From Flexibility to Forced Alignment: The One Big Beautiful Bill Act’s Reshaping of Medicaid Federalism

Abstract The One Big Beautiful Bill Act (OBBBA) enacted historic cuts to Americans’ safety net and narrowed the state flexibility that has long characterized Medicaid federalism. By compelling new Medicaid cost-sharing of up to $35 per service, the implementation of new work requirements, and more frequent eligibility redeterminations, as well as precluding many immigrants from enrolling in Medicaid, CHIP, and Affordable Care Act marketplace plans, the law ties states’ hands in the delivery of health insurance, with harsh federal penalties for noncompliance. This article reviews Medicaid’s historic roots in federalism, and its intersection with state-driven policies emanating from the ACA. It then contextualizes prior state Medicaid policies in the administrative burden framework. It then details the core ways that the OBBBA intrudes on state flexibility in health insurance delivery, while also likely spurring a deepened partisan divide in implementation choices. It concludes by offering reflections on the future of healthcare access in this new policy landscape.