BOSTON — State leaders will likely need to cut spending or move money from savings to manage Medicaid cuts and cost-shifts under the One Big Beautiful Bill Act, lawmakers said Monday at the National Conference of State Legislatures annual summit. 

Nevada Gov. Joe Lombardo (R) has said he will not raise taxes. So lawmakers will need to consider cutting Medicaid spending, said Sen. Fabian Doñate (D), the deputy majority whip.  

“You either cut eligibility that’s not mandatory, or you cut services. That becomes a challenge,” he told a packed room at the national gathering for state lawmakers and legislative staffers. 

Lawmakers are still working to understand how sweeping changes in the new federal law will affect their Medicaid programs, one of the largest line items in state budgets. 

The new law also comes amid uncertainty about how other federal actions such as tariffs, workforce cuts and immigration crackdowns will impact state revenues. 

To balance Nevada’s Medicaid budget, Doñate said lawmakers could drop coverage for health care services considered luxuries. 

Lawmakers likely will not be able to afford additional pay increases for doctors and other providers that treat Medicaid patients, he said. Many states have used Covid-era federal aid to increase Medicaid payment rates, which are below the rates Medicare and private insurance plans pay. 

“I would say that provider enhancements are probably off the table now,” Doñate said. 

Fast-growing Medicaid costs were already squeezing state budgets before Congress passed the Big Beautiful Bill. 

It will impact state budgets in complex ways. In the short term, it will reduce tax revenues for some states while requiring all states to spend more to administer food stamp and Medicaid programs. In future years, states may need to partially fund food stamp benefits. 

States will no longer be able to raise taxes on hospitals and other providers to help fund Medicaid services. States that have expanded Medicaid to cover more low-income adults will need to cut such taxes in future years, as well as begin administering work requirements and twice-yearly program eligibility checks. 

Over the long term, the new eligibility rules could reduce the number of adults enrolled in Medicaid. But states must foot the bill for technology and staff needed to implement those changes.

Some legislatures are already taking action to protect their Medicaid programs, said Kathryn Costanza, an NCSL program principal for health. 

Some states passed legislation this year to shore up their programs in anticipation of the federal changes, Costanza said. Others have called for Medicaid spending reviews, or are considering special sessions to determine their next steps. 

Oklahoma lawmakers will need to cover new administrative costs in their Medicaid and food stamp programs, said Sen. John Haste (R), vice chair of the appropriations committee. He said lawmakers are also worried about how their rural hospitals will fare.

“All of those things added together could come up to a very big number,” Haste said. “We don’t know what that is.”

Oklahoma’s Republican-led legislature has focused for years on cutting taxes, in part to spur economic growth, Haste said. Raising taxes requires a vote of the people or three-fourths vote in the state House and Senate.

“That’s not going to be an option,” Haste said of raising taxes to cover new costs.

Utah has three rainy day funds to help protect its Medicaid program from fiscal risks, such as an economic downturn or loss of federal funding, said Jonathan Ball, 

Utah’s legislative fiscal analyst. Utah leaders could use those savings to pay for I.T. upgrades needed to implement new Medicaid eligibility rules. “Because this is a one-time cost, I think it’s manageable,” Ball said.

He said he did not know how large the bill would be. 

Ball said he was also worried about overhauling the state’s Medicaid payment system, which could lead to glitches. 

Lawmakers there had to scramble to fill a $60 million budget hole in the final days of the legislative session this year after they discovered providers had been underpaid under a new Medicaid payment system. 

“I’m not only worried about how to tackle the administrative cost of changing the system,” Ball said, “but what does that do to all the other components and how to avoid messing it up again.”