The more things change: Navigating the next healthcare crisis under the One Big Beautiful Bill

The One Big Beautiful Bill (OBBB) was signed into law on July 4, 2025, and represents the most significant change to healthcare coverage and financing since 2010’s Affordable Care Act (ACA). The law changes Medicaid eligibility and financing, ACA tax credit eligibility and many other provisions that will impact healthcare providers (see here for full details). Taken together, the OBBB is projected to decrease healthcare coverage and increase bad debt for hospitals and health systems. All providers will be affected, with the degree of disruption varying widely across and within states.

The Congressional Budget Office (CBO) has estimated that approximately 11.8 million more people will be uninsured by 2034 due to changes in the OBBB.¹ That number will grow if enhanced premium tax credits are not extended at the end of 2025. A look in the rearview mirror reminds us that before the ACA in 2010, the uninsured rate was 17.8% (approximately 46.5 million people). As of 2023, the uninsured rate had fallen to 9.5% (approximately 25.3 million people).

In some ways, we have been here before. Providers have weathered numerous disruptions and crises over the years: the Balanced Budget Act of 1997, the Great Recession, the ACA and the COVID-19 pandemic, to name a few. However, many macro factors have shifted, and legacy playbooks will not provide the answers for an evolving healthcare environment. Today’s landscape includes fragile post-pandemic financial stabilization, payers grappling with new margin pressures, employer premiums outpacing inflation, costs required to provide care that have surged nearly 50% since 2010 and unprecedented workforce challenges including shortages of primary care physicians, behavioral health professionals, nurses, direct care workers and others that accelerated during the pandemic. Although the challenge of caring for an underinsured population is familiar, the landscape is now different, with little margin for error.

Providers also have new solutions at their disposal. Perhaps the most promising change since the ACA is the acceleration of artificial intelligence (AI) and automation tools that promise a much-needed avenue for gaining efficiencies and advancing outcomes across the industry. At the same time, these new tools require investment, deliberate partnerships, cross-functional coordination and strategic prioritization to realize their potential.

The CBO projects that over the ten-year period ending FY 2034, the OBBB will reduce cumulative federal health spending by approximately $1 trillion. This impact ramps up over time, with 59% of the maximum annual spending reductions expected to impact providers in FY 2029.² In general, meaningful increases in uncompensated care could begin in 2026³ and accelerate in 2027, increasing in subsequent years. The next 18 months will be a critical period for hospitals and health systems, who must assess the likely impacts of the law on their local population and launch a coordinated plan to navigate new challenges.

Planning with pace and diligence

There will be variability in impact within and across states — reductions in provider tax thresholds, state Medicaid expansion status and flexibility on design and timing of new Medicaid requirements will lead to wide variations in impact depending on geography. For some, the magnitude of change could threaten their ability to sustainably serve their local population unless mitigated through other efficiency gains. It goes without saying that achieving high-quality outcomes, positive patient experiences and improved access are foundational goals for all health systems. However, future financial challenges will require many systems to find ways to do more with less. Flourishing in the face of uncertainty will require focus on four imperatives: margin transformation, care delivery realignment, structural resilience and technological enablement.

1. Margin transformation
   • Intensified cost optimization: For those that haven’t fully optimized internal costs, now is the time to focus on evergreen cost efforts, including optimizing purchasing, throughput and administrative workflows to protect operating margins, and sustaining those improvements with ongoing monitoring and agile adjustments. For many systems, it may be time to focus on the next frontier of cost management, including portfolio optimization and service line rationalization for transformative, enduring results.
   • Strategy and financial planning: Strategy must be interlinked with financial planning — including aligning financial goals with missions, assessing the affordability of approaches and using scenario planning to prepare for potential risks and rapid changes. With scarce resources and often intense competition, organizations must develop a clear enterprise value proposition that enables cohesive strategic choices about what they stand for and will prioritize in the future.
   • Payment innovation: Start by optimizing performance through the entire revenue cycle, recognizing that every unrealized dollar counts. Next, take a strategic approach to private payer relationships. Sophisticated providers will use payer scorecards, relationship prioritization, alternative payment arrangements and novel partnerships to redefine payer strategy. Nuanced approaches must be win-win to acknowledge payer (and employer) margin realities, and technology should be fully leveraged to reduce administrative complexities and enable two-way communication.
2. Care delivery realignment
   • Ambulatory specificity: Be deliberate about the shift from inpatient to outpatient care, where ambulatory surgery centers and other options can deliver higher margins with added convenience for patients. Not all ambulatory sites are created equal, and potential site neutral payment policies bring an added dynamic that requires nimble execution. Consider partnerships to both accelerate the strategy and diffuse risk.
   • Physician and clinician workforce: Changes to federal support of medical student loans, potential impact on international medical graduates and other provisions may exacerbate staffing difficulties and steepen the upcoming “retirement cliff.” Maintaining the right workforce for future needs will require more than hiring incentives; providers need to optimize workflows and ensure clinicians are equipped to practice at the top of their license — and ideally, at the top of their competency — to maximize the impact of care. Demand management — including asynchronous visits, digital intake and self-service — can play a role. These efforts, along with strong physician alignment and partnerships, should underpin a robust recruitment and retention program.
   • Community health partnerships: Patients without coverage often delay care until illnesses become acute, particularly in vulnerable communities, where social needs and barriers to care are higher. Partnerships with local social service teams and clinics can reduce urgent hospitalizations with preventive services.
3. Structural resilience
   • M&A and partnerships: When managed well, consolidation can be a lifeline, delivering economies of scale and tech-enabled best practices that aren’t possible for smaller footprints. Historically, financial pressures increase M&A for these reasons, and M&A will likely rebound from its current levels as financial pressures rise. Amid current regulatory uncertainty, regulators may be more open to M&A deals that preserve patient access. However, well-designed strategic partnerships can also offer an opportunity to combine resources and achieve efficient scale for clinical innovation, site of care expansion and implementation of transformative technologies — especially for high-cost, high-complexity AI investments.
   • Policy advocacy: Staying close to state and federal legislators can accelerate visibility into how implementation will evolve and help providers influence positive change, ultimately building a network of advocates. Policy makers need to hear from providers to understand how legislation will impact community health. This is particularly true at the state level, where upcoming OBBB implementation choices will shape the future of care.
   • Innovation and new ventures: In certain cases, providers with the right scale and resources have found success investing in new ventures and innovation incubators. This success often comes from initiatives incubated outside hospital walls, yet deeply connected to the core business, driving efficiency, clinical improvement, patient experience and access. With the right innovation infrastructure, connections with external partners and dedicated focus, these efforts have potential to be a differentiator.
4. Technological enablement
   • Artificial intelligence: AI and new automation tools offer enormous potential and must be part of the answer. Applied correctly, they can be force multipliers, accelerators and automators that unlock transformation across imperatives in your post-OBBB playbook. Studies estimate that wider adoption of AI could produce savings of 5% to 10% in U.S. healthcare spending, resulting in approximately $200 billion to $360 billion annually. AI tools can generate new revenue, e.g., improving throughput, optimizing revenue cycle, improving patient access or implementing solutions that recruit and retain consumers. Health systems that take a “wait and see” approach will soon find themselves behind, missing out on valuable months of test-and-learn opportunities needed for the challenging landscape ahead. Being ready includes developing the right governance to evaluate AI solutions and building implementation skills to achieve clinical, financial and patient experience outcomes. This transition will take iterations and cultural shifts; providers shouldn’t wait for financial urgency to get started.
   • Real-time visibility and agility: In a rapidly changing landscape, management systems must equip leaders to understand what is changing and enable corrective actions. Today’s technologies and AI enable data intelligence that wasn’t possible in the past. A tech-enabled, robust management system is critical to identifying key signals and adapting.
   • Information technology (IT) as a strategic partner: IT needs to be a top priority across the entire C-suite. The growing importance and complexity of AI and advanced automation have made robust enterprise IT capabilities essential to operations, finance, strategy, clinical outcomes and patient experience. Strategic technology decisions and a cohesive IT approach are crucial to effectively manage an expanding ecosystem of tools and sustain the organization's mission.

Take deliberate steps for transformation

With urgent shortfalls on the horizon, a scattershot approach across departments and leaders can deplete resources and jeopardize outcomes. Instead, providers should adopt a unified, proactive strategy focused on transforming margins, realigning care delivery and building structural resilience — all supported by technological enablement — to successfully navigate the transition to OBBB. By beginning these efforts now, organizations will be best prepared to navigate the post-OBBB era with sustainable and effective operations that continue to deliver on their missions.

¹ Based on the most recent CBO estimate, which does not reflect the final legislation passed by the Senate.

² By the end of FY 2029, cumulative reductions in spending represent 26% of the total 10-year reduction.

³ Due to currently scheduled expiration of enhanced premium tax credits; these may be extended, which would delay enrollment impacts.