CBO Predicts Major Deficit Hike and Health Coverage Loss from GOP’s Signature Bill

The Congressional Budget Office (CBO) has released its final analysis of the GOP’s sweeping legislative package signed by President Donald Trump on July 4. The report outlines a sharp rise in the national deficit and a major drop in health insurance coverage.

According to the CBO, the GOP megabill will increase the federal deficit by $3.4 trillion over the next 10 years. In addition, an estimated 10 million Americans could lose health insurance under the new policy.

The nonpartisan office’s findings are expected to fuel ongoing debate around the long-term impact of the bill.

Trump’s Tax Cuts Drive Trillions in Lost Revenue

A significant portion of the projected deficit comes from the permanent extension of Trump’s 2017 tax cuts. These tax reductions, originally passed as temporary measures, are now locked in.

The CBO estimates the tax cuts will reduce federal tax revenue by $4.5 trillion over a decade. This includes last-minute additions made by Senate Republicans during floor debates.

While some spending cuts offset a portion of the cost, the net result is a deepening deficit. The Senate Finance Committee, which oversees tax legislation, played a major role in crafting these measures.

Medicaid Cuts Lead to Major Coverage Loss

To balance part of the bill’s cost, lawmakers introduced significant reductions to Medicaid and other federal health programs. The CBO forecasts over $1 trillion in savings from these cuts alone.

However, this comes with a steep consequence: 10 million people will lose access to health insurance. Most of these losses will stem from reduced federal support for state-run Medicaid programs. Earlier estimates placed the number closer to 11.8 million, but that figure has since been revised. The CBO said some provisions were dropped in the final version, lowering the impact.

Final Version Removes Undocumented Coverage Penalties

One major change in the final bill involved removing a policy that would strip coverage from undocumented immigrants. Initially, the bill would have caused 1.4 million people to lose access. Twelve states and the District of Columbia currently fund coverage for undocumented residents using state resources. The early version of the megabill threatened these programs with penalties.

That language was later cut, contributing to the lower uninsured figure. Still, the remaining cuts will drastically affect Medicaid recipients nationwide.

Food Aid Cuts Will Save $120 Billion

In addition to healthcare changes, the legislation introduces deep cuts to federal agriculture and food assistance programs.

The Supplemental Nutrition Assistance Program (SNAP), the largest anti-hunger program in the U.S., was among the targets. CBO estimates $120 billion in savings over the next 10 years from revisions to food aid distribution. Senator Lisa Murkowski (R-Alaska) played a key role in softening some requirements. She led negotiations to reduce the burden placed on states, particularly regarding cost-sharing rules.

New Accounting Lowers the Official Deficit Estimate

At the urging of Senate Republicans, the CBO included an alternate analysis using nontraditional accounting rules.

This version excludes the cost of permanently extending the 2017 tax cuts. Under this method, the overall deficit increase drops significantly to $366 billion. Republicans argue that continuing current tax rates shouldn’t be scored as a new cost. Critics, however, see this as a tactic to obscure the bill’s actual financial impact.

The standard CBO method, which includes those tax cuts, remains the widely accepted approach.

Medicaid Expansion Cuts Dropped After Senate Objection

An early draft of the megabill proposed cutting funding for states that expanded Medicaid under the Affordable Care Act.

However, this proposal faced procedural hurdles. The Senate parliamentarian objected to its inclusion, citing reconciliation rules. As a result, the final version no longer penalizes expansion states, softening the overall healthcare impact. Still, massive federal health cuts remain in place.

Long-Term Impact: Fiscal Red Ink and Less Coverage

The CBO report paints a stark picture of the GOP’s legislative strategy. While the bill aims to reduce spending in some areas, it more than offsets those gains with long-term tax revenue losses.

The $3.4 trillion increase in the national deficit will have lasting implications. Combined with 10 million fewer Americans insured, the policy marks a significant shift in U.S. domestic priorities.

Conclusion: High Stakes for the Federal Budget and Public Health

The final CBO analysis confirms that the GOP’s megabill comes at a steep cost. Lower taxes bring relief to some, but cuts to health and food aid will hit vulnerable populations hard. With the national deficit poised to grow by trillions and millions losing coverage, the debate over fiscal responsibility versus public welfare continues. This legislation may define the legacy of Trump’s second term and reshape economic policy discussions for years to come.