What you need to know

On July 4, 2025, President Donald Trump signed H.R. 1 (now P.L. 119-21), also known as the “One Big, Beautiful Bill,” into law. The $4.5 trillion tax cut package includes significant changes to Medicaid, Medicare and the Affordable Care Act (ACA) exchange programs, but does not include any direct pharmacy benefit manager (PBM) provisions. 

However, policymakers are signaling that additional health care legislation — potentially including PBM reforms — may follow in the future. 

Overview

The version of H.R. 1 signed into law could result in more than 11 million people losing their health insurance over the next decade, according to the Congressional Budget Office. 

As we previously communicated, earlier versions of the bill included Medicare delinking, a Medicaid spread pricing ban and audit rights, but these were excluded from the final legislation. While the enacted law contains no PBM provisions, Prime Therapeutics (Prime) expects there could be a multi-sector health care spending bill later this year that may include some of these provisions along with commercial impacts. 

Additionally, as part of the signed law, a provision will increase the number of orphan drugs that will be ineligible for negotiation under the Inflation Reduction Act (IRA). Under pre-existing law, drugs could only be exempt from negotiation for one orphan indication — that limitation has now been eliminated.

Outlined below are several changes to Medicaid and the ACA resulting from the newly enacted law.

Medicaid changes

• Caps provider taxes used to draw down federal funding to 3.5% in states that have expanded Medicaid eligibility under the ACA
• Adds work requirements starting Dec. 31, 2026, for able-bodied adults who do not have dependents under the age of 14
• Requires semi-annual eligibility checks starting in 2027
• Allows for nominal copays for certain enrollees

Exchange plan changes

• Reduces open enrollment to six weeks
• Ends automatic re-enrollment
• Requires states to withhold subsidies until eligibility is verified

Considerations

• This law introduces significant health care spending cuts. People losing Medicaid may be sicker when eligible for Medicare and more might seek Medicare disability coverage.
• Congress must reauthorize Advanced Premium Tax Credits by year-end to help beneficiaries under 400% of the federal poverty line afford exchange coverage, costing about $333 billion. Without these credits, approximately another 5 million people could lose coverage.
• Lawmakers may also revisit commercial market reforms, including transparency mandates and restrictions on PBM ownership of pharmacies, similar to Arkansas' law. PBM reform may be included in a broader year-end funding package.

Prime will continue to monitor and work to shape any developments

We believe there is a possibility that PBM reform could be part of a broader year-end government funding package. Prime is actively monitoring these developments, lobbying Congress and will continue to assess potential impacts. We remain dedicated to understanding and adapting to these shifts as they arise, ensuring that clients are well-prepared for any forthcoming regulations.