As the Big Beautiful Bill Becomes Law, States Face a ‘Daunting’ Rollout

Dan Gorenstein (DG): Last week, as Republicans began to celebrate the passage of their landmark piece of legislation… 

Sfx: Applause and USA chants from the House floor

DG: They sounded like marathon runners who had finally reached the finish line.

Johnson: We’ve had spirited debates. We’ve had months of deliberation. And now we are finally ready to fulfill our promise to the American people. That’s what we are doing today. // Trump: In a few moments we’re going to make official the greatest victory yet when I sign the One Big, Beautiful Bill.

Sfx: Applause

DG: But for health officials in state capitols across the country now faced with the task of turning this law’s reforms into reality, the race has just begun. And they’re going to need to do it at record speed.

Today, we talk with one state’s former health chief about the huge lift and hard choices ahead.

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein. This is Tradeoffs.

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DG: The mega bill that President Trump signed into law on July 4th contains a whole heap of important health policies: reforms that will reshape Medicaid, rescue money for rural hospitals, a big blow to Planned Parenthood’s funding.

We’ve covered some of these policies already, and we’ll cover them and more, in the coming months. Today, though, I wanted to take a beat and focus on the people charged with putting these policies in place: the officials in red and blue and purple states — what they’re thinking and what they’re doing — as they begin work that will touch the lives of tens of millions of Americans.

Kody Kinsley (KK): People who come into these roles in any state, regardless of the background or political affiliations or anything, they are trying to improve the health and well-being of the people in their state.

DG: Kody Kinsley, until earlier this year, was one of these people. He led North Carolina’s Health and Human Services agency for three years and ran their behavioral health division before that. Kody’s made a habit out of working with folks across the political spectrum. That’s how he helped North Carolina become the 40th state to expand Medicaid to more low-income adults. He also served in the Treasury Department under both Presidents Obama and Trump.

So I thought Kody would be a great person to shed some light on what his former colleagues across the country are facing in this moment. Here’s our conversation. 

DG: In one word, Kody, how would you describe the challenge ahead of states as they move to put the Big Beautiful Bill into action? One word.

KK: Daunting.

DG: Thank you for the one word. Now say more.

KK: Oh, you wanted me to prepare more? [Laughs] Bottom line: This is a health care bill. You know, since the Affordable Care Act 15 years ago, this is the most sweeping change to health care that we have seen, and it will require significant implementation at the state level.  

DG: And what are folks literally doing right now? So they’re feeling overwhelmed, but what are they doing to try to do the best job that they can do?

KK: Well, look, a big source of that worry and fear is the amount of uncertainty that we have. 

The bill in its current form only saw the light of day, you know, a week and a half ago. And so right now, the first thing that folks are doing is just trying to read it and understand it and make sure they’re finding all of the little nits and bits and to make sure they can begin to understand the implementation. We’ve got a long road ahead of even just trying to build out the glossary and the definitions here. 

DG: Right, I mean we’re talking about a law here that’s close to 1,000 pages long. 

KK: We’re going to see Centers for Medicaid and Medicare doing implementation guidance. We’re going to see litigation. And all of those things will impact how this is implemented. And so, state officials are trying to follow along through all of that and then provide the advice necessary to their governors [and] to their legislative partners on what they’re going to need to do this. 

DG: No need to name names. Can you share a conversation you had in the last three or four days — seven days — with a current state health official?

KK: Sure, I’ve had a number of conversations with several of my former colleagues. One of them is pretty sad and pretty frustrated to the point of considering to leave their job. 

DG: And what did that person say? 

KK: This is not what I signed up for.

DG: What did you counsel this person when they said, “This is not what I signed up for”?

KK: I said that I think that you better than anybody else to be in this role right now. You’ve been in this role for as long as you have. You understand this and your team needs you now more than they’ve ever needed you. And I think they would have told me the same thing if I was in a similar situation.

Now I want to be clear, I don’t think this person is going to leave their job because, you know, these folks do hard things every day, and they also know that part of being in these roles is implementing the policy, whether you agree with it or not. And that’s not a new thing. And so I think we’re going to see the highest level of professionalism and the highest level of creativity in trying to support. And like any policy, some things will work well, some things won’t work well, and I think there’ll be opportunity down the road for continued tweaking and changes. 

DG: You’re, of course on the sidelines now, Kody, watching friends and colleagues run this race.

But I’ve got to think you’ve got a wealth of experience to share. In particular, I’m thinking about your experience standing up the kinds of systems that states are going to need, for example, to meet this law’s new work requirements.

As you know, somewhere close to 20 million adults now need to start proving that they’re working, volunteering or going to school in order to stay on Medicaid. States have to have this ready to roll by the end of next year. What’s your advice for them? 

KK: So during the COVID period when people were on Medicaid for extended periods of time, North Carolina used that opportunity to make some major technology updates. And one of the things that we committed ourselves to was having a very high utilization of something called ex-parte data — essentially data through third-party vendors like Equifax or Experian to pull income information — and getting the technology right allowed us to move people through the eligibility process much faster than we had prior. And in fact, we could actually get about 40% of people through the eligibility process without ever having to talk to a human. That had never been done before in North Carolina Medicaid. Something that’s also really important in this is making sure that CMS gives states the policy flexibility that they need to be able to do that. 

DG:  What I’m hearing you say, Kody, is that, you know, now here we are in the 21st century and it’s so much easier to sort of scrape data from any number of sources. In theory, a state could set up a system that requires less contact, lower touch from the Medicaid beneficiaries themselves and the state could be doing more of that determination, redetermination work rather than even having to get the beneficiary involved. And the more that the state can do that and set a system up like that, the less we’re going to have eligible people lose their coverage. 

KK:  That’s right. And I should have started here so let me let me say this now. It always was, and it always will be the interest of every state Medicaid program to accurately determine eligibility to make sure that the people that are eligible under the law are on and the people who are not eligible under the law are not. Period. What we want to try to do through these technological improvements are about trying to get rid of the inaccurate eligibility determinations, right? So if you can move it more online, that makes it better. If you can make it more passive so that the person’s like, “You know what? I don’t know where my five pay stubs are,” like, if all they have to do is look at it and be like, “Yep, that’s accurate,” you know, that’s good. 

DG: And not just good for people on Medicaid. This is going to be good for the state, too right? I mean this just sounds much more efficient.

KK: Yeah, like North Carolina does eligibility at the county level. That’s 100 county departments of social service. Those are 100 different teams. That is a significant amount of work that those county government workers will have to face when they cannot do everything else they’re supposed to do, and so making their lives easier is an important goal as well. 

DG: Obviously different states are gonna have different approaches to this. Do you think we could see big disparities in the number of people losing Medicaid simply because some states have better software than others?

KK:  Absolutely. I mean the common joke is if you’ve seen one Medicaid program, you’ve seen one Medicaid program, right? And that is both a benefit — that you get the opportunity for the laboratories of democracy to demonstrate how things work functionally — but then you also have the challenges that come along with that. And look, there have been exactly zero successes at implementing work requirements in this country — and that’s one of the challenges that I’m worried about. We’ve got two relatively well documented struggle-buses moving down the street here. And maybe that was because they were relatively small pilots and whatever, you know, so I’m not trying to suggest that there won’t be successes here but I think that we need to be realistic, back to the word that I started with, that the road ahead is daunting.

DG: Those ‘struggle buses’ that Kody’s alluding two there are Arkansas and Georgia — two states that have tried work requirements and run into some pretty big bumps in the road.

In Arkansas, for example, 18,000 people lost their Medicaid despite surveys suggesting that many of those folks were either employed or exempt from the requirement. 

When we come back, Kody outlines some of the tough budget choices states will face from cutting dental coverage to taking Medicaid away from hundreds of thousands of people.

MIDROLL

DG: Welcome back. We’re talking with Kody Kinsley, who until earlier this year, served as the state of North Carolina’s health and human services secretary.

Before the break, Kody walked us through why states might struggle with both the timeline and the technology required to put Republicans’ new health reforms into action. Now, we turn to the budgetary challenges posed by this behemoth of a law.

DG: Obviously, as a result of this legislation, states are going to be facing some very difficult decisions, choices. Money is going to become tighter. When you think about North Carolina, what’s an example of something that’s going to be really hard?

KK: The North Carolina General Assembly will have to wrestle right out of the gate with over 660,000 people losing their health care coverage. These are folks that gained coverage very recently through North Carolina’s expanded Medicaid program. And the reason is because North Carolina lawmakers put a trigger on the books when they passed expansion a few years ago that essentially says if the state incurs any increased cost for the expansion population, then the program would automatically sunset. The requirement to implement work requirements from the federal government specific to the expansion population will cost the state money to do so, and so lawmakers can either adjust that law in some way or wrestle with it another way. But if they choose to do nothing, then more than 660,000 individuals will lose their health care coverage.

DG: Wow, so that is a huge decision. It is also clearly very specific to North Carolina. So I guess I’m wondering, Kody, when you think more generally about state health officials across the country, what’s a tough choice that they’re all about to face? 

KK:   Let’s zoom out to the just broader budgetary situation we are in. I mean, most states are facing budget shortfalls — the tightening of a lot of the federal funding post-COVID, you know, Medicaid changes are happening alongside a lot of other changes, major cuts to the SNAP program, a number of other grants getting canceled, challenges that public universities are facing. All these roads lead back to the respective states’ budgets. States just don’t have a lot of places to turn for money right now, and states, unlike the federal government, balance their budget.

And I can tell you from my experience when we were facing tight budgetary moments it takes a lot of program cuts to make up a dollar, right? So we had looked at like, could we cancel the entire dental program and the entire dental program would’ve saved quote, you know, air quoting here ‘saved’ $150 million. Right now these changes are forecasting to remove $32 billion from the Medicaid program over the next 10 years in North Carolina alone. 

DG: Is that sort of the crude math? I mean, I really appreciate what you just said here. The state of North Carolina is projected to lose $32 billion in health care money over the next decade and so at the most basic level that means how is the state going to be making up $3.2 billion a year over the next 10 years?

KK: I can cut to the chase, and the answer is that it can’t. And so, you know, it just simply won’t. But the question will be is what of the losses will it try — like what pennies will it throw in the direction of some of those dollars where it is believed to potentially make the most difference? And there’s just not going to be easy choices here. Will they go towards, you know, coverage or will it be towards just a rural hospital emergency fund? Will it go towards, you know, some other aspect of the program? And those sorts of tradeoffs are really challenging.

DG: Because at the end of the day, I mean, this is likely going to lead to either a cut in services, a reduction in eligibility or lower reimbursement rates for providers — or some combination of all three. 

KK: That’s right. Yeah, I expect it’ll be a combination of all three.

DG: You have a sign — I think we’re talking to you from what appears to be your office here on this video call — and you have a sign over your right shoulder that says, “Health Care 600,000 North Carolinians.” What is it?

KK: Yeah, this was the sign that we had on the day that we launched Medicaid expansion in North Carolina, December 1st, 2023. And what you can’t see — it’s a little blurred — you’ve got Governor Cooper’s signature and a bunch of members of my team who all worked together to get this done. I have to point out just above on the side here is a football that was signed by pretty much every Republican in the North Carolina General Assembly and given to me on that day for getting Medicaid expansion over the line. 

Medicaid expansion was a huge bipartisan accomplishment — something that people worked on for a decade from every walk of life. Every North Carolinian wanted to see this done and this moment and the risk of it all falling apart really feels like a rug being ripped out from underneath people.

DG: Final question. You obviously are a person who thinks about others. I know that even though I don’t know you. How do you feel, though, right now knowing that this work could be in jeopardy?

KK: I am — I’m probably of two minds. 

One is just, you know, frustrated and sad that we seem to be going backwards — going backwards in the way of coverage access, going backwards in the way of trying to promote health and well-being as a priority. 

But alsoI recognize that if I were to step outside of the policy world that I live in and go sit down with people at a kitchen table, there are not many people in this country who believe health care is working well. They think that even when they are insured, they end their health care experiences relatively traumatized and frustrated with billing and frustrated with all aspects of what’s going on. And that public sentiment demanded major changes. 

I don’t think the changes that we have seen out of Congress are the changes that we needed. But I do think that someone is being responsive to the frustrated public sentiment that we have. And I think what is missing in this moment is a better vision for what health care should look like. 

If you were to ask one of those people at the kitchen table, they would say, it needs to be much simpler. Like I grew up in North Carolina uninsured. I remember watching my mother navigate the health system that looked like provider on a sliding scale, pharmacy samples out of a supply closet. Fast forward 40 years we’ve put trillions of dollars into health care. We have record coverage rates. We’ve made huge progress on cancer cure rates. But you go find the version of my mother today and that mother navigates a health care system that I think is even more confusing, even harder and more frustrating. And…

DG: And even more expensive. 

KK: And even more expensive. And I think that that is a reality that policymakers have to wrestle with, and I worry that we are taking a turn in the wrong direction but that does not mean that we needed to be in a place of no change. We have to continue to embrace change and progress.

DG: Kody, thanks so much for taking the time to talk to us on Tradeoffs. 

KK: Thank you. 

DG: Already, states have begun to turn to some of the hard and urgent work that Kody outlined in our conversation.

Both Colorado and Connecticut appear headed for special legislative sessions to deal with the fallout from the bill.

And the National Academy for State Health Policy told Tradeoffs they expect many other states to revisit their budgets. 

I’m Dan Gorenstein. This is Tradeoffs.