The Big Beautiful Bill Act and Its Impact on the U.S. Health Care Spending
Former JPMorgan Chase Global Chief Economist (Ph.D. in Economics) & Current Global Keynote Speaker
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In recent years, healthcare has accounted for a growing share of the United States’ economy. The debate over the Big Beautiful Bill Act (BBBA) — a sweeping fiscal proposal currently under consideration in Congress — has intensified as policymakers assess its long-term implications for federal spending, national healthcare access, and economic productivity. At the core of the BBBA is a significant restructuring that would cut Medicaid spending by $793 billion and reduce Affordable Care Act Marketplace spending by $268 billion over the next decade. The Senate version of the bill (released on June 16, 2025) would increase the Medicaid cuts to $880 billion over 10 years and raise the number of individuals losing medical benefits from 14 million under the House bill to 16 million. Such cuts are expected to slow the nation’s overall healthcare expenditures as a share of Gross Domestic Product (GDP).
Source: Centers for Medicare and Medicaid Services and Altarum
National Health Expenditure Trends
According to the latest available data from the Centers for Medicare and Medicaid Services (CMS), U.S. National Health Expenditures (NHEA) reached $4.9 trillion in 2023, accounting for 17.6% of GDP. This trend is consistent with a long-term increase in healthcare costs, although the ratio has fluctuated over time due to health and macroeconomic factors.
This share stood at 17.5% in 2019, before the COVID-19 pandemic increased it to 19.5% in 2020, as both emergency federal outlays and a shrinking economy distorted the ratio. During the post-pandemic recovery, a rebound in GDP growth led to a normalization of the ratio, which fell to 17.4% in both 2021 and 2022. The 2023 figure reflects a modest increase, possibly influenced by a combination of rising inflation in healthcare services and ongoing demographic pressures from an aging population.
Using real-time data from the Bureau of Economic Analysis, Altarum estimates that the 2024 NHEA/GDP ratio will rise to 18.1%, absent structural policy changes. If left unchecked, projections from CMS suggest that this ratio will rise to approximately 19.6% by 2034, driven by escalating healthcare costs, technological innovation, and increased utilization.
Medicaid Cuts
The BBBA introduces sweeping reforms aimed at curbing entitlement spending, with Medicaid bearing the brunt of these changes. While this would help “bend the cost curve” of national health expenditures, the cuts are not without significant social and economic costs.
In 2025, 71.2 million people are receiving Medicaid health care, and 7.3 million children are enrolled in the Children’s Health Insurance Program (CHIP). According to estimates from the Congressional Budget Office (CBO), the BBBA’s proposed Medicaid spending cuts would reduce federal outlays by $793 billion over 10 years ($880 billion under the Senate version) and eliminate health care coverage for 14 million (16 million under the Senate version) Americans.
It is also important to note that most of those affected by the benefit cuts are not unemployed or undocumented. Most are low-wage workers, part-time employees, individuals with disabilities, or students who qualify based on income and hardship. For them, Medicaid serves as a critical bridge to primary care and effective management of chronic diseases. Eliminating coverage could lead to increased reliance on emergency rooms and higher rates of untreated illness.
A Tradeoff: Lower Spending, Higher Uninsurance
On the other side of the argument, the proponents of the proposed spending cuts argue that spending cuts represent a step toward fiscal discipline and economic sustainability, especially as the nation grapples with mounting debt and rising interest payments. Reducing the trajectory of Medicaid expenditures could have a significant impact on long-term healthcare spending.
According to a nonpartisan analysis, this legislation could decrease the ratio of national healthcare spending to GDP by 0.5% to 1.0% by 2034, from its projected 19.6%, marking a rare victory in efforts to control national health spending. Health care costs have historically outpaced GDP growth due to increasing demand, new treatments, and inefficiencies within the system. By reining in one of the most extensive federal health programs, the BBBA could help realign incentives in the healthcare sector, encourage technological innovation that reduces costs, and prompt states to explore alternative delivery models.
Hospital Losses and Employment Risks
However, some downsides emerge from these budget cuts. Without federal matching funds, many states may struggle to bridge the gap. Consequently, the health care safety net could weaken, resulting in significant increases in uncompensated care. Hospitals, particularly those serving rural or low-income communities, are likely to be the most affected.
Under the House version, health care spending cuts could total $1.04 trillion due to reductions in Medicaid funding and to the Affordable Care Act's health exchanges over the next decade. Such reductions would be even greater under the Senate version of the bill.
America's Essential Hospitals projects that cumulative uncompensated care losses will range from $200 to $300 billion over the next 10 years. These losses could have wide-ranging effects. Hospitals may need to cut staff, reduce services, or even close entirely. Multiplier effects are likely to extend beyond clinical employment and negatively impact secondary and support jobs in areas such as billing, food service, maintenance, and medical supply distribution.
The impact will vary across states. Regions with high Medicaid enrollment and relatively poor economic performance — such as West Virginia, which has among the highest NHEA/GDP ratios in the country — will face a disproportionate burden. Conversely, states like Washington, which have a more diversified payer mix and the lowest NHEA/GDP ratio, may weather the storm with less disruption.
Pressures for Efficiency and Innovation
However, supporters of the BBBA argue that forcing the health care system to do more with less could lead to increased efficiency and innovation. In theory, hospitals and clinics facing tighter budgets would have no choice but to eliminate redundant procedures, embrace telehealth, improve patient triage, and adopt technologies that reduce administrative bloat. Insurers and providers may also move more quickly toward value-based care and payment models tied to outcomes rather than volume.
These shifts could, over time, improve the system’s productivity — a critical outcome given the aging U.S. population and the limited fiscal space for expanding public programs. The private sector may also rise to meet the challenge, with nonprofit organizations, startups, and community health partnerships stepping in to support those affected by coverage losses.
Summary and Concluding Thoughts
With a commitment to nonpartisanship, we aim to provide our readers with a balanced view on this issue. While supporters stress the importance of controlling the deficit, restoring state control over health programs, and stopping unregulated federal expansion, critics claim the bill unfairly impacts low-income and working-class Americans, many of whom are already struggling financially.
Still, the Big Beautiful Bill Act is likely to mark a turning point in the evolution of American healthcare policy. On the one hand, it has the potential to restrain unsustainable growth in national health expenditures by pushing the NHEA/GDP ratio in 2034 below 19%, a milestone that was not thought to be achievable just a few years ago. Such efforts could foster innovation, leaner operations, and a new era of fiscal prudence.
In return, 14 million to 16 million individuals could lose medical coverage due to spending reductions of over $1 trillion over the next decade. States with high dependence on Medicaid will bear the brunt, risking economic ripple effects and a degradation of public health outcomes.
Ultimately, the BBBA highlights a tradeoff between fiscal discipline and economic efficiency, versus an erosion of medical coverage and social strain.
As always, our goal is to present both sides of this issue so that individuals can weigh the political, ethical, and practical tradeoffs involved and choose a position they are comfortable supporting.