Local agencies weigh impacts of ‘Big Beautiful Bill’

Michael Calhoun: Roughly 75% of CMH patients have either Medicare or Medicaid insurance.

Bart Brown: Missouri may eventually need to pay $225M annually toward SNAP.

Andy Drennen: Bill's passage provides some clarity on advising clients financially.

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As President Donald Trump signed the federal budget reconciliation bill – dubbed by the White House as the “One Big Beautiful Bill Act” – into law July 4, local officials worried about the long-term impacts after planned cuts to Medicaid and the Supplemental Nutrition Assistance Program. 

The nearly 900-page bill, which was passed July 3 in the Republican-controlled House by a 218-214 vote, fulfills several of Trump’s campaign promises and contains nearly $4.5 trillion in tax cuts, according to the Associated Press, including an extension of the expiring tax cuts he enacted in his first term while temporarily cutting taxes on tips and overtime pay. It also includes hundreds of billions of dollars in new spending on the military and immigration enforcement while eliminating numerous tax incentives surrounding energy efficiency programs.

Medicaid, which provides health coverage for over 71 million people, and food assistance programs for 40 million people below the poverty line, are a target for cuts in the legislative package.

The reduction in federal support for Medicaid through the bill – estimated at $1 trillion by the Congressional Budget Office – could translate into fewer health services, medical professionals and even hospitals, especially in rural communities. The bill could result in 1.8 million people in rural communities losing their Medicare coverage by 2034, according to the American Hospital Association. Roughly 51,000 of those would be in Missouri. In all, the CBO estimates 11.8 million Americans will become uninsured by 2034.

“Obviously in rural settings, we have a lot of dependence upon the Medicare and Medicaid programs,” said Michael Calhoun, CEO of Citizens Memorial Hospital in Bolivar. “Probably about three quarters of our patients have either Medicare or Medicaid insurance plans. So, when you have reductions in Medicaid coverage and reimbursements, it’s obviously concerning to us and health care and more particularly in a rural setting because of that payer mix.”

CMH recorded over 477,000 outpatient visits in 2023, according to Springfield Business Journal list research.

“Some of the cuts don’t start for several years, and right now we’re trying to really assess the impact of this for our system,” Calhoun said. “I know (Missouri Hospital Association) is working really hard on our behalf to determine what the impact is specifically for each of its member hospitals, and we’re developing strategies in response to the bill and to the new environment that we’re in.”

Calhoun declined to estimate the potential impact for Medicaid cuts on CMH. However, Tim Wolters, director of reimbursement at CMH, told KSMU prior to the bill’s passage it will cost the health system “somewhere at least in the range of about $3 million per year in terms of lost reimbursement.”

Republicans in the Senate added $50 billion onto the legislation for a newly created fund to ease the bill’s impact to rural hospitals. The money will be distributed starting in 2027 and continue for five years.

“I do think they did hear the voice of hospitals that were speaking up, and I think that’s why you saw the rural fund,” Calhoun said of health care officials sharing concerns with legislators in Washington, D.C. prior to the bill’s passage. “I think that’s also why you saw some delays in implementation of the cuts.”

Dave Dillon, MHA’s vice president of public and media relations, said the rural fund is a short-term positive but he expects more rural hospitals nationally and in Missouri could be in jeopardy of closing as the bill’s impact spreads in the years ahead. He said the MHA is evaluating every element of the bill to see what revisions could be made.

“Our goal is not to accept this as the new normal, but to continue to work with members of Congress and work with the [Missouri Gov. Mike] Kehoe administration and the MO HealthNet division, which is Medicaid in Missouri, to try to minimize the harm and or work to change the policy,” he said. “The first thing is figuring out exactly what is in the bill, make sure that the sections don’t conflict, make sure that we understand what all the policies actually do.”

CoxHealth officials released a statement noting changes to the Medicaid program could have negative ramifications for the state, but the specific effects of the bill on hospitals are yet to be determined. However, Mercy Springfield Communities was blunter in its early assessment of the legislation.

“Cuts to Medicaid are a serious setback to our patients and to every American. It eliminates affordable health care for patients who need it the most, which damages the country’s health care system and diminishes human dignity,” Mercy said in the statement. “Choosing to cut Medicaid by upwards of a trillion dollars is a devastating decision that will make it harder for patients to access and afford health care. It will eliminate crucial funding for hospitals and force some facilities to close or reduce services.”

Food assistance impact
The CBO also anticipates major reforms to SNAP in the coming years. Able-bodied adults ages 19 to 64 must work, volunteer, study or train for at least 80 hours per month to qualify for the food assistance, with exemptions for parents of children under 15. Enrollees will face more frequent eligibility reviews and more paperwork.

The CBO estimates 3 million Americans will not qualify for SNAP due to the changes.

Federal funding to states for Medicaid is also set to shrink, a policy slated to begin in 2028. That year is also when SNAP funding changes are set to start, said Bart Brown, CEO of Ozarks Food Harvest Inc. The Springfield-based food bank currently reaches 70,000 individuals a month with 270 partners covering one-third of the state. It provided 21 million meals in 2024, totaling about $45 million in food and services, he said.

SNAP transitioning from a 100% federally funded program that will now pass a portion of costs on to states by 2028 is concerning, Brown said. The SNAP program has been paid for exclusively from the federal Treasury since it was launched in the 1960s. States with higher error rates, such as Missouri, may have to pay up to 15% of SNAP costs.

“According to our estimates, Missouri would have to pay $225 million of state tax dollars a year as their 15% share,” Brown said. “That’s a major gap.”

According to the law, Brown said the state can seek either spending cuts or tax increases elsewhere in its budget in order to pay what it can. Making cuts of its own to the SNAP budget is also an option for the state, he said.

Luckily, the SNAP funding changes won’t go into effect soon, he said.

“That does give the states time – not much time – but time to figure out some kind of strategy toward making the match or what their policy is going to be,” Brown said.

There are unanswered questions with the legislation, Brown said, particularly around the state matching funds with SNAP and how the changes will be implemented for its funding and usage by those who need its services.

“We literally are in the present day of kind of analyzing this. But the sobering reality is that even if there is a narrative that perhaps private charity and state institutions can make up for these cuts, the numbers don’t match with that,” he said. “We live in a very generous community, but I don’t think there’s that deep of resources to do that on top of what the philanthropic community is already doing.”

While Brown said the SNAP impact is yet to be determined for OFH, the organization is already dealing with other federal cuts. In April, it announced it would lose an estimated $3 million worth of food this year due to U.S. Department of Agriculture cuts. Local officials specifically pointed to $500 million cut in March from The Emergency Food Assistance Program.

The TEFAP decision comes amid hundreds of millions of dollars in funding eliminations by the USDA for the Local Food for Schools program and the Local Food Purchase Assistance Cooperative Agreement program.

TEFAP, a program that connects food from farms to food banks, makes up nearly 25% of the food that Ozarks Food Harvest distributes. OFH is amid a major fundraising push that will continue into the fall to deal with the cuts, Brown said, adding the agency also is reaching into reserves.

“We are really calling on everybody that has a stake in this, so lawmakers, the business community as well as the philanthropic community to stand together and look at it in this new field,” he said. “What can we do to keep on meeting the need that we can?”

Taxing direction
Prior to the bill’s passage, the tax cuts introduced by Trump in 2017 were going to sunset next year, which led financial planners like Andy Drennen, vice president and senior portfolio manager at Simmons Bank to advise clients based on what they knew at the time.

“So ahead of this, we were putting in some strategies which were a lot of Roth conversions depending on their tax rate and where they were. Because that way if tax rates go up, then we have some tax-free money that we can access,” he said, noting his company was more aggressive with tax loss harvesting, which means selling investments at a loss to offset a client’s capital gains and lower their tax bill.

The bill’s passage, with lower tax brackets, larger standard deductions, and a bigger child tax credit, provides some clarity on advising clients, at least for the next few years, Drennen said.

“The IRS, they’re going to have a time ahead of them, trying to digest all this and put it into a format that everybody can understand because there’s so much to it,” he said.

As for exempting income from tips and overtime from federal income taxes, Drennen said employees will report tips as usual. However, when they file their federal tax return there will be an above the line deduction to solve for adjusted gross impact. Employers and employees will still be required to pay Federal Insurance Contributions Act taxes on the full amount, which allows employees to contribute to and benefit from payments into Social Security and Medicare based on total income.

The deduction will offset income up to $25,000 and it will phase out with income above $150,000 for single filers and $300,000 for joint filers. It expires in 2028. Tipped workers make up about 2.5% of the workforce, and about 12% of hourly workers clock some overtime each year, according to Yale Budget Lab.

The bill also calls for a 20% deduction for so-called pass-through businesses, which report income at the individual level, such as sole proprietors, partnerships and S-corporations, along with some trusts and estates. Additionally, caps for state and local tax deductions, known as SALT, will quadruple to $40,000 for five years, offering some benefits to residents of higher-taxed states.