{{item.videoDuration}}
{{item.title}}
{{item.text}}
{{item.videoDuration}}
{{item.text}}
Nicole Montgomery, Shannon O’Shea, and Philip Sclafani join Glenn Hunzinger to break down the One Big Beautiful Bill and how it is already reshaping US healthcare.
Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) is one of the most consequential federal healthcare laws in decades. With nearly 1,000 pages, 300 of which directly address healthcare, it introduces sweeping changes to Medicaid funding, coverage eligibility, and market dynamics for insurers, providers, and life sciences companies.
In this conversation, Glenn Hunzinger, PwC’s Health Industries Leader, speaks with Nicole Montgomery, Shannon O’Shea, and Philip Sclafani, who bring deep expertise across the payer, provider, and pharmaceutical sectors, to discuss the implications of the One Big Beautiful Bill and the actions industry leaders should be taking now.
Prefer to read instead of listen?
We’ve summarized the full discussion in a short Q&A format so you can get the highlights in minutes.
The payer perspective: Coverage loss, funding cuts, and operational strain
Glenn Hunzinger: Nicole, what are the top challenges facing payers under this new law?
Nicole Montgomery: There are three major areas where payers will feel the impact: coverage loss, funding cuts, and administrative burden. The CBO estimates that 11.8 to 13.7 million people will lose Medicaid or marketplace coverage over the next decade. That is due to new work requirements, reduced enrollment periods, and expiring ACA subsidies. Healthier individuals may exit the market, leaving insurers with a sicker, higher-need population and a more volatile risk pool.
At the same time, states are losing $1 trillion in federal Medicaid funding over the next ten years. To balance budgets, they will likely cut optional services or lower capitation rates, putting more financial pressure on payers, especially those with large Medicaid populations. Add to that the operational burden of navigating new eligibility processes, reconciling membership data, and supporting members through coverage transitions.
Glenn Hunzinger: What should payers be doing now to respond?
Nicole Montgomery: Payers need to become strategic partners with states, particularly in shaping implementation of work requirements and data sharing processes. They should also run impact models to understand how state-level changes will affect their markets. Rate advocacy will be critical as member acuity increases, and payers will need to invest in proactive engagement programs like workforce support or AI-driven risk analytics to retain members and manage transitions.
The provider perspective: Uncompensated care and care model transformation
Glenn Hunzinger: Shannon, what are providers going to experience in the near term?
Shannon O’Shea: The most immediate impact will be a sharp increase in uncompensated care. Two major drivers are the new Medicaid eligibility rules and the phaseout of DSH payments after September 2025. Many patients will lose coverage without realizing it, and frontline staff may be the first to detect gaps, which causes delays, confusion, and financial strain.
While large systems may shift focus to commercial payers or higher-income areas, rural and safety-net providers will face the greatest risk. The Rural Health Transformation Program provides $50 billion in grants through 2030, which may slow but not stop closures and service cuts.
Glenn Hunzinger: And how can providers get ahead of this?
Shannon O’Shea: Scenario planning is key. Providers should model how the bill will affect revenue, volume, and coverage mix. They will need to update workflows, especially around eligibility verification and billing, and assess how their charity care policies will fill coverage gaps. Looking ahead, many will need to evolve their care models by expanding digital, outpatient, and mobile services. It is also time to rethink workforce strategy to support more digital delivery and leaner margins.
The pharma perspective: Orphan drug wins, access headwinds, and supply chain shifts
Glenn Hunzinger: Phil, what are the implications for pharmaceutical and life sciences companies?
Philip Sclafani: There are a few bright spots. The orphan drug fix, restoring exemption for drugs with multiple orphan indications from Medicare price negotiation, is something the industry has pushed for, and it could reignite innovation in rare diseases. There are also new tax incentives for domestic manufacturing, which align with broader onshoring trends and supply chain resilience goals.
Glenn Hunzinger: And what about the risks?
Philip Sclafani: The biggest headwind is reduced access. Coverage losses in Medicaid and ACA exchanges will likely lead to fewer prescriptions and lower revenue, especially for companies with portfolios concentrated in CNS or high-cost specialty drugs. We may also see greater demand for copay assistance, pressure to offer deeper discounts, and potential disruptions as patients move in and out of coverage or lose access to provider sites. Pharma companies will need to reassess how they support patients on therapy, especially in oncology and other complex care areas.
Final thoughts
Glenn Hunzinger: A thousand-page bill brings a thousand new realities, and leaders across the healthcare system need to move quickly. For payers, providers, and pharma, the message is clear: scenario planning, strategic partnerships, and operational agility will define who succeeds in the post-OBBBA era.
Episode transcript
Find episode transcript below.
00:00:03:10 Welcome to PwC’s Next in Health, where we unpack the policies transforming healthcare and break them down to what it really means for the industry. Today's episode is focused on a major new law that's already changing the game. The One Big Beautiful Bill Act, or OBBBA signed into law on July 4th, the OBBBA is a sweeping reconciliation bill that marks a defining moment in US healthcare and federal spending.
00:00:28:01 Is it headline provisions making President Trump's signature tax cuts from his first term permanent? But to make the math work, Congress needed to offset those costs, and they did it by zeroing in on healthcare. The bill itself is massive. Almost a thousand pages and nearly 300 of those deal directly with healthcare. And while it's dense, the impact is clear.
00:00:48:30 The legislation re-shifts who gets covered, how care is paid, and how states, providers, payers, pharma, and patients interact with the system. Joining me today are three of my esteemed colleagues, Nicole Montgomery, who's going to talk about what it means for payers. Shannon O’shea to talk about providers and Phil Sclafani to talk about what it means for our pharmaceutical and life science companies.
00:01:09:03 Let's dive in. Nicole, maybe we can talk about payers and what does it all about means for them?
NICOLE MONTGOMERY:
00:01:14:05 Thanks, Glenn. If I break down the three major areas where this bill will directly or indirectly hit payers the hardest, it is coverage loss and member churn, funding cuts and increased administrative burden. To start with coverage loss and member churn, the CBO estimates 11.8 to 13.7 million people will lose Medicaid and marketplace coverage in the next decade. This will be driven by new work requirements, more frequent eligibility checks, stricter immigration rules, reduced ACA enrollment periods, new co-pays and skyrocketing marketplace premiums
00:01:53:10 as the advanced premium tax credit subsidies expire. For many members outside of these cost increases, a big challenge is going to be navigating the complex verification processes, causing confusion, gaps in coverage, or complete enrollment loss. All of these factors in action will likely prompt healthier individuals to leave the market and drive instability in insurance risk pools, leaving payers who participate in these public programs with a sicker, higher-need pool of enrollees.
00:02:23:05 Secondly, is funding cuts. As Glenn mentioned, states are facing a staggering $1 trillion reduction in Medicaid and federal funding over the next 10 years, and states are going to have to balance their budgets to make up for that funding reduction, which could be done through things like cutting optional Medicaid services like behavioral health, dental care, or prescription drugs,
00:02:45:04 flashing eligibility for certain populations completely, cutting funding from other programs like education, or even lowering capitation rates to payers. Payers with large Medicaid populations will feel the strain from things such as more complex care coordination with these benefit carve-outs, immediate membership loss in their programs, and the need for tighter cost management.
00:03:07:03 Providers, especially in rural areas, will also be hit hard from a funding perspective, which Shannon will go into shortly. But this could lead to potential hospital shutdowns and service cuts, creating healthcare deserts for payers to navigate from a network adequacy perspective, and additionally can afford the providers that are able to survive these funding cuts.
00:03:30:50 They may push for higher Medicaid rates, adding further financial pressure on these payers, and then lastly, an increased administrative burden. While states are on the hook for implementing these changes, payers are going to face quite a large operational burden, whether it's constant membership reconciliation that are data exchange required with state systems, additional staff
00:03:53.01 to proactively support members with these new requirements. There will be an administrative lift and some states may even offload some of these ongoing responsibilities directly onto payers through their managed care contracts, adding kind of even more to the load.
GLENN HUNZINGER:
00:04:09:05 Thanks, Nicole. I think it’s pretty interesting impact on the payers. Shannon, if you think about providers, what are we going to see?
SHANNON O’SHEA:
00:04:16:15 It's a great question, Glenn. For providers, the most immediate impact is going to be a sharp increase in uncompensated care, and there are really two drivers to that. More people losing Medicaid because of the new eligibility rules and the phase-out of dish payments after September 2025. This is going to come up in very real ways.
00:04:35:06 Providers will start seeing more patients who either can't pay or don't realize they've lost their coverage. At the same time, hospitals are going to see an increase in administrative complexity. Frontline teams may be the first to discover when a patient's no longer eligible for coverage, which is going to cause delays, denials, and confusion.
00:04:54:05 This could represent though, an opportunity for organizations to explore technology solutions and consider outsourcing specific functions to AI. High-resource systems may be able to cost shift raising prices for the commercial payers or pivot to wealthier geographies, but unfortunately, the safety net hospitals and rural providers,
00:05:13:50 those are the ones that usually really can't shift their strategy and will be most exposed. The bill aims to protect rural hospitals from some of the impacts of reduced Medicaid funding. What's called the Rural Health Transformation Program was set up and it'll award $50 billion in grants to states between fiscal year 2026 and 2030.
00:05:33:20 And this is supposed to help support rural healthcare services. While the funding is unlikely to offset the new budget constraints, it at least could help to stabilize the rural hospital operations and prevent closures for longer that Nicole mentioned.
GLENN HUNZINGER:
00:05:47:12 Phil, maybe you can talk a little bit about impact on PLS, and maybe there are some bright spots here?
PHILIP SCLAFANI:
00:05:53:12 Yeah, sounds good, Glenn, and let's maybe start off with some of the good news. So, the orphan drug fix that was contained at OBBB is definitely one that pharma has long sought. As a reminder, that's currently drugs that have a single orphan drug indication or exempt from MFP negotiation under the Inflation Reduction Act.
00:06:11:40 But as soon as you had multiple orphan conditions, you were no longer exempt. That sort of patch is now in OBBB to say drugs that have multiple orphan drug indications will be exempt. Definitely something pharma has long sought and will help development and bringing therapies to market in rare diseases and other things like that.
00:06:28:20 I think important to keep in mind, this kind of just reshuffles the list. So, if one manufacturer's product comes out from the negotiation list, another one slots up earlier, so there'll be some give and take in there, but often positive for what the industry was looking for there.
00:06:42:10 There also were some tax incentives for domestic manufacturing. Definitely, nice for those to be there. Fits well with kind of the broader tariff and onshoring issue we've been seeing. So maybe another reason or push to help companies bring back more of the drug supply chain as the administration and others have been looking for.
00:06:58:50 The negative side of things really goes back to some of the coverage losses that Nicole mentioned, right, so less insured lives under Medicaid and the ACA exchange plans probably the biggest direct impact for pharma. So, we expect fewer prescriptions from those channels. Ultimately, will mean less revenue, probably disproportionately impacting some companies that are products
00:07:18:30 that heavily treat Medicaid populations and CNS, depression, others like that, and probably also hitting some high-cost or specialty drugs the hardest. Beyond that, we're looking out for kind of the ripple effects, so maybe an expected rise in co-pay support or patient assistance programs that pharma offers as there are more uninsured patients.
00:07:37:06 We'll also be looking to see if payers or providers might turn to pharma to provide greater discounts or other value to compensate for some of the losses that both Nicole and Shannon mentioned, and they're probably the most important for both patients and pharma, is just to look out for any of the patient disruptions that might happen, right?
00:07:52:05 As patients go on and off Medicaid, or maybe their rural hospital goes out of business. Obviously, that impacts pharma, who really want their patients to be stable on therapy and be able to continue long term without disruption.
GLENN HUNZINGER:
00:08:03:10 Thanks, Phil. It's kind of interesting hearing all the differences between the payers and providers and the impact, and I think as we dig deeper now, can we just talk a little bit about, so what does it mean right now? And what should people be doing? What do we expect to happen? So maybe I'll kick it back to you, Nicole, and let's talk about the payers.
NICOLE MONTGOMERY:
00:08:20:12 Yeah, thanks, Glenn. I think generally, there's a lot of uncertainty in how states are going to roll out some of these changes. So, payers should really focus on a set of strategic actions, and one of those is stepping up as thought partners with states to help shape their strategies around these Medicaid funding cuts and operationalizing these requirements.
00:08:42:50 It's really crucial for payers to be involved at the onset of these discussions, especially around things like the eligibility tracking, the work requirements that we've already talked about, to establish how they can partner with states in the implementation as well as the ongoing operations of them. Payers should also be focusing on scenario and impact modelling
00:09:02:08 to understand how the bills requirements and the state-specific strategies that their states are taking could impact their membership and market dynamics, and quickly apply those insights to guide their product decisions or capability investments and their broader strategy overall.
00:09:19:10 Additionally, down the line, with a sicker population likely to maintain coverage, rate advocacy with states will be essential to ensure payments reflect higher member acuity. And then secondly, really doubling down on proactive member engagement to try to minimize that coverage loss and member churn. Programs that target at-risk members, such as workforce development programs that support members getting jobs,
00:09:44:10 training rides to interviews will all be vital. And using AI and predictive analytics to identify members at risk of losing coverage can help with timely interventions and outreach that may help limit some of that loss of coverage for the payer membership. Finally, thinking through kind of operational capabilities, the changes from this bill are going to require payers to be operationally agile, and payers need to do a thorough review of the requirements of the bill and their state-specific rollout strategy
00:10:15:09 against their operational capabilities and technology infrastructure to understand the required enhancements and develop an internal roadmap for the rollout of those changes.
GLENN HUNZINGER:
00:10:25:10 No lack of work to do there, Nicole. Shannon, what are we thinking about on your end?
SHANNON O’SHEA:
00:10:30:14 It's a great question. So, providers really need to act quickly, and there are probably several steps organizations should consider. They should think about conducting scenario planning. So, if it's not already in process, they need to start with their scenario planning, being able to model the delta in revenue under the bill and the anticipated potential shifts in patient volume.
00:10:48:09 It's really going to be essential for organizations to explore how resources can be strategically redirected to commercial payers and assess the possible cost shifts for their organizations. They're going to want to plan for coverage disruptions, preparing for potential coverage disruptions at the point of care.
00:11:07:05 So, eligibility verification should happen in real-time, is going to have to be conducted more frequently. They're going to want to review and update their workflows and policies for re-verification, co-pay collections, referrals, really to ensure that they align with the new processes and potential shifts. So, some of the questions that organizations will want to consider is, are you collecting information now required for the Medicaid eligibility?
00:11:33:10 Do you have a process for preventing billing Medicaid for non-covered patients or services? Will your charity policies fill the gaps left by the reduced Medicaid coverage? So those are just a few that organizations are going to want to consider. They're also going to want to look at the identity of vulnerable service lines like identifying service lines or locations where rising uncompensated care may jeopardize financial stability
00:11:59:09 and prioritize efforts to mitigate these risks. And they're really going to want to invest in patient education. Even basic awareness about the benefits can really help reduce financial exposure. So, kind of looking forward for providers, it's really about redesigning their care delivery. They need to expect to serve more uninsured and underinsured patients
00:12:19:09 and really start to consider new models, urgent care, telehealth, mobile services if they're not doing that already. Again, like Nicole mentioned, using predictive analytics to identify and flag coverage gaps on the provider side before they happen will be important. They're going to want to consider shifting capital planning towards more outpatient, more digital, and more preventative services, and they're really going to want to evolve their workforce for digital delivery and leaner margins.
GLENN HUNZINGER:
00:12:45:10 It's fascinating. Shannon and Nicole, it seems like there's just a start of continuation of this change that is going to happen and expected to happen. And Phil, on the PLS side, what are you thinking there?
PHILIP SCLAFANI:
00:12:59:13 Yeah, definitely a lot to do too. It turns out a thousand-page legislation creates a lot of work across the enterprise. So, we're looking at kind of the impact in each part here. From a commercial perspective, definitely, companies should be modeling the impact of potential coverage losses on their overall market access demand, number of prescriptions to expect
00:13:17:50 and how ultimately that's going to impact revenue and then what might be done to offset some of those losses. Looking at patient services, a really important area that pharma focuses on, onboarding and supporting patients on therapy going to be super important to evaluate how patients currently on therapy might be impacted as they go on and off coverage,
00:13:36:06 lose coverage, and maybe the hospital that they're going to for their oncology infusion goes out of business, and they need a new site to get infused, or they now all of a sudden get referred to a new site because their insurance won't work where they're at. A lot of area where pharma spends a lot of time and investment, and looking at how that might be impacted will be key.
00:13:54:30 A couple areas for bigger capital investment decisions. So certainly, this is another push for companies to consider US manufacturing expansion and going along what we've seen with potential pharma tariffs and some of the onshoring push. And then more broadly looking at R&D and M&A. This is a chance to re-evaluate the orphan drug pipeline strategy in that area
00:14:14:00 given the new exemption and overall, maybe unlock some opportunities that companies weren't looking at before. So maybe despite not being as directly impacted as payers and providers, definitely a lot to look at for pharma across the enterprise.
GLENN HUNZINGER:
00:14:27:10 Thanks team for the insights here. The One Big Beautiful Bill is here. It's already reshaping the healthcare as far as how things are covered, paid for, and ultimately what that delivery is going to look like in the US. Special thanks to Nicole, Shannon and Phil for joining us here. We'll be back soon with more on what's Next in Health. Until then, stay ready, stay informed, and keep moving forward.
FEMALE VOICEOVER:
00:14:57:07 This podcast is brought to you by PwC, all rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity.
Our insights. Your choices.
Get started with PwC's preference center
{{filterContent.facetedTitle}}
{{contentList.loadingText}}
{{contentList.loadingText}}
Contact us
Follow us
