The 'One Big Beautiful Bill': Tax Breaks for the Wealthy, Paid for by Cutting Medicaid by $990 Billion and SNAP by $187 Billion

The 'One Big Beautiful Bill Act' (H.R. 1) passed the House on May 22, 2025, cleared the Senate on July 1, 2025 by a razor-thin 51–50 vote — with three Republican senators joining all Democrats in opposition — and was signed by President Trump on July 4, 2025. Congress used a procedural mechanism called 'budget reconciliation,' which bypasses the Senate's 60-vote threshold and allows passage with a simple majority. The bill is the largest reconciliation package in U.S. history by dollar scope, touching tax policy, defense, immigration enforcement, Medicaid, SNAP, student loans, and spectrum auctions in a single piece of legislation.

The headline budget numbers are staggering. The law cuts gross federal Medicaid and CHIP spending by $990 billion over 10 years (2025–2034), making it the largest cut to Medicaid in the program's 60-year history. SNAP — formerly known as food stamps — is cut by $187 billion over the same period, the largest single SNAP reduction ever enacted. Education loan programs are cut by $284 billion. On the spending increase side, the bill adds $150 billion for defense and $132 billion for immigration enforcement and border security. Despite $1.4 trillion in total spending cuts, the law is projected to increase the federal deficit by $3.4 trillion over 10 years — or $4.1 trillion including added interest — because it simultaneously reduces federal tax revenues by $4.5 trillion, primarily by making the 2017 Tax Cuts and Jobs Act permanent.

The Medicaid cuts are not delivered as a single line-item reduction — they are engineered through a series of structural changes that erect new barriers to enrollment and coverage. The largest single provision requires adults aged 19–64 in Medicaid expansion states to document 80 hours per month of work, job training, education, or community service, or earn at least $580 per month — or lose coverage. The CBO projects this work requirement provision alone will save $325.6 billion in federal spending over 10 years and cause 5.3 million people to lose Medicaid by 2034. Additional provisions shrink the 'provider tax' threshold that states use to draw down federal matching funds (saving $191.1 billion but threatening hospitals' financial stability), require redeterminations of expansion adult eligibility every 6 months instead of annually ($62.5 billion in savings; 700,000 more uninsured), reduce retroactive coverage from 90 days to 30 days, and mandate cost-sharing of up to $35 per service for expansion adults above the federal poverty line. States that cannot make up the lost federal funding will face pressure to cut enrollment further or reduce provider payments.

The SNAP cuts operate on similar logic — new bureaucratic hurdles layered onto the program to reduce enrollment rather than improving program administration. Work requirements are extended to include adults up to age 64 (previously capped at 49), covering an estimated 5 million SNAP recipients who will now need to document qualifying activity monthly to retain benefits. The law also shifts a portion of SNAP benefit costs to states for the first time in the program's history, a structural change that analysts warn will lead non-expansion states with the least fiscal capacity — like Alabama — to cap enrollment or reduce benefits. The Urban Institute estimated that 22.3 million families could lose some or all SNAP benefits. The average family may lose $146 per month in food assistance, with a mother and one child potentially seeing benefits fall from $536 to $292 per month. As of May 2026, at least 3.5 million people had already lost SNAP access as implementation began.

The distributional picture — who wins and who loses — is the starkest measure of the bill's true priorities. The Congressional Budget Office's August 2025 distributional analysis found that households in the highest income ranges see their after-tax resources increase substantially, while households toward the bottom of the income distribution face decreased resources. The top 1% of earners receive tax cuts averaging over $50,000 per year; the top 10% receive cuts averaging more than $14,700 per year. By contrast, low-income households that lose Medicaid and SNAP benefits face reductions in resources that exceed any modest tax benefit they receive. For Alabama — the fifth-poorest state in the nation — this tradeoff lands especially hard. Approximately 1.09 million Alabamians (roughly 1 in 5 residents) are enrolled in Medicaid; 740,300 Alabamians (14.3% of the population) receive SNAP. Families USA projects at least 190,000 Alabamians will lose health coverage under the enacted law, increasing the state's uninsured rate by 45%. Alabama's hospitals, which already operate with thin margins in a state that has not expanded Medicaid, stand to lose an estimated $410 million per year in federal funding — a loss that will pressure rural hospitals and safety-net providers that serve the communities with the fewest alternatives.