser Family Foundation’s (KFF’s) allocation shows the five hardest-hit states – Louisiana, Virginia, Illinois, Nevada and New Jersey – face projected federal Medicaid funding reductions near 20–21 percent of their baseline, while the five least-impacted states – Mississippi, South Carolina, Florida, Alabama, and Wyoming – see more modest estimated cuts around 6–8 percent.

The Medicaid savings (cuts) are back-end loaded by design, with modest reductions in 2025–2027 and sharply larger cuts accruing after 2028.  That does provide an opportunity for providers to adapt to what will be a significant change to the operating environment.

Apropos to our world, we can conclude that many families will be denied ABA coverage.  For providers, that means fewer service hours desired, while available capacity to provide services will remain unchanged in the near-term.  The increased competition to provide services means less pressure on payers to increase reimbursement rates.  All told, that means providers will have to be super focused on operational efficiency while continuing to provide quality services.  We cannot emphasize the importance of operational efficiency enough.

Our continued best wishes and good fortune to all providers in their incredible commitment to the population they serve.

barrons.com, apnews.com, cbo.gov, kff.org/state impact, cbo.gov/Medicaid enrollees, kff – uninsured projection