Changes to Medicaid financing in Ohio

HR 1, the federal reconciliation bill sometimes referred to as the “One Big Beautiful Bill Act” or the “Working Families Tax Cuts Act,” includes provisions that will have major impacts on Medicaid financing in Ohio. These provisions affect provider taxes, as well as one of the ways that states increase payments to providers who treat Medicaid patients and invest in quality improvement efforts. While the exact impacts of these changes to financing are not yet fully known, they will reduce Medicaid funding in Ohio by billions of dollars. Ohio policymakers will need to make important decisions to mitigate these funding cuts. States may consider cutting Medicaid expenditures in response to HR 1, however these decisions will have negative impacts on residents and the broader health care system. 

Read the full 12-page brief   Click here for a 4-page Summary

3 key findings

• HR 1 restricts the ability of states to raise revenue for their Medicaid programs through provider taxes. These provisions will significantly impact two of Ohio’s provider taxes, which currently generate billions of dollars in state revenue, along with additional matching federal funds.

• HR 1 caps the amount that states can enhance provider reimbursement through state directed payments, which may impact the financial stability of providers and care access for Medicaid enrollees.

• States will need to account for the loss of Medicaid funding from provisions in HR 1. Ohio can mitigate some of the cuts by modifying its provider tax on health insurers. States may pursue reducing  Medicaid expenditures, however, doing so is likely to have negative health and economic consequences for Ohioans.

Resources

• How Medicaid Provider Taxes Work: An Explainer (National Association of Medicaid Directors)
• CMS Issues New Guidance on H.R. 1’s Restrictions on State Use of Provider Taxes to Finance Medicaid (Georgetown University Center for Children and Families)
• How Medicaid State-Directed Payments Support Critical Health Care Providers (Commonwealth Fund)
• New CMS Guidance on H.R. 1’s Restrictions of State Directed Payments (Georgetown University Center for Children and Families)

For more information on other HR 1 provisions, see HPIO’s briefs on:

• SNAP at a glance: Key changes from HR 1
• Rural Health Transformation program funding in Ohio
• Medicaid Work Requirements in Ohio
• Access to care for immigrants in Ohio

Related HPIO work

• Ohio Medicaid Basics 2025
• 2025 OHIO MEDICAID EXPANSION STUDY
• Healthcare access and affordability in Ohio