The “One Big Beautiful Bill (OBBB)” ushered in sweeping reforms that will upend how states provide an array of social services. Chief among these are changes to the Medicaid program that will directly impact how millions of patients access healthcare services. Below are recommendations for state policymakers, health center leaders, and advocates for implementing these new policies.

State implementation of Medicaid work requirements

The OBBB enacted new Medicaid work requirements that mandate able-bodied adults, age 19-64, without dependents, enrolled through the Medicaid expansion prove they are meeting the following:

• At least 80 hours per month of work, or a monthly income of equivalent to at least minimum wage for 80 hours;
• At least 80 hours per month of community service or a work program;
• Part-time enrollment in an educational program; or,
• At least 80 combined hours of qualifying activities.

While the new law exempts certain populations (e.g., parents, guardians, caretakers for a disabled individual, or family caregivers of a dependent child age 13 or younger; members of a tribe; pregnant or postpartum women; individuals who are medically frail), it is unclear how states will verify income, addresses, immigration status, and qualifying work requirement activities for those subject to this new policy. States must adopt the necessary procedures by December 31, 2026, which will require establishing new bureaucracies dedicated to evaluating and confirming each application (pending guidance from CMS via an interim final rule expected to be published by June 2026). Some estimates project the costs to administer Medicaid work requirement programs will range from millions to hundreds of millions of dollars per state.

To ensure patients are properly educated, states should partner with health centers to maintain coverage for the individuals who must now complete the work requirement activities, or those who qualify for an exemption. According to HRSA, health centers employed 7,000 outreach and enrollment personnel (e.g., patient navigators, health educators, community health workers, eligibility assistance workers, etc.) in 2023. By leveraging their expertise, states can work to safeguard Medicaid for the patients who rely on the life-saving services – including for millions of CHC patients. NACHC urges states to partner directly with health centers and state Primary Care Associations, and adopt the following policies to minimize coverage losses for vulnerable patients:

1. Invest in and train health centers to educate patients and providers about Medicaid work requirements, and the resources available for individuals subject to this new policy. Investing in and training health center outreach and enrollment staff will build on their expertise and leverage the partnerships they already have with patients across the nation. Health centers across the country were heavily involved with Medicaid redeterminations, and established outstation locations to assist individuals (re)enroll in Medicaid. This expertise will be invaluable as states establish new eligibility and enrollment protocols.
2. Facilitate partnerships between health centers and local and state-based job training and educational programs. Health centers staff work diligently to assist patients in enrolling for SNAP, WIC, and other vital benefits for which they qualify. Assisting health centers partner with employers, job training programs, and educational programs, will ensure they are equipped to connect patients with resources to fulfill these new requirements.
3. Permit patients to volunteer at health centers to fulfill the qualifying activities requirement of the new Medicaid work requirement. Health centers serve as key anchor institutions in their community, providing key services and programs that promote nutrition, safety, and community engagement. By permitting health centers to serve as a volunteer site, states can maximize a health center’s impact and position them as leaders in helping patients meet the Medicaid work requirements.

Shifting costs of administering Medicaid and other programs to states

The OBBB sought to increase states’ responsibility in financing and administering programs like Medicaid, the Affordable Care Act insurance marketplaces, SNAP, and more. Amidst challenging budget deficits, several states have defunded state-funded coverage programs for immigrant patients, and one state has opted to defund a federal Medicaid waiver program that authorized services that addressed the nonclinical health needs of patients.

As states grapple with significant projected increases in costs for these programs, health centers and Primary Care Associations must advocate for their state to preserve funding for health center services and resist pressure to reduce reimbursement rates. The federal statute governing health center services and reimbursement remain unchanged; however, states have exercised considerable discretion in interpreting how these services are defined and how health centers are reimbursed. Recently, some health centers have received landmark budget appropriations from their state. These investments must be preserved and increased if states are to weather the disruptions to coverage and care for patients and providers directly impacted by OBBB. Moreover, in recent years, states have made significant investments to expand continuous eligibility for children and young adults in Medicaid and CHIP, additional SUD services, and increases in maternal and child health providers, such as doulas. Reducing these services would have a disproportionately negative impact on health centers and their patients. Given the expected increases in uncompensated care costs from the projected losses in coverage, any reduction in funding and/or services would be devastating to health centers. To protect against these impacts, NACHC urges states to strengthen partnerships with health centers via the following:

1. Increase state appropriations to fund health center services and providers: Health centers serve as the backbone to the nation’s healthcare safety net. Increasing their funding would bolster their role as critical care providers and ensure their services are available to patients navigating the turbulent changes in the healthcare system. Moreover, it would allow them to recruit, train, and retain the health workforce they need to administer care to patients in need.
2. Establish a minimum primary care state spending threshold: Dedicating annual appropriations to fund primary care across all states will ensure health centers and other primary care providers remain supported amidst mass disruptions to the nation’s healthcare system and economy. At a time when the nation projects massive churn in healthcare enrollment and amidst continued disease outbreaks, it is vital states reinforce their commitment to healthcare especially for vulnerable populations.
3. Partner with health centers to fulfill the purpose of programs like Medicaid, SNAP, and the ACA marketplaces. States must work closely with health centers to ensure these programs reach the populations they were intended to serve. Health centers provide critical eligibility assistance for health coverage and a wide array of social services. By leveraging and are secured for the people who rely on these programs.

Next steps for the health center movement

As the nation prepares to adopt these new policies, health centers will continue to strive to the provider, partner, and employer of choice for the communities they serve. NACHC urges health center leaders to partner with NACHC and their state PCA to strengthen our advocacy at the local state and federal level. Below are recommendations to help health centers be more effective advocates:

1. Become an Advocacy Center of Excellence (ACE): ACEs actively partner with NACHC on federal policy issues, as well as their state PCA on key local-level policy issues impacting health centers and their patients to meaningfully engage elected officials at all levels of government.
2. Participate in NACHC advocacy fly-ins and PCA state advocacy days: NACHC hosts regular “fly-ins” that allow health center leaders to directly advocate on behalf of their patients and staff for policy solutions that address the urgent challenges they face.
3. Mobilize patients to advocate on behalf of health centers: By mobilizing their patients to participate in state and federal advocacy, health centers can champion their patients’ experiences to protect the funding and services that patients rely on.
4. Foster partnerships with foundations, local government agencies, and other philanthropic entities to maintain funding for vital healthcare services: Health centers should work with their state PCA and NACHC to foster partnerships with private foundations, or local and state government agencies to secure the revenue needed to maintain the services they provide.

Over the next 15 months, states will play a central role in determining whether patients continue to have access to life-saving healthcare services, and health centers must champion their patients in that fight. NACHC is honored to be a part of this movement with the 1,500+ health centers across the nation and look forward to continuing our work to serve as the provider, partner, and employer of choice for every community in the country.

The NACHC state policy team is launching a new monthly blog series where we will highlight health centers’ monthly state legislative wins.

Every year, states make hard decisions around budget allocations, but given evolving challenges over the years, 2025 posed unique challenges due to COVID-era funding drying up along with the uncertainty in Congress over looming reductions in federal healthcare spending. This blog will highlight three states that showed a commitment for new and continued financial investments into the Community Health Center (CHC) system. These state investments reflect the value that CHCs provide within their state’s overall health care safety net system. The PCAs and health center champions deserve a round of applause for their sustained engagement and advocacy that resulted in these state investments. 

Connecticut: State budget invests in Community Health Centers

On June 30, Connecticut Governor Ned Lamont signed into law the state’s two-year budget. Included in the final bill were a mix of reauthorized and new financial investments for CHCs. Foremost, the Community Health Center Association of Connecticut (CHC/ACT) engaged in continued negotiations with the state and ultimately ended up establishing a requirement where health centers have the ability to have their existing Medicaid reimbursement rates evaluated, also known as rebasing, and will occur under an Alternative Payment Method (APM) to be phased in over three years.

“This was a true negotiation,” Deb Polun, chief strategy officer at CHC/ACT, said. “It’s about getting health centers to a place where they’re more financially sustainable and able to serve all people. And having Medicaid rates go up will benefit all health center patients and really the entire community.”   

Overall, the budget allocates state funds of $5 million in FY 26, an additional $7 million in FY 27 ($12 million total in new APM rates), and secures an additional $14.4 million in FY 28 ($26.4 million total). Depending upon the federal match, this could yield $15 million, $36 million, and $80 million in funds for Medicaid rates for health centers.  

A 2024 NACHC survey found that most CHC respondents (86%) reported difficulty maintaining competitive salaries for staff as a top workforce recruitment and retention challenge due to financial constraints. Increasing health centers’ Medicaid reimbursement rates will yield more resources to support services provided to patients, which in turn enables CHCs to offer competitive salaries in-line with comparable hospitals and for-profit systems who generally have a larger personnel budget comparatively.  

Another ongoing challenge for Connecticut’s CHCs was the process to get their Medicaid Prospective Payment System (PPS) rate increased to match the type, intensity, duration, and amount of services being provided to patients. Through the passage of the state budget, Connecticut established a process called “change in scope” to ensure every CHC can have a fair process to evaluate the services provided to patients and allows them to adjust their reimbursement rate to ensure their funding is adequately reflected.

Minnesota: FQHC Subsidy Grant Program

On June 14, Minnesota Governor Tim Walz signed the state’s two-year budget, which included reinvestments in the state’s FQHC Subsidy Grant Program. The Program was established via legislation in 2007 for the purpose of distributing grants to CHCs and FQHC Look-Alikes operating in Minnesota to “continue, expand, and improve federally qualified health center services to low-income populations”. A state’s healthcare budget has limited funding that is dispersed across the whole healthcare system, which is not guaranteed to go towards CHCs. A dedicated funding stream is extremely beneficial for a CHC, both from an operational and financial planning perspective, as it allows them to be more secure with planning for the future.

When a CHC has a dedicated state grant program, it sets a predictable revenue stream and enables them to more confidently create or expand lines of business to better serve their patient population.

The 2026-2028 biennial budget appropriated for Fiscal Year (FY) 2026 and FY 2027 $1M additional each year, and then $6.25 M every following year, starting in 2028. The anticipated result in base annual subsidy is around $9 million annually. For FY 2026, the legislature also appropriated $24.6M in one-time funding to health centers.   

Furthermore, Minnesota also established a pathway for a certified midwife licensure and coverage for traditional healing practices. Creating these new licensure pathways benefits CHCs by addressing workforce shortages by offering new provider employment options. Now that these practitioners are certified by the state, they may be eligible for reimbursement which creates new revenue streams for CHCs allowing them to reinvest into programs and services such as maternal healthcare. 

It’s important to note that Minnesota’s Lt. Governor, Peggy Flanagan, is the first Native American woman to be elected as a lieutenant governor in the United States. Adding coverage for traditional healing practices reflects a significant move by the state to recognize the need for care that considers patients’ cultural traditions.

Illinois: Increase in PPS for Community Health Centers

On June 16, Illinois Governor JB Pritzker signed the state’s FY26 budget. The state approved $40 million in General Revenue Funds for a PPS increases. This funding will help shore up CHCs so that they can continue to provide care for individuals who may lose health coverage or face other barriers to access.  

Due to ongoing budget constraints and the federal reconciliation package, the FY 2026 budget sunset a program providing healthcare for immigrants which is anticipated to result in half a million residents losing health coverage as a result. CHCs that are reimbursed through a bundled rate system receive a single payment for all combined costs of eligible services and supplies. This requires providers to think more holistically about their approach to delivering care yet may result in lower reimbursement compared to CHCs that use fee-for-service.  

Elimination of their healthcare for immigrants’ program is expected to increase the volume of uncompensated care CHCs will provide. Whereas by increasing PPS rates, CHCs in Illinois will be able to mitigate the loss of revenue, in turn, enabling providers to continue to provide services to this population. 

In addition to CHC funding, the state took moves to advance policies that support non-clinical factors of health. The budget invested $263.7 million for HOME Illinois, a program that addresses homelessness by recognizing the interconnectedness of health and social well-being. Investing in non-clinical factors of health directly improves health outcomes by addressing the root causes of poor health which results in better adherence and outcomes. 

Furthermore, the Illinois Primary Health Care Association (IPHCA) also made significant strides in advancing 340B contract pharmacy protections. The 340B program has been a lifeline for CHCs since the program began. As small community-based organizations, CHCs use the 340B program and 340B savings to provide essential medication and health care to under and uninsured individuals by reinvesting every penny from the program into activities that expand access to patient care. While the bill was not called for a final vote in the House before session adjourned, it remains on the docket and can be called once the legislature reconvenes.  

“While we know there is much work left to do, we were pleased to take a moment at the end of this year’s legislative session to acknowledge our members’ hard work, our legislative champions, along with our staff, and all the advocates each Illinois health center mobilized over the course of session,” said Ollie Idowu, president and CEO at IPHCA. 

It is essential that state legislatures appropriate dedicated funding for CHCs in their state budgets to ensure that these vital providers can continue delivering accessible, high-quality care to underserved populations. CHCs are often the frontline for primary, preventive, and behavioral health services in communities that face persistent health disparities and provider shortages.  

Without stable and adequate funding, CHCs struggle to maintain services, expand their workforce, and invest in long-term improvements that benefit public health. State investment strengthens the health infrastructure by reducing emergency room costs and allowing any individuals to access care regardless of their ability to pay.

Julia Liou, MPH, is CEO of Asian Health Services; Thu Quach, PhD, is President of Asian Health Services; Robert Phillips, MPH, MPA, ABD, is CEO of Baywell Health; and Kimberly S.G. Chang, MD, MPH, is a Physician at Asian Health Services and a Commonwealth Fund Fellow in Health Policy 2015.

What does a healthy community look like? What does healing look like? How do we help to create the conditions for a united Oakland community that cares for each other? How do we make everyone feel welcome at our health centers and in our local community? These are questions Asian Health Services (AHS) and Baywell Health, two Community Health Centers (CHCs) in Oakland, California, sought to answer.

CHCs are at the heart of the communities they serve. With the goal to develop strong networks to embrace all members of the Oakland community, Asian Health Services and Baywell Health embarked on an ambitious partnership to bring peace, understanding, and deepen connections with the myriad of patients for whom we provide health care, and community organizations with whom we partner. 

Knowing that our communities are stronger and healthier when we are in good relationships with each other on individual and societal levels, and to unite for solutions to community violence affecting all of the Oakland area, Asian Health Services and Baywell Health intentionally co-created community events to bring people together and to promote healing and safety. For example, annual celebratory events every February in honor of Black History Month and Lunar New Year in a neighborhood center brought artistic and cultural performances of Lion Dances and African drumming together, alongside health education booths, art exhibitions, and health care and social services information booths.

Other events to bring understanding of the rich history between the two health centers included:

• bringing elderly participants on experiential learning field trips
• exchanges with other organizations
• healing circle activities, visiting West Oakland and learning about the history of segregation and displacement, and how the West Oakland Health Council (now Baywell Health) was formed, and how West Oakland Health Council helped support  Asian Health Services to become a federally qualified health center

A particularly impactful experience was a visit to San Quentin prison’s ROOTS program in collaboration with the Asian Prisoner Support Committee. The incarcerated students shared their childhood exposures to violence and their ideas for effective community safety. One speaker was a young Chinese man, former AHS patient, and Chinatown resident.

The seniors were so moved by the incarcerated students that they wrote letters with encouraging words:

“Although our time together was short, I am deeply thankful for your openness and warmth. Your stories have truly touched our hearts. Each one of you shared something moving and powerful. Though the journey home may be full of challenges and uncertainties, remember that every step brings you closer to home and every day brings you closer to hope.”

Inspired by the series, the seniors began to advocate for community-based violence prevention and expanded services for people with limited English proficiency, and to organize community events to promote healing and safety.

Internally, AHS embarked on a campaign to increase the clinic’s welcoming environment for people from various backgrounds – by leading staff discussions and activities on empathy, understanding, compassion, reclaiming joy, and developing visual materials and signage to welcome all patients. Other healing events included screening the short film “Love Has Two Meanings” (https://www.youtube.com/watch?v=zUfG2y45ZKU), which documented the field trip by the seniors above to San Quentin prison, and facilitating brown bag discussions for staff about what healing means and how we can be agents for healing to everyone in our community.

Through external community healing and safety activities and internal organizational efforts, AHS and Baywell Health are harnessing the power of health centers to create healthier communities and healthier patients!

This project was supported in part by the Commonwealth Fund, a national, private foundation based in New York City that supports independent research on health care issues and makes grants to improve health care practice and policy. The views presented here are those of the author and not necessarily those of the Commonwealth Fund, its directors, officers, or staff.

Community Health Centers (CHCs) provide vital care to 16 million patients insured through Medicaid. About one in five people are covered by Medicaid nationwide. These CHCs often serve as the only source of primary medical, dental, behavioral health care in rural towns, small cities, and high-need communities. Yet the program that supports their work faces serious threats of reduced Medicaid funding and coverage, putting the healthcare of millions of Americans at risk. 

The bill passed by the House (H.R. 1) would impose stricter eligibility rules, pushing millions off Medicaid. The latest estimate from the  CBO reports that 10.9 million patients insured through Medicaid would lose coverage. The Senate is now considering the bill, with a goal of passing it by July 4^th.

Medicaid supports people at every stage of life

Understanding who depends on Medicaid reveals why these cuts matter so deeply. Medicaid supports people across every stage of life, often when no other options exist. (Figure 1) For example, among CHC patients, 43% of patients with cancer and 50% of those with cardiovascular disease depend on Medicaid for treatment. 

These numbers are more than data points. They represent children getting well care, seniors needing support, patients fighting serious illnesses, families coping with mental illness, and homeless individuals who count on Medicaid as their main coverage. Medicaid is the critical link connecting these people to the care they need.

Reductions in Medicaid funding mean an increase in uninsured patients for CHCs

CHCs deliver that care every day, serving as the medical home for millions who rely on Medicaid. When Medicaid funding shrinks or access is limited, these CHCs face the consequences first. CHCs are in areas where few other providers accept Medicaid or uninsured patients. So, they must manage with tighter budgets while facing increased demand from patients who lose coverage elsewhere. This often results in fewer appointments, reduced hours or services, and longer wait times.  

For patients already facing serious health challenges, these barriers to timely care can cause delays in treatment, worsening conditions, and ultimately more expensive emergency, specialty, or hospital care. The strain on CHCs affects entire communities, threatening the health and stability of the low-income populations they serve. In the worst cases, CHCs may be forced to close sites, leading to higher mortality rates in those communities. 

Medicaid is not just a line item in a budget. It is a proven force that prevents health crises, strengthens families, and supports local economies. It reduces uncompensated care costs, keeps providers accessible, and helps communities stay healthier and resilient. 

Now is the time to protect Medicaid and the CHC patients who rely on it.

A new study offers compelling evidence that Community Health Centers (CHCs) are essential to saving lives. Published in the May 2025 issue of the journal Health Services Research, the study finds a link between the closure of CHC sites and measurable increases in mortality. 

As our nation’s largest primary care system serving at least one in 10 Americans overall and one in five rural Americans, this new data underscores that CHCs save lives and CHC closures can lead to the loss of life.  

The study, “Impact of Community Health Center Losses on County-Level Mortality: A Natural Experiment in the United States, 2011–2019,” was co-authored by Sanjay Basu, MD, Bob Phillips, MD, and Hank Hoang. Writing on LinkedIn, the authors described their study design:

“We employed a natural experiment caused by previous funding lapses and their differential impact across geographies to study the impacts of community health centers on mortality, finding that health center losses from a community were related to increased mortality net of other factors.”

The study (link is for subscribers only) included 3,142 U.S. counties, with 177 counties experiencing CHC site losses in 2014, per data from the Health Resources and Services Administration. Their findings included:  

• CHC site losses were associated with an increase of 3.54 deaths per 100,000 population annually. 

• Mediation analysis revealed that loss of both the primary care workforce and patient access to care contributed to the findings. 

While CHCs serve 10% of the U.S. population, they represent roughly 1% of total annual healthcare spending in the U.S. By keeping people healthy, the evidence is clear: CHCs don’t just save money – they save lives. 

Community Health Centers (CHCs) are critical in delivering affordable primary care to 32.5 million Americans, 90 percent of whom live in poverty. A large share of the 1 in 5 people who get health insurance through Medicaid and low-income individuals (1 in 3) who might otherwise struggle to access primary care depend on CHCs for life-saving care.  

One in eight Medicaid enrollees at CHCs are children, including the 13-year-old daughter of Rachel Stankowski, PhD, Community Health Strategy Director of the Family Health Center of Marshfield in Central Wisconsin. When Rachel adopted her daughter from foster care, she encountered unexpected challenges accessing dental care. 

“I didn’t realize how difficult it would be until I struggled to get my daughter into dental services,” Rachel explains. “I was even willing to pay out of pocket, but the dental provider I’d seen for more than 10 years refused to treat my daughter simply because she had Medicaid. I was so grateful that Family Health Center was willing to see my daughter, who had cavities that were visible to the naked eye.” 

Medicaid beneficiaries also include veterans, seniors, people fighting cancer, children, and people living with disabilities. If they lose coverage, newly uninsured patients will likely delay or forgo necessary care, leading to more serious health conditions, emergency department visits, and higher long-term healthcare costs.  

Hospitals and other healthcare providers that partner with CHCs may also face further financial strain from Medicaid cuts, particularly in rural areas where CHCs help offset hospital overcrowding and reduce uncompensated care.

Workforce Shortages and Rising Demand for Affordable Care

Though a vital part of the U.S. healthcare system, CHCs continue to struggle with workforce shortages. As of 2023, CHCs employed over 310,000 staff members, including more than 16,000 physicians and 13,000 nurse practitioners. However, the U.S. Department of Health and Human Services, which oversees the federal CHC grant program, estimates a shortfall of 35,000 primary care providers by 2030. This shortage is most acute in rural areas, where lower salaries hinder recruitment and retention.  

CHCs have long relied on loan repayment programs to recruit clinicians but have also developed and expanded successful community-based training programs like the Teaching Health Center Graduate Medical Education, which has helped to reduce primary care shortages since its inception, and the Nurse Practitioner Residency program. Without sustained investment in these and other workforce initiatives, many CHCs will be unable to fill vacancies in key clinical roles, including behavioral health providers, dentists, and pharmacists.  

A 2024 survey by the NACHC found that 55% of CHCs report difficulties in filling open positions and 86% could not offer competitive salaries. These workforce challenges impact service delivery and put additional strain on existing staff, exacerbating burnout and turnover.

The precarious state of multi-year federal CHC funding, combined with looming Medicaid reductions and tightening eligibility requirements, threatens to deepen an already critical workforce crisis.

Impact of Medicaid Cuts on the CHC Workforce

The stability of the CHC workforce is deeply intertwined with Medicaid financing. Medicaid is the single largest source of revenue for CHCs, accounting for 42% of total CHC operating revenue. When Medicaid enrollment drops or rates are cut, CHCs lose the revenue needed to maintain staff and services.   

Since the end of continuous enrollment projections, more than 25 million people lost Medicaid coverage, and 69% of disenrollment were due to paperwork or procedural reasons.  As a result, CHCs lost an average of $600,000 in Medicaid revenue, and one in 10 CHCs reduced staff or scaled back services. 

Federal training initiatives, such as the Teaching Health Center program, also rely on stable Medicaid financing. These programs require not only  adequate per resident amount funding but also financially secure CHCs capable of hosting and training new clinicians.  When Medicaid resources are strained, opportunities to grow the future workforce diminish. They disrupt and weaken the pipeline of future clinicians, further straining the few providers who remain.   

This challenge is compounded by the unstable outlook for federal CHC funding. For decades, this essential support has depended on short-term reauthorizations, undermining long-term workforce planning and contributing to persistent uncertainty. Without reliable funding, CHCs face a double burden of retaining their current workforce while struggling to train the next generation.

Conclusion

The precarious state of multi-year federal CHC funding, combined with looming Medicaid reductions and tightening eligibility requirements, threatens to deepen an already critical workforce crisis. These financial pressures force CHCs into an impossible choice: scaling back vital services precisely when communities need them to thrive.  

Behind these statistics are real people with nowhere else to turn for affordable care. The time to safeguard access to essential community lifelines is not tomorrow — but today.