What Does the New US Budget Law Mean for Physicians?

Medscape

16-07-2025

Physicians are still assessing the impact of the budget and policy package passed by Congressional Republicans and recently signed into law by President Donald Trump.
The legislation makes the largest cuts to Medicaid in its history, eliminating about $1 trillion over 10 years and establishing a work requirement that could force many recipients off the program over bureaucratic hurdles.
Nearly 12 million Americans are expected to lose health coverage over 10 years as a result, according to the Congressional Budget Office. Millions more will be affected by the law's ending of certain health insurance subsidies created under the Affordable Care Act.
Here's what physicians should know:
Medicare Pay Bump
In the near term, physicians will see a 1-year 2026 temporary increase of 2.5% in a rate used in determining Medicare's payments to clinicians.
Despite that bit of good news, the budget package will make it more challenging to practice medicine, Bobby Mukkamala, MD, president of the American Medical Association (AMA), told Medscape Medical News in an interview. Clinicians, hospitals, and medical groups are likely to have to provide more uncompensated care to the uninsured.
'When it comes to healthcare in this country and the training for healthcare in this country, I don't see anything to be happy about,' Mukkamala said.
Medicaid patients made up about 17% of the average physician's caseload in 2016, according to the AMA's Physician Practice Benchmark Survey. But pediatricians, with the largest average Medicaid patient share of any specialty at nearly 35%, could see a bigger reimbursement hit, depending on whether they are on salary or not.
Psychiatrists and emergency medicine physicians also have above average Medicaid patient shares (26% and 22%, respectively). Internists reported the lowest Medicaid patient share at just under 12%.
New Med Student Loan Limits
The new law also limits federal loans for professional programs including medical and dental school to $50,000 a year with a total cap of $200,000. The average medical school debt tops $234,000, according to an Education Data Initiative report, but tuition and living expenses for private schools can top $87,000 per year.
The Association of American Medical Colleges (AAMC) said in a statement that the budget package's elimination of the Grad PLUS loan program 'will affect many prospective medical and other health profession's students and worsen the nation's persistent doctor shortage.'
AAMC leaders said they were 'dismayed' by 'massive cuts to Medicaid and changes to state health insurance marketplace exchanges that will lead to tens of millions of people losing much-needed healthcare coverage.'
Anders Gilberg, senior vice president for government affairs for the Medical Group Management Association, said the newly cleared bill 'paints a grim future for America's physician practices by stripping healthcare coverage from millions of Americans.'
People who lose healthcare coverage 'will still find care in our US healthcare system,' Gilberg said, but 'medical groups and hospitals will be left picking up the enormous tab.'
'With these historic Medicaid cuts, dedicated physicians and medical practices committed to providing care in our country's most underserved areas will face growing financial burdens as they are forced to offer more and more uncompensated care,' he said.
A Boost for Direct Primary Care
The budget package also for the first time allows patients to use their Health Savings Accounts to pay for monthly fees charged by direct primary care providers, which may include office visits but not major procedures, lab tests, or prescription drugs.
Monthly fees of up to $150 ($300 per couple) will be allowed and will be tied to inflation going forward. The provision is seen as a win for the growing direct primary care movement.
Uninsured Concerns
It's not yet clear how many adults will eventually lose health coverage due to the implementation of the new law.
The Congressional Budget Office had estimated that 11.8 million fewer people would have had health insurance in 2034 if an earlier Senate version of the bill were adopted.
Belinda R. Avalos, MD, president of the American Society of Hematology said in a statement that nearly half of people living with sickle cell disease are covered under Medicaid or the Children's Health Insurance Program.
'It is profoundly disappointing that the Senate and House have voted to adopt the devastating cuts to Medicaid outlined in this bill,' Avalos said. 'These cuts recklessly endanger the health of millions of Americans, including those living with complex, life-threatening blood disorders.'
In a statement, the American College of Rheumatology (ACR) said it also was 'disappointed that Congress has advanced legislation that could impact patients' access to Medicaid and limit providers' ability to care for vulnerable patients.'
'We encourage leaders in Washington to support measures that expand access to care and coverage for patients, rather than displacing the estimated 11.8 million Americans whose insurance could be at risk,' ACR said.