Impacts on Poverty of the “One Big Beautiful Bill” Act: Baseline Projections and Behavioral Adjustments

• In Event: Medicaid Expansions and Contractions: the OBBBA, Poverty & Financial Insecurity

Abstract

BACKGROUND: The OBBBA enacted unprecedented federal cuts to Medicaid and SNAP benefits and administration and let expire enhanced ACA Marketplace subsidies. The CBO projected a ~$1-trillion reduction in Medicaid spending alone over 10 years. About half of the projected cuts come from new Medicaid and SNAP work requirements and exclusion of refugees/asylees and other lawful humanitarian immigrants. The OBBBA has the potential to disproportionately harm the most disadvantaged families and deepen poverty (Giannarelli et al., 2025; Yale Budget Lab, 2025). 

OBJECTIVES: We pursue two research questions:
(Q1) How much will poverty rise from major OBBBA cuts to health insurance and SNAP nationally and across states, absent behavioral adjustments by affected populations and absent state policy responses? How will OBBBA affect sociodemographic differences in poverty?
(Q2) How much would household behavioral adjustments alter OBBBA impacts on poverty, overall and across sociodemographic groups? We focus on adjustments to labor supply, health insurance coverage type and status, and changes in medical out-of-pocket spending (MOOP).

METHODS: We use the Health Inclusive Poverty Measure (HIPM) to capture the effects of OBBBA changes on safety-net benefits (Remler et al., 2017; Creamer, 2021). Unlike Census’s Official and Supplemental Poverty Measures, the HIPM accounts for household health care/insurance needs and resources, besides other benefits (Creamer, 2025; NASEM, 2023). To support state-level estimation, we implement the first HIPM using American Community Survey (ACS) data, merging administrative data on ACA and MA plans with ACS data. Census makes available ACS-SPM research files (Fox et al., 2020). The 2023 ACS-SPM includes 3.2 million records, with state Ns ranging from 6,000 to 370,000, far larger than in CPS-ASEC. We further estimate differential impacts of OBBBA on poverty across sociodemographic groups (by age, sex, race/ethnicity, household structure, and citizen/immigrant status). The study is well-powered to detect effects on state poverty rates and differential poverty impacts but not for sub-populations of small states. To account for household behavioral responses, we will adjust the value of lost benefits under OBBBA for expected changes in labor supply, insurance uptake, and MOOP amounts. To estimate counterfactuals under benefit loss scenarios, we will compare those receiving Medicaid, SNAP, and subsidies to propensity score-matched controls, following prior methods (Sommers & Oellerich, 2013; Zewde et al., 2021), and adjust HIPM poverty rates accordingly.

PRELIMINARY RESULTS: Our ACS-HIPM results will be completed in Summer 2026. Preliminary simulations by the Urban Institute with ACS data to estimate effects on SPM poverty of OBBBA health insurance, SNAP, and tax changes (Giannarelli et al., 2025) assumed those who lose Medicaid would buy Marketplace plans and incur corresponding MOOP. This assumption precludes transitions from Medicaid to uninsured and misses the direct poverty effects of uninsurance (forgoing unaffordable care, incurring no MOOP). They estimated 1.4 million more people would enter SPM poverty, including 400,000 children. In comparison, our preliminary study with HIPM in CPS-ASEC data (Hyson & Korenman, 2025) for NY State alone projected increases in poverty of 450,000-700,000 people, and 150,000-250,000 children, reflecting sharp poverty increases for the newly uninsured.

Authors

• Mustafa Hussein, CUNY School of Public Health
  Presenting Author

• Rosemary Hyson, Baruch College (City University of New York)
  Non-Presenting Co-Author

• Sanders D. Korenman, Baruch College (City University of New York)
  Non-Presenting Co-Author