Rolling Back Medicaid, SNAP, and Obamacare Reforms Would Drive Up Federal Spending

Reversing key policies enacted in 2025 could add more than $5 trillion to federal deficits over the next decade, including substantial costs from undoing Medicaid, Supplemental Nutrition Assistance Program (SNAP), and Obamacare reforms. Many of these changes involve work requirements, eligibility verification, and stronger oversight of taxpayer-funded assistance programs.

According to estimates compiled from the Congressional Budget Office (CBO) and Piper Sandler, reversing the Medicaid provisions would increase federal deficits by approximately $1.4 trillion through 2036, while undoing the SNAP changes would add another $224 billion. Reversing Affordable Care Act provisions would increase deficits further, although the budgetary estimates include policy changes beyond program integrity measures.

The figures raise questions about the fiscal consequences of rolling back reforms enacted through the Working Families Tax Cuts at a time when federal spending continues to exceed revenue by trillions of dollars.

Medicaid Reforms Establish Work Requirements and Strengthen Eligibility Oversight

The Working Families Tax Cuts established work and community engagement requirements for certain able-bodied adults receiving Medicaid benefits. Under the law, affected beneficiaries generally must complete at least 80 hours per month of qualifying activities, including employment, education, job training, or community service.

The requirements include exemptions for pregnant women, certain individuals with disabilities or serious medical conditions, caregivers, and other qualifying populations. The provisions are intended to encourage employment among adults capable of working while maintaining assistance for those who qualify for exemptions.

Congress included additional measures to strengthen eligibility verification and reduce improper payments. These provisions address concerns about outdated enrollment records, beneficiaries who no longer qualify for coverage, and weaknesses in state oversight.

The Centers for Medicare & Medicaid Services (CMS) is currently working with state Medicaid agencies to implement the new requirements. States generally must begin applying the community engagement requirements by January 1, 2027.

SNAP Reforms Expand Work Requirements and State Accountability

Congress enacted similar changes to SNAP, the federal nutrition assistance program administered by the U.S. Department of Agriculture (USDA).

The 2025 law expanded existing work requirements for able-bodied adults without dependents, generally extending the age range subject to those requirements through age 64. It modified several exemptions and maintained qualifying work or training activities as a condition for receiving benefits beyond the applicable time limits.

The legislation strengthened state accountability by changing how administrative expenses are shared and introducing greater state financial responsibility tied to payment error rates. These provisions are intended to encourage more accurate eligibility determinations and improve oversight of benefit payments.

Payment errors do not necessarily indicate fraud, but stronger verification and accountability procedures can help identify incorrect payments and prevent misuse of federal funds. Effective administration will require states to enforce eligibility standards while ensuring that qualified recipients retain access to assistance.

Obamacare Reforms Target Improper Enrollment and Subsidy Payments

The 2025 reforms extended to Obamacare's federal health insurance subsidies, where concerns about unauthorized enrollments and inaccurate eligibility information prompted additional oversight measures.

Congress enacted provisions affecting eligibility for premium tax credits, while CMS finalized regulations strengthening income verification, enrollment procedures, and oversight of insurance agents and brokers.

Under the 2025 Marketplace Integrity and Affordability Final Rule, CMS established additional safeguards intended to prevent individuals from receiving subsidies based on inaccurate income information or remaining enrolled in coverage without their knowledge. The agency also moved to strengthen verification for special enrollment periods, which allow individuals to enroll outside the regular annual enrollment window under qualifying circumstances.

Some provisions of the 2025 rule were subsequently stayed by a federal court. CMS has continued its program integrity efforts through additional regulations, including rules for the 2027 coverage year addressing eligibility verification and improper enrollment.

These changes respond to concerns that weak enrollment controls can expose taxpayers to unnecessary subsidy payments while leaving consumers vulnerable to unauthorized coverage changes and unexpected tax liabilities.

The reforms also include changes to premium tax credit eligibility that extend beyond fraud prevention. Those provisions have separate implications for federal spending and access to subsidized coverage, and should not be confused with measures aimed specifically at preventing improper payments.

Reversing the Reforms Would Carry a Significant Fiscal Cost

The projected $1.6 trillion deficit increase from reversing Medicaid and SNAP provisions represents nearly one-third of the estimated $5.1 trillion fiscal impact of the broader policy reversals examined in the chart. Changes to Obamacare provisions and premium tax credits would add further costs.

Not all projected savings from the 2025 law come from work requirements or fraud prevention. The legislation includes other changes to eligibility, benefits, and financing that contribute to its overall budgetary effects.

The broader estimates include the fiscal impact of repealing tariffs, which would reduce federal revenue but could lower costs for American consumers and businesses. Tariff revenue should not be confused with savings from reducing improper payments or improving the administration of federal assistance programs.

Medicaid, SNAP, and Obamacare subsidies collectively account for substantial federal expenditures. Accurate eligibility determinations, appropriate work requirements, and safeguards against unauthorized enrollment are important considerations as Congress evaluates the cost and administration of these programs.

CFE Takeaway

The 2025 Medicaid, SNAP, and Obamacare reforms include measures intended to strengthen eligibility verification, encourage workforce participation, prevent improper payments, and improve accountability for taxpayer dollars. CMS and state agencies are now responsible for implementing many of these provisions.

With federal deficits already running into the trillions, proposals to reverse existing reforms warrant careful consideration of their fiscal effects. Work requirements and program integrity safeguards can help improve oversight of federal assistance, while effective implementation must ensure that eligible Americans retain access to the benefits for which they qualify.