Despite intense opposition from the California Medical Association (CMA), physicians, and patient advocates, Congress passed HR 1, which was signed into law on July 4, 2025. The legislation imposes more than $1 trillion in federal health care cuts and threatens health coverage for millions across California.
“This law will do irreparable harm to the health of our nation,” said CMA President Shannon Udovic-Constant, M.D. in a statement following the signing of the bill. “It strips coverage from millions, guts provider funding, and places new barriers between patients and the care they need — especially in our most vulnerable communities.”
Key Threats to California’s Health Care System
Coverage Losses: The bill is expected to strip coverage from 2.5 million Medi-Cal enrollees and up to 2.6 million individuals insured through Covered California.
Higher Out-of-Pocket Costs: Beginning in 2028, Medicaid expansion beneficiaries will face $35 copays per service. The expiration of ACA premium tax credits could drive premiums up by as much as 66% for nearly 2 million Californians.
Severe Cuts to Provider Funding: California stands to lose up to $128 billion over the next decade due to cuts in provider taxes and caps on state-directed payments. These reductions may lead to lower physician and hospital reimbursement rates, service cuts, and even facility closures.
Uncompensated Care Surge: With fewer patients insured, hospitals and providers are expected to absorb an additional $9.5 billion in uncompensated care costs.
Job and Economic Losses: The ripple effects are projected to eliminate 217,000 health care jobs in California, reduce economic output by $37 billion, and slash $1.7 billion from state and local tax revenues.
Medicaid Work Requirements: The law mandates that many adult Medicaid enrollees complete 80 hours of work, education, or community service each month — along with burdensome documentation. These requirements could result in more than 4.8 million Americans losing coverage, despite being eligible.
Defunding Planned Parenthood: A one-year ban on Medicaid funding for Planned Parenthood could cost California $305 million and disrupt over 80% of the state’s 1.2 million annual visits to its clinics.
Medical Education Cuts: The bill caps federal borrowing for medical school at $200,000, creating new barriers for students and exacerbating physician workforce shortages. (A proposed elimination of Public Service Loan Forgiveness during residency was ultimately removed.)
While the law includes a one-year 2.5% increase in Medicare physician payments in 2026, CMA cautions that it falls far short of addressing the long-standing underfunding of physician services. Additionally, the bill triggers another 2% Medicare sequestration cut starting in 2026.
CMA’s Response
CMA vows to continue the fight to protect California’s health care system.
“We will not back down,” CMA stated. “Our patients and communities cannot afford the consequences of this shortsighted and harmful law. We are grateful to the physicians and advocates who stood with us and remain committed to working together to safeguard access to equitable, patient-centered care.”