US Medicaid Cuts Begin Phasing In Through 2026, Threatening Coverage for Millions

The restructuring of the US public health insurance system continues to unfold throughout 2026 as provisions of the One Big Beautiful Bill Act phase in. According to the nonpartisan Congressional Budget Office (CBO), the legislation is projected to result in approximately 11.8 million people directly losing Medicaid coverage, with a further 3.1 million losing marketplace plan eligibility as federal subsidies are reduced. An additional 4.2 million covered under ACA marketplace plans face losing coverage when enhanced premium tax credits expire later in the year.

Several major provisions are scheduled to take effect throughout 2026. Medicaid recipients who do not meet a new 80-hours-per-month community engagement or work requirement face coverage termination. Critics note that such administrative barriers historically cause coverage losses not due to ineligibility but due to paperwork complexity — a dynamic observed in Arkansas in 2018, when 17,000 people lost Medicaid in three months after a brief work requirement was introduced, with no measurable employment increase.

From October 1, 2026, the law restricts federal Medicaid funding for noncitizens, limiting eligibility to a narrow set of immigration categories. States wanting to maintain coverage for affected groups will need to use state-only funds. A RAND Health analysis estimates state Medicaid budgets will contract by a total of $665 billion over the next decade.

Healthcare advocacy groups, state governors, and provider organizations have raised alarms about the downstream effects on behavioral health services — often classified as optional under Medicaid and among the first benefits cut when states face funding pressure. Private health insurers and managed care organizations are reviewing contracts and, in some cases, freezing new provider contracting in anticipation of membership losses. KFF projects Medicaid enrollment will be largely flat in fiscal year 2026, even as program spending grows by approximately 7.9% due to provider rate increases, greater beneficiary health needs, and rising costs for long-term care, pharmacy benefits, and behavioral healthcare. The intersection of Medicaid cuts with the broader healthcare affordability debate is expected to feature prominently ahead of the November 2026 mid-term elections.