Across the United States, a sweeping new tax and spending law signed by President Donald Trump in the summer of 2025 is sending shockwaves through the American health care system. The legislation, which slashes more than $1 trillion from Medicaid and federal food assistance over the next decade, is already prompting a patchwork of responses from state leaders, health care providers, and local communities—each scrambling to cope with the fallout as millions of low-income Americans brace for the loss of critical health coverage.
In California, the response has been swift and ambitious. On October 23, 2025, the Service Employees International Union (SEIU) announced a proposal for a one-time 5% tax on billionaires residing in the state. The aim? To generate $100 billion in revenue to offset the anticipated federal funding cuts to health care for low-income people. As reported by the Associated Press, the tax would apply to the net worth of California’s wealthiest residents for the 2026 tax year, with funds potentially available for appropriation starting in 2027. A small portion of the revenue would also be earmarked for K-12 education, in response to federal threats to withhold grant money from public schools.
Proponents of the measure, including SEIU-United Healthcare Workers West president Dave Regan, have sounded the alarm about the stakes. “If we do not do this, millions of people are going to lose health care, an untold number of people will go without treatment and there will be tragedy after tragedy,” Regan told the Associated Press. Backers must collect more than 870,000 signatures by spring 2026 to qualify the measure for the November 2026 ballot, but there’s no guarantee it will pass. Governor Gavin Newsom, a Democrat, has previously opposed tax hikes targeting the rich, adding another layer of uncertainty to the proposal’s fate.
The urgency is driven by numbers that are hard to ignore. According to the California Budget and Policy Center, California could lose $30 billion in federal Medicaid funding annually, potentially causing up to 3.4 million people to lose their coverage. Governor Newsom warned earlier in October that people enrolled in Covered California, the state’s health insurance marketplace, could see their monthly health care bills nearly double next year as a direct result of the federal spending cuts. “California has led the nation in expanding access to affordable health care, but Donald Trump is ripping it away,” Newsom stated, as reported by the Associated Press.
Emmanuel Saez, a professor of economics at the University of California, Berkeley, weighed in on the moral argument behind the proposed billionaire tax. “We hope that some and perhaps hopefully a large number of billionaires will recognize that it’s important in the state where they’ve grown their fortune that they have a responsibility to society to preserve the future of California,” Saez said.
Meanwhile, on the other side of the country, New York is taking a different approach. On October 24, 2025, Governor Kathy Hochul announced that her administration had secured state funding for Planned Parenthood after federal Medicaid funding was blocked due to the new law. “Washington Republicans have shown time and again that they’ll stop at nothing to undermine women’s health care and restrict access to reproductive rights,” Hochul declared in a statement, as reported by NBC New York. “In the face of Congressional Republicans voting to defund Planned Parenthood, I’ve directed the state to fund these vital services.”
The federal provision that triggered the funding crisis instructed the government to end Medicaid payments for one year to abortion providers receiving more than $800,000 from Medicaid in 2023—even if, like Planned Parenthood, they also provide contraception, pregnancy tests, and STD testing. Nearly half of Planned Parenthood’s patients rely on Medicaid, and the organization says abortions account for less than 10% of its services, with the bulk of care focused on other reproductive health needs. While a federal judge ruled in July that Medicaid reimbursements must continue, an appeals court panel later allowed the Trump administration to block funding while legal challenges continue, according to the Associated Press.
In the rural South, the impact of the new law feels especially acute. NPR reported on October 25, 2025, that communities like East Carroll Parish in northeastern Louisiana—where Medicaid expansion in 2016 helped drive the uninsured rate down to 8% in 2023 despite the state’s high poverty—are now bracing for deep cuts. Medicaid enrollment in East Carroll Parish soared from about 53% in 2015 to about 64% in 2023, reflecting just how vital the program has become for the region’s residents.
Rosie Brown, executive director at the East Carroll Community Action Agency, described the situation bluntly: many people in the area struggle to make ends meet, and Medicaid expansion was a lifeline. Now, she worries, “President Donald Trump’s tax and spending bill could snatch it away.”
The law’s new work reporting requirements—set to take effect in 2027—will force Medicaid expansion enrollees to verify their eligibility every six months, rather than yearly, and prove they are working or volunteering for at least 80 hours a month or attending school part-time. Researchers from Princeton University estimate that 317,000 low-income Louisianans and over 30,000 Mississippians could lose health coverage because of the cuts. Nationwide, about 10 million people are expected to become uninsured over ten years, according to the Congressional Budget Office.
“Why do you wanna knock someone who doesn’t have anything and you already got everything?” asked Sherila Ervin, a cafeteria worker in Oak Grove, Louisiana, who relies on Medicaid for her health care. Like many in her community, she fears the new requirements will be confusing and burdensome, leading many to lose coverage without even realizing it.
Dr. Brent Smith, a physician at Delta Health System in Greenville, Mississippi, echoed the frustration voiced by many health professionals. “The physician community spoke out pretty heavily against this,” he told NPR. “The fact that it still went through…was a real sense of disconnect with what our legislators are doing and what we as a health care community feel like is the reality on the ground.”
States are now scrambling to build new systems to track work requirements and eligibility, a massive administrative lift. Courtney Foster, senior policy adviser for Medicaid with the nonprofit Invest in Louisiana, stressed the importance of engaging with community organizations to mitigate harm. “Let’s make sure that we can mitigate as much harm as possible,” Foster told NPR.
Some modest relief may come from a $50 billion rural health fund created by the law, intended to help keep struggling rural hospitals open. Mississippi is applying for a share and hopes to receive at least $500 million over five years, but health leaders warn that if those funds don’t materialize, hospital closures or service cutbacks could follow.
From her office in Lake Providence, nurse Jennifer Newton, who oversees The Family Medical Clinic, reflected on the progress Medicaid expansion brought to her community. In 2015, the uninsured rate among working-age adults in East Carroll Parish was nearly 35%. By 2021, it had dropped to 12.7%. Now, with the new law, she wonders, “Why are we going back? We’ve made so much progress.”
As the nation’s health care safety net faces its greatest test in years, states and communities are left to chart their own paths—whether by taxing the ultra-wealthy, reallocating state resources, or bracing for the worst. The coming months will reveal just how resilient America’s patchwork health care system truly is.
