Trump’s “Big, Beautiful” Bill Is About to Screw With States’ Budgets

The administration of many public benefits that faced cuts after Congress passed Trump’s budget bill last year will become more complicated in October, even as state governments are already struggling to meet the stringent new requirements congressional Republicans approved.Several provisions from President Donald Trump’s One Big Beautiful Bill Act relating to Medicaid and the Supplemental Nutrition Assistance Program, or SNAP, will go into effect on October 1. This will include pushing more of the cost of SNAP administration onto states, and limiting Medicaid eligibility for legal immigrants.“If you want to actually be administering the program well, you should be investing more in the administration. Instead, we’re seeing the opposite,” said Lauren Bauer, a fellow in Economic Studies at the Brookings Institution, about SNAP.Historically, states and the federal government have shared SNAP administrative expenses equally. But with the start of the new fiscal year at the beginning of October, states will need to shoulder 75 percent of SNAP administration costs, while the federal government will lower its reimbursement to 25 percent. This change is expected to push nearly $17 billion onto states over five years.This will come as states are already working to implement tightened work requirements established by the Republican law, and are preparing for a pending shift in the cost of benefits based on their error rate—that is, the amount of overpayments or underpayments of SNAP benefits in a fiscal year. Beginning in 2027, states will have to shoulder up to 15 percent of benefit costs depending on their error rate. The lower the error rate, the lower the share of state costs. But achieving that goal requires investment in SNAP administration on the state level, and that’s about to become even more expensive.“Retraining staff, paying staff better, having more oversight over quality assurance, intensifying how you do quality control, making sure you’re doing everything in a timely manner—all of that requires staff resources, and staff resources require money,” said Bauer, who is also the associate director of the Hamilton Project.The Republican law already ended SNAP eligibility for certain lawful immigrants, a provision that the nonpartisan Congressional Budget Office estimates would result in an average of 90,000 people losing access to SNAP each month. Beginning on October 1, eligibility for Medicaid and the Children’s Health Insurance Program, or CHIP, will be similarly restricted.The law limits eligibility for these programs to green card holders; entrants from Cuba and Haiti; people from the Marshall Islands, Micronesia, and Palau residing in the U.S. under the Compacts of Free Association; and lawfully residing children and pregnant parents in states that offer coverage. Groups such as refugees, asylees, humanitarian parolees, survivors of domestic violence, and victims of human trafficking—who may have already lost access to SNAP—will no longer be eligible. These new limits will result in 100,000 individuals losing health coverage by 2034, according to estimates by the CBO.“The current law of the land says the state must provide coverage to these individuals, like refugees and people granted asylum. Starting October 1, states no longer have access to funding for those programs,” said Shelby Gonzales, an expert on immigrant access to benefit programs at the Center on Budget and Policy Priorities. “The tools that are utilized by states to verify eligibility based off of immigration status are challenging, and they’re imperfect.”Verifying a person’s eligibility is an extremely complicated and lengthy process. States first need to identify “potentially affected” enrollees, then undertake new eligibility determinations beginning on October 1. They must reverify the status of those potentially affected, and contact those immigrants whose status was unable to be satisfactorily verified electronically. The state must provide these enrollees with 90 days to provide documents necessary to verify their status, then offer at least 10 days of notice before terminating or reducing benefits. On top of that, states will need to update their eligibility systems, as well as enrollment data and financial claim reporting, to fulfill the new federal requirements. Because of the complexity of this process, people who remain eligible for Medicaid and CHIP could still lose their benefits.“They may experience procedural disenrollments or coverage disruptions due to fear, confusion, or challenges completing the verification requirements, because they may have difficulty understanding the new eligibility rules,” said Drishti Pillai, the associate director of the Racial Equity and Health Policy Program and director of Immigrant Health Policy at KFF, a nonprofit health policy research, polling, and news organization.Immigrants who are concerned about being detained by U.S. Immigration and Customs Enforcement may also choose to disenroll from Medicaid out of fear for their ability to stay in the country.“They’re afraid to have their information provided to the government at all. They’re afraid to respond to new notices when they come in the mail. They’re afraid to challenge if it appears that they lost coverage inappropriately,” said Gonzales. Medicaid participants are less likely to work in occupations that offer health care coverage, meaning that there is little recourse if they lose Medicaid.The law also limits federal matching payments for emergency Medicaid, which allows hospitals to be reimbursed for care provided to individuals who would qualify for Medicaid except for their immigration status. Beginning on October 1, the cost of reimbursing that care will functionally be pushed onto states that have expanded Medicaid. This will not only affect undocumented immigrants, but also legal residents who do not qualify for Medicaid.Aside from the burden on states, many legal residents are now finding themselves without food assistance or health care. Saba Berhane, vice president for programs at the refugee resettlement organization Global Refuge, said that nonprofits can help fill the gaps for individuals who have lost nutrition benefits. Health care is another matter.“When a family loses coverage, there is no reliable equivalent to a food bank,” Berhane said in a press call. “That means people will likely go without—rationing medications, skipping a specialist, and putting off care—until a manageable problem becomes an emergency room visit.”In the year since the approval of the law, Medicaid, CHIP, and SNAP have seen a significant decline in participants. Overall, five million fewer people were enrolled in Medicaid and CHIP in May 2026 as compared to May 2025. SNAP enrollment declined from around 41.6 million in July 2025, when the law was passed, to roughly 36.3 million in June 2026.As the burden of administering these programs increases, states may be forced to respond to these funding pressures by reducing SNAP benefits or further limiting eligibility. An overview of state budgets for fiscal year 2027 by the National Association for State Budget Officers showed states already bracing for changes to SNAP and Medicaid. As they face a “constrained fiscal environment,” the report says, “states are likely to remain cautious about new ongoing commitments, protect core services, make targeted spending adjustments, and use other strategies to address fiscal pressure and maintain structural balance.”In a recent survey of 39 states by the American Public Human Services Association and the Urban Institute, 29 percent of states said the impending benefit cost shift could result in reducing eligibility for SNAP, and 11 percent identified withdrawing or pausing SNAP as a potential risk. “It is absolutely critical for states to continue to participate in the program and to provide the funding that is needed for the administrative costs. That being said, state budgets are squeezed,” said Crystal FitzSimons, president of the Food Research and Action Center. “If they’re going to increase the amount of funding that they’re providing to SNAP through administrative costs or benefit costs, then they’re going to have to start making some tough choices.”