On July 22, the Washington State Senate Health and Long-Term Care Committee met to discuss the impacts of the One Big Beautiful Bill (HR-1) on Medicaid. HR-1 was signed into law by President Trump on July 4. Washington State officials and healthcare leaders are now preparing for major changes. These include shifts in coverage, eligibility, and funding. Some changes will begin as early as January 2026 and continue over the next 3-4 years, with impacts lasting at least a decade. Here’s what we learned from the hearing:
Immediate and Long-Term Coverage Loss
Governor Ferguson’s Office said the biggest impacts from HR-1 will happen in the next 3–4 years. There is also a 10-year outlook at play. The most immediate change comes in January 2026. That’s when enhanced federal tax credits may expire. As a result, about 80,000 people could lose individual coverage. This will increase the uninsured rate and affect providers and counties without individual market plans.
While some premium increases may be mitigated by provisions in HR-1, officials expect significant Medicaid impacts within a year. Notably, Washington will have just 1.5 years to respond. That’s less than half the time given during the Affordable Care Act rollout.
Major Shifts in Medicaid Eligibility and Cost Sharing
Dr. Charissa Fotinos, Medicaid Director at HCA, outlined a grim outlook:
- 100,000 to 320,000 Washingtonians could lose coverage, although these numbers are not final.
- Planned Parenthood may no longer be able to bill Medicaid starting July 22, based on HCA’s interpretation.
- Beginning October 2026, coverage will end for non-citizens, including refugees and asylees—an estimated 30,000 people in WA.
- Work requirements begin December 2026. Adults will need to verify 80 hours of work or volunteer/community service over six months to stay eligible.
HCA will seek an extension to implement these requirements, but the clock is ticking.
Federal Requirements & Administrative Hurdles
Medicaid Director Fotinos emphasized that most Medicaid recipients already work—yet 620,000 adults risk losing coverage due to increased administrative burden. A waiver is available and Washington is working to automate eligibility through CMS, but the system won’t be ready until June 2027.
Fortunately, Washington already qualifies to delay implementation of federal work requirements until December 2028.
State-Directed Payments & Provider Taxes
HR-1 will gradually reduce the cap on State-Directed Payments (SDPs) from 6% to 3.5% starting in 2028, cutting over $1.5 billion annually from existing hospital support mechanisms like the UW and the Hospital Safety Net Assessment. No new SDPs will be allowed to exceed Medicare payment levels.
Cost Sharing Hits Low-Income Residents
Starting October 1, 2028, states must impose cost-sharing requirements of up to $35 per service. While the state will decide the exact rate, this could significantly impact individuals earning as little as $16,000 a year—forcing many to forgo necessary care.
If more than 3% of a state’s Medicaid payments are deemed improper, Washington could also lose its eligibility for federal good-faith waivers, resulting in additional funding losses.
Rural Health Funding: A Glimmer of Opportunity
HR-1 includes $10 billion annually to support rural healthcare. Washington will need to apply by the end of 2025. While the funding is meant for rural transformation, the projects don’t necessarily need to be located in rural areas. The CMS Secretary has discretion over how funds are awarded. During the hearing, it was acknowledged that it’s unclear if Washington will receive funds even if we apply.
State agencies are still waiting for guidance on when applications will open, but decisions are expected by December.
Legislative Concerns and Recommendations
Lawmakers voiced concerns about confusion around Apple Health branding—with some residents unaware it’s Washington’s Medicaid program. The lack of awareness could prevent eligible individuals from enrolling.
Legislators also flagged challenges related to new work requirements. Beneficiaries will have just one month after losing their jobs to requalify, and then must meet strict work/service hour thresholds. Lawmakers suggested improvements to the Employment Security Department (ESD) portal to better verify employment and cross-check other benefits like SNAP and TANF.
Next Steps for Policymakers
The Governor’s office voiced plans to work closely with the Legislature in the 2026 session to adjust the transition period and provide support during implementation. While the timeline is compressed, there is still an opportunity for state policymakers to ease the burden on low-income residents and protect health access.
What This Means for Stakeholders
If your organization provides health services, advocates for low-income communities, or works within the state health system, now is the time to engage. HR-1 will touch every corner of the Medicaid system—from eligibility and cost to provider payments and rural care.
We’ll continue tracking updates as implementation moves forward. For questions about how HR-1 might affect your organization, or how to engage during the 2026 legislative session, get in touch with our team.