When H.R.1—better known as the One Big Beautiful Bill Act—was being debated, proposed cuts to safety-net programs inspired constant headlines. And understandably so. While all eyes were on SNAP and Medicaid, however, little attention was being paid to another vulnerable health insurance program: Medicare.
This week marks the 60th anniversary of the Great Society initiative, which was signed into law on July 30, 1965, and designed to ensure older Americans and Americans with disabilities have access to quality, affordable health care. Over the past six decades, the Medicare program has proven to be one of the most popular forms of health insurance—given the broad access of traditional Medicare and the flexibility of many Medicare Advantage plans. But the recent budget reconciliation bill has the potential to hurt Medicare.
The potential impact of PAYGO
Signed into law by President Trump on July 4, H.R. 1 slashes spending across sectors—from infrastructure to health care—and delivers sweeping tax cuts, mostly for the wealthiest individuals and corporations. It’s also poised to balloon the federal deficit by an estimated $3.4 trillion over the next decade.
Thanks to a little-known principle tied to the national deficit, the controversial budget reconciliation bill could have a financial impact on Medicare as well.
Formally codified in the Statutory Pay-As-You-Go (PAYGO) Act of 2010, PAYGO is a budget enforcement mechanism designed to prevent the national debt from growing because of new legislation. In response to H.R.1, PAYGO would offset deficit increases through automatic, across-the-board spending cuts.
Because Medicare isn’t exempt from PAYGO, the federal program could see spending reductions of up to 4 percent each year beginning in 2026. Based on the projected deficit, the Congressional Budget Office estimates a total of $535 billion in cuts over the 2026 to 2034 period.
These cuts would be applied to provider reimbursements—payments made to doctors, hospitals, and health plans. And while enrollees might not be directly impacted, the ripple effect could result in reduced access to care. That’s because many providers already cite low Medicare payment rates as a barrier to accepting new patients. Even lower reimbursements could push more of them—especially specialists and rural hospitals—to opt out of Medicare entirely.
For enrollees in traditional Medicare, this means longer wait times and fewer participating doctors. For those in privately run Medicare Advantage (MA) plans, the impact would also be significant. MA plans rely on provider networks and supplemental benefits, like dental, hearing, and vision. These benefits might be scaled back as providers and insurers adjust to lower federal payments. Finally, regardless of whether they’re enrolled in traditional Medicare or Medicare Advantage, “dual eligibles”—individuals who qualify for both Medicare and Medicaid—would be adversely affected by smaller provider networks and reduced benefits.
Congress has the authority to waive PAYGO, but this would require bipartisan compromise during a time of chaos and uncertainty.
Medicare has been a core federal program since 1965, providing health coverage for both older adults and individuals with disabilities. In 2025, it’s outrageous that current and future beneficiaries must now brace themselves for constrained resources—all because of the budgetary aftershocks of the One Big Beautiful Bill Act.
Additional reading:
Tracking the Medicare Provisions in the 2025 Reconciliation Bill | KFF
What Does the Reconciliation Law (H.R. 1) Mean for Medicare? | Commonwealth Fund
