Life Sciences, Healthcare, and Legislative Change

The United States Congress passed the One Big Beautiful Bill Act (OBBBA)—also called the Big Beautiful Bill—in a tiebreaker vote. President Trump signed it into law on July 4, 2025. Known as a “budget reconciliation bill,” this act is an enormous spending and tax bill that involves and funds many different industries and initiatives—including life sciences and healthcare.

Curious how the OBBBA affects these two industries? As a professional services and staffing company, we work with a wide range of clients in life sciences and healthcare. And we’ve seen firsthand how both industries are reacting to this legislation. From nutrition programs and Medicaid to drug development and pricing, the OBBBA could affect many initiatives.

Let’s break down what the Big Beautiful Bill is funding, what it’s no longer funding, and what all of this could mean for life sciences and healthcare moving forward.

What Is Being Funded By the Big Beautiful Bill?

Health and Medicaid Systems

While Medicaid—the federal and state health insurance program for lower-income and disabled Americans—is receiving cuts, resources will still go toward how Medicaid providers are screened and enrolled to reduce fraud and help make sure healthcare providers are legitimate. Because some funding changes won’t be enacted until 2026 or 2027, many Medicaid and Medicare initiatives that will eventually receive cuts will still receive funding for now.

Orphan Drug Protections

The bill clarifies and expands rules around orphan drugs—medications designed to treat rare diseases—and effectively protects rare-disease drugs from the Inflation Reduction Act’s (IRA) price controls amid their unique regulatory hurdles. Orphan drugs that treat multiple diseases are now included along with those that treat a single disease. The OBBBA also preserves revenue streams for biotech and pharmaceutical companies who are developing orphan drugs.

Rural Health Initiatives

Support for rural hospitals comes in the wake of fear that Medicaid cuts could deeply affect rural communities. The OBBBA establishes a Rural Health Transformation program of $50 billion over a five-year period. It also expands the definition of rural emergency hospitals under Medicare, allowing more facilities to qualify for enhanced reimbursement.

The bill also supports rural health research on nutrition, disease prevention, and public health in rural communities to a higher degree. States must apply for this program with a detailed plan concerning their use of this funding.

Nutrition Programs

The OBBBA extends $4 million annually for surplus food rescue and donation programs under the Emergency Food Assistance Program (TEFAP). This program, which supports food banks for low-income families, will be given funding authority until 2031.

Biotechnology, Research, and Innovation

There is a large investment in AI, especially in how it can be used to organize and analyze massive amounts of scientific data. This act restores immediate expensing for domestic research and experimental (R&E) expenditures, retroactive to 2022 for small businesses. Companies to no longer have to amortize research and development (R&D) costs over several years. They can deduct domestic R&D costs in the same year they spend the money.

What Is No Longer Being Funded By the OBBBA?

Medicaid and CHIP

The OBBBA is making large cuts in spending to Medicaid. Medicaid spending will likely be cut by $911 billion over the next decade. It is also changing Medicaid eligibility requirements that will begin in 2026. In October 2026, Medicaid and the Children’s Health Insurance Program (CHIP) coverage for unqualified, non-U.S. citizens will be canceled.

For further analysis on OBBBA and Medicaid, check out insights from Stephanie Wiseman, Managing Director of SLED at Insight Global.

Medicare

The biggest impact to Medicare due to the OBBBA concern coverage changes, namely changes for Low-Income Subsidy (LIS) recipients and a loss of Medicare coverage for non-U.S. citizens. The OBBBA reduces the premium support LIS beneficiaries receive to make prescription drugs, medical supplies, and nursing and hospital care more affordable. These changes will be enacted at the end of 2026.

Affordable Care Act (ACA)

Enrollment in marketplace healthcare is changing. To enroll in coverage, applicants will need to annually apply. They will also need to update information like income and immigration status in order to keep their coverage. Under the OBBBA, ACA plans no longer renew automatically, and open enrollment ends December 15 rather than January 15. Some marketplace plans will also be allowed to have Health Savings Accounts (HSAs).

Supplemental Nutrition Assistance Program (SNAP)

Similar to Medicaid’s new eligibility standards, the OBBBA will change SNAP eligibility for non-citizens. Non-citizens can still qualify if they are, for example, U.S. residents and U.S. nationals, Cuban or Haitian immigrants under specific migration agreement, lawful permanent residents, or lawful U.S. residents under the Compact of Free Association.

It will also implement work requirements for able-bodied adults without dependents. Work exemptions will exist until 2030 for those under 18 or over 65, pregnant women, foster children, homeless individuals, and veterans.

Life Sciences and Healthcare Moving Foward

The OBBBA sets a dual trajectory. Innovation and research will continue to thrive, driven by tax incentives and AI investments, while access to care may tighten due to stricter eligibility rules and reduced federal support for Medicaid, Medicare, and ACA plans.

Here are the biggest impacts of the Big Beautiful Bill that we’re likely to see in healthcare and life sciences:

Orphan Drugs: These protections are a big deal for the pharmaceutical industry. Patients with rare conditions can get the treatments they need without facing excessive costs or delays.
Rural Health Initiatives: Funding for rural health research provides greater financial stability for rural hospitals and communities. This is especially important given healthcare eligibility changes.
R&E Expenditures: The investment in R&E is a major financial benefit for life sciences, biotech, and pharmaceutical companies investing in U.S.-based research. This will allow life sciences companies to accelerate drug discovery, improve diagnostics, and help researchers in biotech make faster breakthroughs. Funding will support the development of advanced AI models that can make sense of complex datasets.
Medicaid, Medicare, ACA, SNAP, and CHIP: Because of defunding and eligibility changes, many people are likely to lose eligibility for certain healthcare plans. Healthcare premiums may increase for marketplace plans starting in 2026. While most of the OBBBA’s changes within healthcare will not be enacted until FY2026 or 2027, applicants and health insurance providers should keep these changes top of mind.

In 2026 and beyond, organizations should prepare for a more competitive, innovation-driven life sciences market alongside heightened challenges in healthcare affordability and coverage equity. However, the true effects of the bill on these industries will not be known for years to come as the policies are enacted.

Navigating the Future with Insight Global

Leading the way in healthcare and life sciences doesn’t have to be complicated. As your partner, Insight Global goes beyond staffing to deliver talent and professional services. As a functional service provider (FSP), our experts can help you navigate the nuances of regulatory and federal changes.

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