New federal law brings major Medicaid changes: What does this mean for NKY?

The U.S. Congress passed a raft of tax and federal spending changes on July 4 that will have effects on our region.

Referred to as the Big Beautiful Bill by its supporters (even though that’s not its official name), the legislation enacts a variety of changes, notably reforms to Medicaid, a federal program aimed at helping people below certain income levels access healthcare.

Now that the law has passed, the question arises: What are the changes, and how will they affect Northern Kentucky?

Medicaid in Northern Kentucky

“This is going to impact more people than we anticipate, for several reasons,” said Dr. Abdullah Al Bahrani, a professor of economics at NKU.

Al Bahrani writes and speaks regularly about economic issues in the region and recently did a series of articles on his Substack about the effects of the bill. He and others point to data from the Kaiser Family Foundation, or KFF, a nonpartisan legacy nonprofit known for its research on the healthcare sector.

KFF has fact sheets on Medicaid coverage for every state and Congressional district. There were about 1,395,000 people, both children and adults, on Medicaid in Kentucky as of the KFF’s most recent report, which was published on May 20, 2025. That’s equivalent to about $16.3 billion in spending. 44% of births, 51% of working adults with disabilities and 68% of nursing home residents in Kentucky are covered by Medicaid, according to the KFF.

You can view Kentucky’s fact sheet below.

“Usage of social safety net programs, especially in our area, is a personal matter,” Al Bahrani said. “Not everybody shares that information, and then there’s also a social stigma about the use of social safety nets in general, whether it’s unemployment insurance or in this case Medicaid. So, the average individual is not aware of how many people that they are close to that might be impacted by this policy.”

Northern Kentucky is part of Kentucky’s 4th Congressional District. 22% of residents in the district used Medicaid in 2024, according to the KFF. That accounts for about 165,900 people, including 32,200 adults, 15,900 children, 20,600 seniors and 35,600 people with disabilities.

What’s next?

The changes enacted by the bill don’t take effect immediately. Instead, they’re rolled out over a period of ten years. The Congressional Budget Office estimates that about 11 million people throughout the country will lose their health insurance by 2034, as a result. Specific figures and effects on individual states and regions are more difficult to predict.

“Medicaid is actually administered at the state level…,” Al Bahrani said. “The state still has flexibility on changing its own spending. So, we might not see any direct impacts to Medicaid.”

Instead, Al Bahrani said, the state could reallocate spending from other parts of its budget. Or, it could raise taxes or change its own Medicaid eligibility criteria.

The Centers for Medicare and Medicaid Services, often referred to as the CMS, is the federal agency responsible for setting administrative procedures related to Medicaid. The General Assembly in Kentucky will be responsible for actually enacting the changes in the commonwealth. This process is ongoing.

The Kentucky Medicaid Oversight and Advisory Board met last week, on July 30, to discuss what the bill might mean for Kentucky. They discussed the details of the bill and the timing of its provisions, such as the new work requirements for applicants and the new provision that requires Medicaid participants to reapply every six months, instead of every year. The work requirements go into effect in 2027.

No official action occurred at the meeting. Other topics of discussion included waivers to some of the new requirements, state payment structures, and, especially, rural healthcare. Just before the passage of the bill, the U.S. Senate added about $50 billion in state grants aimed at restructuring rural healthcare throughout the country. Given the high number of rural Kentucky hospitals dependent on Medicaid, this topic took up much of the discussion.

“This just became a law on July 4, and there are a number of things that were not entirely clear,” said Secretary of the Kentucky Cabinet for Health and Family Services Steven Stack at the meeting. “Some of this is subject to the CMS administrator giving some additional detail about what’s required in an application [for funding] and then how to apply. So, all the states are still awaiting that guidance and that clarity.”

Nancy Galvagni, the president of the Kentucky Hospital Association, spoke about a program called the Hospital Rate Improvement Program, or HRIP, a Medicaid-funded program that allows hospitals to access additional federal Medicaid funding without drawing from state funding. With the passage of the Big Beautiful Bill, that program will sunset in 2028.

“Without HRIP, Kentucky hospitals would be operating at a -7% operating margin,” Galvagni said. “That would mean less access to vital treatments, less access to care in general.”

She pointed to data from the University of North Carolina’s Sheps Center for Health Services Research, which, at the request of Senate Democrats, compiled data on the number of hospitals throughout the country that were at risk of closure due to the phasing out of programs like HRIP. For Kentucky, that number was 35, although Galvagni admitted that this number was an estimate, not a guarantee. Most of the hospitals at risk were located outside of Kentucky Congressional District 4, according to the Sheps Center.

In spite of the concern expressed by Galvagni, one member of the board, Rep. Jason Petrie, a Republican from Elkton, said the new funding for rural transformation should be seen as an opportunity.

“To pick up just on a word that’s in that – transformation, not subsidization, not find a new revenue to continue doing what we were doing,” Petrie said. “But it will be an opportunity and a challenge to transform the way we think about rural health care and the ripple effects of that… I hope we all take it up and work together to do that so that over these next five years, we have a better system than we had last month.”

Healthcare in the more urban parts of the state, like Northern Kentucky, was not extensively discussed. The board has two Northern Kentucky legislators, Sen. Chris McDaniel of Ryland Heights and Rep. Kim Moser of Taylor Mill (both Republicans). Moser did not speak, and McDaniel did not attend the meeting.

The board will meet again in the coming weeks.