OBBBA Spurs Medicaid Cuts, Threatening a Surge in Uninsured Patients

A New Law Brings Sweeping Changes to Medicaid

In July 2025, Congress passed a budget reconciliation package – dubbed the “One Big Beautiful Bill Act” (OBBBA) – that makes far-reaching changes to health coverage programs. On the surface, the law extends expiring tax cuts, but it pays for them by enacting deep Medicaid spending cuts and new enrollment. These changes include stricter eligibility verifications, work requirements for certain adult enrollees, and limits on federal Medicaid funding mechanisms. Analysts warn that the legislation will “likely result in large-scale loss of health coverage in the United States and damage America’s health care safety net. In other words, millions of people who rely on Medicaid – the public insurance for low-income and vulnerable Americans – could lose coverage in the coming years, reversing many of the coverage gains achieved over the past decade.

National projections are sobering: The Congressional Budget Office (CBO) estimates that the health provisions of the OBBBA will cause about 11.8 million people to lose health coverage by 2034 . (If other expected policy changes are included, total coverage losses could approach 17 million by that time.) In the near term, the number of uninsured Americans is set to rise sharply. Before the law, uninsured counts were already projected to reach 27 million in 2025 due to various factors. Now the OBBBA’s Medicaid cuts are expected to push roughly 16 million additional people off of Medicaid over the next decade. . That would mark one of the largest increases in the uninsured population in recent memory. As one analysis put it, it will be years before the country feels the full weight of these sweeping cuts – but the ripple effects on patients and providers will begin much sooner.

Medicaid Cuts Put Coverage – and Care – at Risk Nationwide

These Medicaid reforms strike at a program that insures over 80 million Americans, including children, working-age adults, seniors, and people with disabilities. The new “community engagement” (work) requirements alone are projected to cause millions to be disenrolled from Medicaid – even among people who are working or should be exempt – due to the burden of proving compliance or meeting paperwork deadlines. Past state experiments with similar requirements led to significant loss of coverage with no significant increase in employment , underscoring that many eligible people will fall through the cracks.

Other provisions in the law tighten eligibility and reduce funding in more subtle ways. For example, states must now conduct Medicaid eligibility redeterminations more frequently for certain enrollees and face new limits on using provider taxes to draw federal matching funds. The law also restricts Medicaid access for some groups, such as noncitizens, and introduces mandatory cost-sharing (copays) for the expansion population adults – though notably FQHCs and other safety-net clinics are exempted from these new copays . All told, federal Medicaid spending will be cut by roughly 15%, or about $1 trillion over 10 years , a massive withdrawal of support from state health programs. States will be left with “limited ability to fund the state share of Medicaid” and overall decreased federal funding for Medicaid . Many may struggle to maintain coverage levels, and some are even contemplating rolling back their Medicaid expansion eligibility to reduce costs – a move that would swell the uninsured ranks even further in those states.

For millions of individuals, losing Medicaid coverage will translate to delayed care, unmet health needs, and higher out-of-pocket costs. The human impact is stark: one study projected that by 2034, the coverage reductions could lead to over 1,400 additional deaths and nearly 95,000 preventable hospitalizations every year as people forgo needed care. The effects will hit rural communities especially hard , since many rural hospitals and clinics depend heavily on Medicaid revenue. Even a $50 billion rural health fund created by the law will only begin to offset the losses – if evenly divided, it’d give each rural hospital just ~$4.5 million per year for five years, against far larger revenue shortfalls from Medicaid cuts. Across the country, the reduction in Medicaid funding is poised to disrupt local health systems , with one analysis warning of over 300 rural hospitals at risk of closure and the loss of hundreds of thousands of health care jobs if nothing changes.

In short, the national impact of the “Big Beautiful” bill will be felt broadly: millions losing insurance coverage , deep funding cuts rippling through state Medicaid programs, and increased strain on the providers who serve low-income and uninsured patients. America’s health care safety net – already stretched thin – is about to be tested like never before. And at the forefront of that safety net are the free clinics and community health centers that care for those with nowhere else to turn.

Free and Charitable Clinics Brace for a Wave of Uninsured Patients

A nurse checks a patient’s pulse at a free clinic in Wise, Virginia, illustrating the vital role of these clinics for uninsured patients.. Free and charitable clinics across the U.S. are preparing to “pick up the pieces” left by the Medicaid cutback. These nonprofit clinics are often the provider of last resort – the places patients go when they have no insurance and no ability to pay . Even before this law, demand at free clinics has been rising. In 2024, over 6 million patient visits took place at free and charitable clinics nationwide (up from 5.7 million the year before). About 84% of patients served by these clinics were uninsured , and the vast majority live near or below the poverty line. Many are working people who simply cannot afford coverage on their own.

By pushing so many more Americans out of Medicaid, the OBBBA virtually guarantees an influx of new patients seeking care in the charitable clinic sector. NAFC, the National Association of Free & Charitable Clinics, projects that the bill would result in 7.8 million Americans losing Medicaid coverage in the coming years. “Cutting coverage further means free clinics – already overburdened – will be inundated ,” the NAFC warns. In an opinion column, leaders of a national free clinic network likewise noted that once the law takes effect, “What will happen to those 16 million [losing Medicaid]? Many will turn to their local free clinic . Every person dropped from Medicaid does not simply disappear; most will still seek medical attention at some point. Free clinics anticipate that much of this displaced patient population will show up at their doors , needing everything from basic check-ups and prescriptions to management of chronic diseases – but now with no insurance to cover even part of the cost .

The challenge is that free and charitable clinics operate with very limited resources . According to the NAFC, 81% of clinics have seen increased demand recently and more than a quarter have had to start waitlists for services.. Yet these organizations run on shoestring budgets: most free clinics have annual budgets under $250,000 – a fraction of what a single typical community health center or hospital might spend. Remarkably, 86% of free clinics do not bill any form of insurance (Medicaid, Medicare, or private) and receive little to no direct government funding. Instead, they rely on charitable donations, grants, and volunteer staff (volunteers make up 92% of the workforce in many clinics). This funding model saves taxpayer dollars, but it also means free clinics have minimal financial cushion . They already stretch every dollar to provide primary care, medications, and even specialty referrals at low or no cost to patients.

Now, with “Medicaid funding shrinks” and uninsured ranks swell, these clinics are caught in a bind – more people than ever need their help, but resources aren’t keeping pace . In fact, only 13 states provide any public funding to support free clinics, and those contributions are often modest grants that barely dent operating costs. Clinic directors worry that without significantly increased support, they cannot absorb a large uptick in uninsured patients on top of current demand. “The care doesn’t disappear with Medicaid – it shifts to our clinics,” the NAFC emphasizes, “[but] without additional support, this is unsustainable.” Free clinic patients often have nowhere else to go – many would end up forgoing care or crowding into emergency rooms if the clinics weren’t there. That makes it all the more critical to shore up these community-based clinics as they brace for a wave of newly uninsured patients in the wake of the BBB law.

FQHCs: Federally Qualified Health Centers Strained by Funding Cuts

The nation’s Federally Qualified Health Centers (FQHCs) – also known as community health centers – are another linchpin of the health care safety net. Spread across urban neighborhoods and rural towns, FQHCs provide comprehensive primary care, prenatal and maternal health, dental, behavioral health, and more to over 31 million Americans annually , regardless of a patient’s ability to pay. These centers receive federal grants (through the Health Resources and Services Administration) and enhanced Medicaid reimbursements to support their mission of caring for underserved populations. Even so, FQHCs operate under tight margins, and they rely heavily on Medicaid coverage to sustain services. On average, Medicaid accounts for about 42% of health center revenues.

It’s no surprise, then, that the “Big Beautiful” bill’s Medicaid cutbacks spell trouble for FQHCs . By CBO’s estimates, the law reduces federal Medicaid spending by roughly $1 trillion over the next decade, forcing states to shrink eligibility or payments – and that translates directly into fewer covered patients and lower reimbursements for community health centers. A recent analysis in JAMA projected that FQHCs nationwide could lose 5 million Medicaid patients , who would either become uninsured or seek care elsewhere, as a result of the 2025 policy changes. While some of those individuals might find other coverage, many will not – in fact, the study estimates health centers will gain about 1.9 million additional uninsured patients annually as people lose Medicaid. Serving more uninsured patients (who often can only pay nominal fees) in place of insured ones is a huge financial hit. The same analysis predicts FQHCs will face a $3.3 billion revenue reduction , an 18–26% drop in income on average, due to the Medicaid changes. In practical terms, that means centers would have nearly one-fifth less funding to care for a growing, poorer patient population.

At the same time, federal grant funding for health centers is under threat. In April 2025 – even before the reconciliation bill was finalized – observers were already sounding alarms that “recent federal and Congressional actions have reduced investment in CHCs” and put their operations at risk. For instance, the new administration temporarily froze certain federal grant funds for health centers early in 2025, resulting in immediate cash shortfalls, and then cut the dedicated Community Health Center Fund (CHCF) to an annualized rate of $4.26 billion (down from $4.4 billion) despite record-high patient loads. Proposals have also been floated to slash the HRSA workforce and programs that support health centers. Compounding these challenges, the OBBBA’s Medicaid cuts represent a double blow: not only will FQHCs have fewer insured patients, but those very Medicaid cuts undermine a major revenue source that keeps the clinics running . Health center leaders often cite a saying: “no margin, no mission.” With margins tightening, the mission to serve all in need becomes that much harder.

Crucially, the OBBBA did not dismantle certain safeguards for FQHCs. For example, FQHC services remain guaranteed under Medicaid’s prospective payment system (PPS) – meaning health centers should still receive their full encounter rate for each Medicaid patient they do manage to see. The law even carved out FQHCs, rural health clinics, and behavioral health clinics from the new Medicaid cost-sharing requirements, so that low-income patients won’t face co-pays when visiting those providers. Additionally, a new $50 billion “Rural Health Transformation” fund was included to assist states in shoring up care in underserved areas, which could benefit some rural FQHC sites. These measures are silver linings aimed at softening the blow for safety-net providers. However, they are relatively small concessions in the face of much larger cuts. “There is no doubt that overall, the OBBBA deals a major blow to Medicaid funding and enrollment ,” one health law expert noted, adding that, absent other interventions, it “may reverse many of the gains in health insurance coverage of the last decade.” For FQHCs, the most damaging aspect of the law will likely be the Medicaid work requirements , which “throw procedural hurdles in the way of coverage for millions of low-income adults that FQHCs across the country serve.” In states that decide to enforce these new rules, health centers anticipate many patients will churn off Medicaid – and some may delay seeking care until they are seriously ill, at which point the clinic will treat them as uninsured charity care.

In practical terms, community health center administrators now face the prospect of doing more with less . They must plan for budget shortfalls at the same time as they plan to extend services to more underinsured and uninsured patients . Many centers operate on thin margins; in fact, even before the new law, nearly half of health centers expected their uncompensated care burdens to rise, and a quarter worried their financial stability would worsen in the near future. Now those pressures will intensify. If revenue drops 20% or more as projected, difficult choices loom: staff positions may go unfilled or be cut , clinic hours may be reduced, and expansion plans may be shelved – even as waiting rooms get busier. The Commonwealth Fund warned in April that these combined cuts “could be devastating, leading to funding shortfalls and center closures” , which would leave some communities with no alternative source of care. In many underserved areas, FQHCs are the only providers available; losing them would create health care deserts where tens of thousands lose access to primary and preventive care.

A Safety Net Stretched Thin: “Do More With Less”

Taken together, the effects of the 2025 “Big Beautiful” health bill pose a monumental challenge for America’s health care safety net. Free and charitable clinics – from small faith-based free clinics to larger charitable health centers – will see surging demand as newly uninsured patients seek help. Federally Qualified Health Centers will likewise serve more people who lack coverage, even as they cope with cuts to Medicaid revenue and federal grants that have long underpinned their operations. Both types of safety-net providers share a common dilemma: their mission is to care for everyone in need, but their resources are shrinking just as needs grow . As one clinic advocate summarized, “81% of clinics [already] reported increased demand… [This bill] proposes reduced reimbursements and increased uncompensated care, severely jeopardizing nonprofit sustainability.”

For administrators of free clinics and FQHCs, the coming years will require difficult navigation and steadfast dedication . These leaders will need to innovate and tighten belts – finding ways to maintain services through efficiency, fundraising, and community partnerships – all while ensuring that quality of care does not suffer for those who rely on them. Many clinics are exploring strategies like expanding volunteer programs, forging alliances with hospitals and local charities, and advocating at the state and federal levels for emergency relief funding. There is also a push to educate newly uninsured patients about available resources (for instance, informing families about free clinics, drug assistance programs, or sliding-scale services in their area). The stakes of these efforts are literally life-and-death for vulnerable patients who might otherwise fall through the cracks.

Administrators are also raising their voices to urge policymakers to bolster support for the safety net. The National Association of Free & Charitable Clinics, for example, has called on Congress to recognize that “clinics are stepping up to meet the growing need. Congress must step up to protect them .” This could include measures like supplemental funding for free clinics, reversing or mitigating some of the Medicaid restrictions at the state level, and extending greater financial aid to community health centers beyond the current budget horizon (the primary federal grant funding for health centers is now set to expire on September 30, 2025, adding urgency to the situation). Health center advocates note that investing in these clinics saves money in the long run by keeping patients out of costlier emergency rooms and preventing more serious illnesses. In short, strengthening the safety net is a cost-effective strategy to maintain community health amidst broader system upheavals.

The tone among safety-net providers is one of resolve mixed with concern . Those who run free clinics and FQHCs have weathered many storms – from economic recessions to public health crises – and they remain deeply committed to their communities. They speak of being the “backbone” of care for underserved populations, and that backbone will not easily break. However, they cannot carry the load alone. As the “big beautiful” bill’s Medicaid changes take effect, it will take concerted efforts by federal and state officials, private partners, and local supporters to ensure that these clinics can continue to fulfill their vital role. Without additional support, the safety net’s capacity to absorb millions of newly uninsured patients is uncertain, and many vulnerable Americans could find themselves with nowhere to turn for health care .

Conclusion: Navigating the Road Ahead

In the aftermath of the July 2025 health care overhaul, the national outlook is clear : coverage is contracting and the responsibility of caring for the uninsured is shifting increasingly to charitable clinics and community health centers . This surge of patients – combined with budget cuts – means free clinics and FQHCs will be asked to do more with less . For administrators of these organizations, the road ahead will be daunting. Yet, there is also a sense of purpose driving the response. “We’re here because our patients need us,” one clinic director might say – and indeed, the commitment to community health among free and nonprofit clinics remains strong even as challenges mount.

Going forward, much will depend on policy choices and public support. Will there be stopgap funding or policy adjustments to relieve some of the pressure on safety-net providers? Will states innovate to cover those left out, or will charitable organizations be left holding the bag entirely? As these questions linger, free clinics and FQHCs are already at work : triaging new patients, expanding outreach, and finding creative ways to stretch dollars. Their role has never been more critical. If there is a hopeful lesson, it’s that America’s safety-net clinics have long been models of resilience and innovation . With adequate support, they can continue to serve as lifelines for millions of Americans caught in the coverage gap. In the face of a policy shift that threatens to widen that gap, these clinics stand ready to catch those who fall – but they will need all the help they can get to keep from falling themselves .

Sources:

• Susannah V. Gopalan, “The One Big Beautiful Bill Act Is Signed Into Law – Devastating Impacts for Health Coverage Overall; Some Silver Linings for Outpatient Safety Net Providers,”

• Association of State and Territorial Health Officials (ASTHO), “One Big Beautiful Bill Law Summary” (Legislative Alert, July 9, 2025).

• Ariana Gordillo De Vivero & Harley Jones, “Medicaid cuts will further strain free and charitable health clinics,”

• NAFC (National Association of Free & Charitable Clinics) Blog, “Clinics on the Frontlines: 2025 Data Report — What Policymakers Must Hear” (June 24, 2025).

• C. Lewis et al., “Community Health Centers Provide Care to Millions, but Cuts Could Put Them in Jeopardy,”

• A. Chatterjee et al., “Projected Health System and Economic Impacts of 2025 Medicaid Policy Proposals,”