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Reconciliation Bill Signed. Now What?

The Situation Report | July 7, 2025

President Trump signed the federal reconciliation bill on July 4 after the bill passed Congress on July 3.

The Reconciliation bill would provide for approximately $4.2 trillion for continuation of tax cuts, plus new tax breaks sought by the President and Congress (such as “no taxes on tips,” expanded child tax credit, expanded deduction for seniors) over 10 years, while reducing federal spending by approximately $1.4 trillion.

The bill contains the House and Senate’s combination of sweeping provisions related to Medicaid, most of which apply to categories of Medicaid services, procedures or coverage outside the direct realm of home and community-based services. However, the implications are substantial for all areas of health, and potentially of all areas of state finance, as states determine how they will in turn account for and navigate the changes in federal aid levels or coverages.

Many of the bill’s provisions and how they will play out nationally, in New York and across the states, will be complex, and will require much further analysis and breakdown in presentation than can be provided in today’s Situation Report.

However, HCANYS can report the following categories of health/Medicaid provisions in the final bill:

  • By January 1, 2027, requires that certain Medicaid eligible individuals take part in a combination of at least 80 hours /month of work, education or volunteer hours. This is reported to be the largest single portion of the federal savings at $325.7 billion over the ten-year CBO scoring period. (Source:  National Alliance for Care at Home)
  • Excludes, or for some populations narrows, the circumstances for noncitizens to receive Medicaid coverage.
  • Freezes state-imposed provider taxes and tax rates in effect of as May 1, 2025, with certain specified exemptions.
  • Beginning July 1, 2028, creates an additional, new home and community based services waiver that will cover individuals who need these services, but do not otherwise meet the long term institutional care threshold as a standard of eligibility.
  • Eliminates certain Medicaid enrollment practices that have been used to by states to ease the process.
  • Creates additional requirements for “budget neutrality” for state waivers, such as the 1115 Medicaid waivers.
  • Requires eligibility determinations every six months, instead of annual redeterminations.
  • Places further parameters on state directed payments to managed care plans, which are further intended for providers directly.
  • Limits the eligibility of retroactive Medicaid coverage for certain populations and services.
  • Revises the home equity limit for determining Medicaid eligibility for long term care services.
  • Places a moratorium on implementation of the staffing standards/ratio rule for long term care facilities.
  • Contains provisions related to preventing claims for or by deceased patients and providers.
  • Provides $10 billion annually in Federal funding over FYs 2026–2030 to enhance rural health care. States would be required to submit a rural health transformation plan to the Centers for Medicare & Medicaid Services (CMS) Administrator.
  • Expands access to Health Savings Accounts.

HCANYS attended a briefing on July 2 from the NYS Department of Health and the Governor’s Office. As provisions were still not settled in the final bill at the time of the NYS briefing, the projections of fiscal impact to NYS were still in flux, although ranged into the billions of dollars annually.

HCANYS will be working with our state and federal advocacy teams on discerning the results, including anticipated fiscal impacts, and next steps for elements of Medicaid and other federal budget issues not contained in the reconciliation bill, but potentially items that may be revisited in the fall months (e.g., provisions that would have fiscally penalized states for maintaining state-only Medicaid coverage for certain noncitizens excluded from Medicaid under the newly enacted law).

HCANYS will report on all significant developments related to New York’s health and Medicaid services, as more information becomes available, and will advise the membership of key steps in both state and federal advocacy.