IHPP - Weekly, August 25, 2025

Summary

Congress is in recess until after Labor Day and will resume on September 2. During this period, Impact Health Policy Partners will provide a series of brief policy outlooks examining key priority areas likely to shape the health policy landscape this fall. This week, we are examining policies related to immigration, nutrition, and gender affirming care.

Immigration

Immigration Policy Changes under H.R. 1

The budget reconciliation package includes significant measures affecting immigration enforcement and immigrant eligibility for federal benefits with two major components:

• Increased Enforcement and Funding
  • One of the primary purposes of the bill is to greatly increase funding for the Department of Homeland Security (DHS) and Immigration and Customs Enforcement (ICE) to expand deportation and immigration enforcement efforts. Large appropriations are dedicated for this purpose, signaling a strong federal push to intensify enforcement actions. The bill also imposes steep new fees on many immigration application processes, making humanitarian protections unaffordable for many individuals. These fee increases took effect immediately upon passage, as evidenced by a recent USCIS notice stating that any application submitted without the new fees within 30 days following the notice will be rejected. Similar rapid implementation measures are expected as agencies move to enforce H.R. 1’s provisions expeditiously.
• Changes to Immigrant Eligibility for Federal Benefits
  • H.R. 1 makes sweeping changes to eligibility for federal health and nutrition assistance programs for immigrants:
    • The range of immigrants eligible for programs such as Medicaid, CHIP, Medicare, SNAP, and ACA premium tax credits is narrowed significantly.
    • Eligibility is now limited primarily to green card holders, Cuban and Haitian entrants, and residents under Compacts of Free Association.
    • Crucially, other qualified immigrants as defined under PRWORA, including refugees, asylees, humanitarian parolees, survivors of trafficking or domestic violence, and those granted withholding of removal, are excluded from these programs. Immediate enforcement applies to SNAP and Medicare provisions, with Medicare enrollees facing an 18-month grace period before losing eligibility. Medicaid changes become effective October 1, 2026.
    • Additionally, the bill reduces the Federal Medical Assistance Percentage (FMAP) for emergency medical services provided to immigrants who would otherwise qualify for Medicaid expansion but are ineligible due to immigration status, cutting the enhanced ACA FMAP from approximately 90% to the state’s traditional FMAP (often around 50% in states like California and Colorado). This will exacerbate states’ budget shortfalls and place additional pressure on state Medicaid programs.

HHS Reinterpretation of PRWORA and Its Impacts

On July 14, 2025, HHS issued a policy change reinterpreting the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA’s) definition of “federal public benefits,” expanding the list of 31 programs restricted to individuals with “qualified” immigration status by adding 13 new programs including Head Start, the federal Health Center program, and Title X family planning services. This policy took effect immediately, with a 30-day public comment period and promises of further guidance.

This reinterpretation bars many lawfully present immigrants (including Temporary Protected Status holders and Deferred Action for Childhood Arrivals recipients) and undocumented immigrants from accessing crucial federal health, educational, and social programs. Particularly affected are Community Health Centers (CHCs), which serve medically underserved communities and provide crucial primary care regardless of ability to pay or immigration status, as well as vital family planning and mental and behavioral health services. Educational services like Head Start are also impacted, affecting longer-term health and socio-economic outcomes.

Service providers face significant challenges in updating verification and delivery processes to comply with the new policy. Although nonprofit charitable organizations are exempt from verifying immigration status, how verification will be standardized remains unclear. Moreover, this reinterpretation conflicts with existing statutory requirements that some programs (e.g., CHCs) serve all patients regardless of immigration status, creating confusion and uncertainty over enforcement.

In addition to legislative and administrative changes, CMS has initiated a nationwide oversight program starting August 2025 to review Medicaid and CHIP enrollee immigration status monthly. CMS will issue reports to states flagging beneficiaries whose eligibility cannot be verified through federal systems like DHS’s Systematic Alien Verification for Entitlements (SAVE). States are expected to quickly review documentation requests and terminate coverage for those found ineligible. First monthly reports are already being sent to states, and all states will receive reports by the end of the month.

This oversight joins recent controversies, including a federal court block on sharing Medicaid data with ICE in 20 states, though DHS reportedly still accesses Medicaid enrollee data nationwide for enforcement purposes.

The combined impact of H.R. 1’s legislative changes and HHS’s reinterpretation of PRWORA represent a major shift in immigration policy, with intensified enforcement and sharply curtailed access to federal health and social benefits for many immigrant groups. These changes will shape state and federal regulatory actions, service provider policies, and immigrant communities’ access to critical programs throughout the remainder of 2025 and beyond. Impact Policy Partners will continue to monitor developments closely to help support organizations in navigating these complex and evolving policies.

Nutrition

Last week we highlighted actions to address nutrition under the Make America Healthy Again (MAHA) movement. While the MAHA agenda will impact federal nutrition programs, especially through waivers limiting the inclusion of certain foods and sugary beverages, congressional action will have the largest impact on access and benefits in these programs, especially the Supplemental Nutrition Assistance Program (SNAP) and Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).

The most important changes to SNAP this year will result from the implementation of the One Big Beautiful Bill Act. While state cost sharing of benefits will not go into effect until late 2026 or 2027, other provisions are effective immediately pending guidance from USDA. We expect that USDA will have to work with states and issue guidance for these changes to become operational, as the administrative burden for states will be significant. SNAP changes that are effective immediately include:

• 10101 requiring all future updates to the Thrifty Food Plan to be budget neutral;
• 10102 expanding SNAP work requirements and restricting state waivers of work requirements;
• 10103 limiting use of the Low-Income Home Energy Assistance program for the standard utility allowance;
• 10104 limiting the use of internet charges for the standard utility allowance;
• 10108 restricting legal immigrant eligibility for SNAP to green card holders, Cuban and Haitian entrants, and residents under a Compact of Free Association.

Now that reconciliation is signed into law, Congress could impact nutrition programs through the fiscal year (FY) 2026 appropriations bill for Agriculture. Most importantly, the budget sets the discretionary funding level for WIC and a variety of other smaller nutrition programs. Both the House and Senate Appropriations Committees passed their Agriculture bills out of committee earlier this year. The bills may be taken up as part of the full FY 2026 budget package later this year if Congress chooses to avoid a government shutdown and not pass a full-year continuing resolution. The Senate version funds WIC at $8.2 billion while the House version funds WIC at $7.6 billion (level with FY 2025). They both fund commodity assistance programs like the Commodity Supplemental Food Program and Farmers’ Market Nutrition Program at the same levels as FY 2025.

Gender Affirming Care

Eliminating federal funding for and access to gender-affirming care (GAC) remains a central target of the Trump administration’s health agenda. Although provisions banning Medicaid funding for GAC were included in the version of the One Big Beautiful Bill Act (OBBBA) that initially passed the House, they were ultimately removed in the Senate and not included in the final package.  In place of legislation, the Administration has advanced a coordinated, multi-agency strategy to narrow access to care by rebranding it as “sex-trait modification procedures” and laying targeted groundwork for further actions. This includes federal agency investigations and requests for information, legal action, changes to insurance coverage, and legislation.

Federal Investigations and RFIs

On May 1, 2025, the Department of Health and Human Services (HHS) released a 409-page report asserting that evidence does not support providing gender-affirming medical interventions for children and adolescents, challenging longstanding medical consensus on GAC. This report lays the groundwork for actions taken since that time and is likely to continue to be used as a tool to justify these efforts and federal actions that question the safety and efficacy of this health care. On July 9 and July 28, respectively,  the Department of Justice (DOJ) and the Federal Trade Commission (FTC) initiated investigations and inquiries that could evolve into direct enforcement against providers. Additionally, on July 9th, AG Bondi announced that the DOJ had sent subpoenas to more than 20 hospitals and providers providing GAC in an investigation into “healthcare fraud” and “false statements,” “which could result in either civil or criminal liability.”

Ongoing Litigation

As these federal efforts continue, stakeholders are responding with legal action. According to court filings unsealed last week, the July 9th DOJ subpoenas go beyond routine records requests. In a subpoena to the Children’s Hospital of Philadelphia, the DOJ demanded confidential patient information such as names, birth dates, Social Security numbers, home addresses, parent/guardian records, as well as clinical and diagnostic assessments, and provider personnel files. On August 20th, a federal judge ordered the administration to disclose the full scope of its investigation within two weeks. Advocates condemned the demands as invasive and unnecessary, warning that they turn doctor–patient confidentiality into government surveillance.

On August 1st, a coalition of 16 states and D.C. sued the administration, arguing that recent actions including Executive Orders and DOJ directives such as Attorney General (AG) Pamela Bondi’s April 22nd memo are designed to intimidate providers into halting gender-affirming care for minors and unlawfully impose a de facto national ban. State attorneys general in this case highlight that administrative actions require providers to either comply with unconstitutional federal directives or violate state laws requiring nondiscriminatory access to medical care, setting the stage for ongoing federal–state conflict.

Changes in Insurance Coverage

Insurance coverage for GAC is also facing significant change. Under the 2025 Marketplace Integrity and Affordability Final Rule, GAC will no longer be classified as an essential health benefit (EHB) starting in Plan Year 2026. States may still require Marketplace plans to cover such care, but premium tax credits cannot be used to subsidize it, meaning states would be responsible for covering the portion of subsidies associated with gender-affirming medical claims. Meanwhile, the Office of Personnel Management (OPM) has informed carriers that federal health plans, including the Federal Employees Health Benefits (FEHB) and Postal Service Health Benefits (PSHB) programs, will exclude coverage for transgender adults beginning in 2026, following a similar directive earlier this year that bars coverage for transgender minors under these plans.

Additional regulatory movement is expected. Two proposed rules that are currently under review at the Office of Management and Budget (OMB) seek to codify further restrictions. The first, “Medicaid Program; Prohibition on Federal Medicaid Funding for Sex Trait Modification Procedures Furnished to Children and Youth,” provides little detail beyond its title. A second proposed rule entitled “Medicare and Medicaid Programs; Hospital Condition of Participation: Limiting Participation Based on the Performance of Sex Trait Modification Procedures on Children” was also previously listed on the website. IHPP will follow these rules and provide more details when they become available.

Congressional Action

Sen. Bill Cassidy (R-LA), Chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, has taken a leading role in executing President Trump’s agenda targeting GAC. He has praised hospital systems and health providers that have ceased providing gender-affirming care for minors, launched an investigation into the World Professional Association for Transgender Health (WPATH), arguing that its clinical standards are flawed and unsupported by reliable science, and continues to champion the No Subsidies for Gender Transition Procedures Act (S. 1551/H.R. 3205), which would prohibit the use of federal funds for GAC.