An Analysis of OBBBA Effect on Medicaid and the Importance of Health Insurance

The one big beautiful bill act (OBBBA) in 2025 will resume certain elements of the tax cuts and jobs act (TCJA) on both corporate and individual level.The drop in federal revenue notwithstanding, despite its main objective to increase economy, there are some serious fiscal and healthcare impacts of OBBBA.On the direct side, OBBBA changes Medicaid rules by introducing federal work requirements and stricter eligibility checks, which may cause coverage losses and add administrative burdens for states.On the indirect side, the reduction in revenue can compel the government to run deficits in the budget, creating additional strain on social programs like Medicaid.The paper explains how both the direct and indirect provisions of OBBBA could affect the funding, sustainability and accessibility to Medicaid due to budgetary constraints and how fiscal policies can influence entitlement programs and entire healthcare system using health economics theories and history factors.Results show that these effects emphasize the importance of maintaining health insurance as an instrument to safeguard vulnerable populations and that Medicaid remains a key factor in ensuring the affordability of healthcare and financial security to millions of Americans.