Aug 10, 2025
Medicaid was signed into law back in 1965 by President Lyndon B. Johnson. It began as a program to help states fund access to health care insurance coverage for Americans in financial need.
Throughout the decades, Medicaid has expanded from practically an afterthought to a program that provides health care coverage to approximately 1 in 5 people across the country.
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The combined federal and state spending on Medicaid totals around $880 billion each year. It also represents nearly $1 in every $5 spent on health care in the U.S.
However, after President Donald Trump signed the One Big Beautiful Bill Act into law on July 4, the Congressional Budget Office estimated in August the number of uninsured would increase by 10 million over a decade, the bulk from Medicaid.
How did Medicaid get so big?
Medicaid's growth had been partly due to more expansive eligibility that Congress enacted over time. But the basic financial framework of the program, which involves federal assistance funds being spent to support state-run Medicaid programs, is another reason.
“Every state was able to sign on and to negotiate issues like coverage,” Keith A. Wailoo, a professor of history and public affairs, told The Wall Street Journal. “That flexibility also allowed states to, in some ways, tailor the system to their population.”
And as states expanded eligibility over the years, the federal government would often follow their lead. In the beginning, Medicaid only provided coverage for the poor. But over time, that eligibility went on to include the disabled, pregnant women in poverty, children and single working adults with lower incomes, according to The Journal.
“These were incremental changes to try to leverage the program to help fill in the gaps for individuals that had no other access to insurance coverage,” Robin Rudowitz, director of the Program on Medicaid and the Uninsured at KFF, told The Journal.
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As of April 2025, more than 71 million people were enrolled in Medicaid.
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How Trump's 'Big Beautiful Bill' may change that
The CBO had previously estimated Medicaid provisions in the bill could cut federal support by about $800 billion over a decade. Such a steep cut could lead to states re-evaluating their budgets and possibly cutting services, including to health care programs.
Some of the changes to the program under the One Big Beautiful Bill Act include imposing stricter eligibility requirements — including 80-hour monthly work requirements for many adults on Medicaid.
States will be required to verify these individuals meet the criteria, which can pose administrative challenges. Some of those unable to find work or are retired may also be out of luck.
"Imposing work requirements doesn't actually lead to additional employment, but does create these barriers for people being able to maintain their coverage," Rudowitz said.
While it’s clear the Big Beautiful Bill will make a sweeping impact on the health insurance landscape in America, many changes will be on a state-by-state basis. How it will impact your bottom line may vary. As states adapt to this new reality, dig into the details of how this legislation will impact your Medicaid program to find out if you or your loved ones are still eligible or if the coverage changes.
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Sarah Sharkey is a personal finance writer who enjoys helping people make optimal financial decisions for their situation. She loves digging into the nitty-gritty details of financial products and money management strategies to root out the good, the bad, and the ugly. Her goal is to help readers find the best course of action for their needs.
