How the One Big Beautiful Bill Changes Medicaid for Older Adults and State Health Policy

This special episode of Health Affairs This Week explores the transformative impact of the 2025 Budget Reconciliation Bill—commonly known as the One Big Beautiful Bill Act (OBAA)—on Medicaid, with a specific focus on older adults and state health policy. Host Katherine Ornstein interviews Hemi Tuwarsin, Executive Director of the National Academy for State Health Policy (NASHP), who provides deep insight into how OBAA’s provisions—particularly community engagement requirements, citizenship restrictions, and changes to Medicaid financing—will affect older Americans and their caregivers. While older adults (65+) are exempt from new work requirements, those aged 50–64 and their caregivers face significant new hurdles in maintaining eligibility. Tuwarsin emphasizes the growing fiscal pressure on states, both from federal funding reductions and constrained state budgets, which may lead to cuts in home and community-based services and provider reimbursements. Despite these challenges, she highlights promising innovations, especially through the $50 billion Rural Health Transformation Fund, with several states proposing PACE expansions, dementia care initiatives, and smart home technologies to support aging in place. The episode concludes with a call for states to prioritize integrated, sustainable models of care that blend funding sources and leverage technology to improve outcomes for older adults. Key takeaways include: 1) The community engagement requirement will impact 50–64-year-olds and caregivers, not those over 65; 2) Medicaid financing changes will reduce state flexibility in provider payments and home care funding; 3) States are increasingly investing in rural aging initiatives, including PACE programs and fall prevention tech; 4) Program integrity audits will intensify, requiring states to justify high-cost services like home care; 5) There is growing momentum to integrate funding across Medicaid, the Older Americans Act, and private partnerships to sustain long-term care. The overall tone is cautiously optimistic, acknowledging systemic challenges while spotlighting state-level innovation and resilience.