The Ripple Effect of H.R. 1: How Federal Cuts Endanger Ohio’s Families and Future

By Caitlin Feldman, Senior Director of Policy

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As President Trump signed the massive spending and tax bill (H.R. 1) into law on Friday, July 4, sweeping changes to federal funding and programs were set into motion that will unfold over the course of the next several years. Approved by a narrow margin in the U.S. House and a tie-breaking vote by Vice President Vance in the Senate, the bill includes a litany of policies and funding cuts with painful consequences for infants and young children, counterbalanced with a few positive changes to tax law that will enhance support low and middle-income families.  

Spending priorities of the bill have been offset by deep cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP). Recent estimates from the Congressional Budget Office (CBO) estimates the bill will add $3.4 trillion in federal deficits over the next decade and leave millions of Americans without health coverage and access to nutrition assistance.  

× Changes to Medicaid 

• Work requirements: able-bodied adults are required 80 hours of work per month – this can include paid employment, work training, or part-time enrollment in school (unless they qualify for an exemption). The bill also enables states to establish more frequent eligibility checks. Even before the passage of H.R.1, Ohio opted to review eligibility every 6 months. 

  • Ohio ranks 51^st among all states and D.C. for publicly funded child care (PFCC) eligibility, making lack of affordable child care a significant barrier to work for Ohio families with young children.  

  • Medicaid enrollees who experience difficulty finding employment or lack reliable transportation will be negatively impacted. Read more about Groundwork Ohio’s concerns for work requirements here.

• Provider taxes: Provider taxes will be reduced from the current 6% to 3.5% by 2032. This reduces the amount of money states will have available to support their Medicaid programs. This decrease in provider taxes leaves a substantial gap in state budgets to cover Medicaid services. In response, states will be forced to identify their own solutions to fill funding gaps. 

  • Rural hospitals have some of the lowest operating margins in the nation, making any reduction in revenue detrimental. Decreases in provider taxes leave the future of Ohio’s remaining 33 rural hospitals uncertain. Read more. 

These changes create an insurmountable funding gap that leaves the status quo out of reach – especially for rural communities and their health centers. As our programs and systems brace for these changes, impossible decisions lie ahead. If our elected officials hope to maintain successful programs and services, the funding gap would require a shift in budgeting priorities. If picking and choosing from already strained health and human services funding, the choice is a house of cards – robbing Peter to pay Paul. 

× Changes to SNAP 

• States are picking up the tab: For the first time in the program’s history, states will be required to share costs based on each state’s error rate. Historically, states and federal government have shared administrative costs for the program 50/50. Under the new legislation, more of the administrative cost burden will shift away from the federal government and onto states to maintain, making the new cost share for administrative costs 75 (state)/25 (federal). 

  • Based on Ohio’s current error rate and current federal structure, Ohio would be required to pay 5%, amounting to approximately $315 million, compared to the prior obligation of $0.00. When adding the new 75/25 administrative cost share in addition to program costs, Ohio will be required to fill a $475 million gap. 

  • As Ohio prepares to meet cost-sharing requirements, our elected officials will have difficult decisions to make regarding where the funds will come from. This could come to the detriment of other programs and services funded by public dollars, such as child care or foodbanks. 

    
    

• Work requirements: Like the Medicaid program, the bill expands work requirements for SNAP eligibility from the current 18-55 age range to 14-65. This means parents of children ages 14+ must meet work requirements to receive benefits.  

  • More than 62% of Ohio’s SNAP participants are families with children. If someone in the household loses SNAP benefits due to work requirements, the family’s benefit could change significantly. These work requirements not only impact parents, but also grandparents, aunts, uncles, older siblings, and foster parents.  

√ Easing the Tax Burden to make Child Care More Affordable 

H.R.1 includes expansions of key tax credits benefitting child care, helping to make child care more affordable for working families with young children. These include expansions to: 

• Child and Dependent Care Tax Credit (CDCTC): this is the only tax credit directly supporting low- and middle-income working parents to maintain earned income to aid in paying for child care.  

  • Working parents claim a portion of their child care expenses on their taxes, up to $3,000 for one child and up to $6,000 for two+ children. Families receive a percentage of their claimed expense back as a credit. Families with the lowest incomes will now receive a maximum credit of 50% of claimed child care expenses. This is an increase from the current 35%. 

• Employer Provided Child Care Tax Credit (45F): Supports businesses that want to help identify or provide child care for employees.  

  • Businesses may receive a maximum tax credit of $150,000 based on 25% of qualified child care expenses ($600,000 maximum).  

  • H.R.1 increases the maximum credit and credit rate, providing more incentive for business participation. It also creates a larger benefit for small businesses, and works to simplify the process for more than one employer to jointly contract with a qualified child care provider.  

• Dependent Care Assistance Plan (DCAP): Enables working parents to set aside pre-tax income to pay for child care with employer-sponsored flexible spending accounts. 

  • Families working for participating employers can deduct up to $5,000 annually from pre-tax earnings to pay for dependent care expenses.  

  • H.R.1 increases the maximum amount families can deduct to $7,500 per year. 

• Changes to the Federal Child Tax Credit 

The bill includes an increase in the child tax credit from $2,000 to $2,200 per qualifying child and makes these changes permanent. H.R. 1 also requires the credit amount to be adjusted annually for inflation starting in 2026. Despite raising the credit itself, H.R.1 neglects to enhance refundability of the credit – a missed opportunity to expand access for lower income Americans. 

• The provision includes a cap on refundability, meaning lower-income families who do not earn up to a certain threshold will not be eligible for the full credit. Those families who earn up to the full refundability threshold will see the greatest tax benefit.  

• For the first time, children and at least one parent or guardian must have a Social Security Number (SSN) to qualify. With this change, an estimated 2.7 million American children who qualify based on income will not be eligible for the credit. 

  
  

  These changes take effect during the 2026 tax filing season and immediately disqualify many millions of young children and families who were previously eligible. The credit will phase-in based on income thresholds and the number of children in the home – meaning that while the credit has increased, families must now earn more before the full amount can be claimed.  

A single parent with one child must earn a minimum of $28,700; a two-parent household with one child must earn at least $36,500.  

A single parent with two children must earn at least $33,700 while a dual household with two children must earn at least $41,500. 

An estimated 28% of children will not qualify for the full amount because their parents earn too little - up from the current 25%. 

Impact on Society at Large 

For the millions of Ohioans who rely on Medicaid and SNAP, the impact of this legislation will be deeply personal. The ripple effect of these changes will not be limited to those who are direct beneficiaries of these services.  

• Rural hospital program changes, eliminations, and closures will minimize health care access for all residents and eliminate local jobs for those who staff the programs and health facilities. 

• Regardless of insurance provider, people in affected communities will experience longer wait times for appointments and longer travel times to other health care facilities.  

• Obstetric and pediatric care is reimbursed at lower rates than other services, making them among the least profitable. This increases the likelihood that, even if rural hospitals remain operational, obstetric and pediatric care are more likely to be eliminated – impacting women and children in the community regardless of insurance provider.  

• Estimates suggest as many as 717,000 Ohio families stand to lose some or all of their SNAP benefits. 

• 12.1% of Ohioans qualify for and rely on SNAP, meaning about 1.4 million of our Ohio neighbors are at risk of losing access to nutritious foods.  

• Families who have relied on SNAP to help put food on the table will experience a decrease in disposable income, harming local economies. 

• Access to nutritious foods increases workforce participation and reliability. Food insecurity is associated with higher number of missed workdays and increase complications of diabetes, resulting in poorer overall health and increased risk of hospitalization. 

• Qualifying young children on SNAP experience a higher intake of essential nutrients and lower risks of anemia, obesity, and hospitalizations than if they did not participate. Low-income children receiving SNAP, who would otherwise lack consistent access to nutritious foods, are more likely to develop well emotionally and academically, setting the stage for long-term success and kindergarten readiness.  

• When SNAP benefits are reduced or eliminated, local grocers are impacted by loss of customers. This loss of revenue is particularly harmful for rural grocers whose profit margins are smaller than large retail stores in urban areas. Loss of business threatens to widen food deserts for Ohioans regardless of whether they are beneficiaries of SNAP. 

H.R. 1 represents the largest cuts to key programs serving low-income families in our nation’s history, and the devastation of these cuts threaten to impact all of us by weakening our state’s funding, reducing or eliminating local programs and resources, and  destabilizing the health and well-being of our communities. Though it will take years for the full weight of these changes to be realized, the eventuality of these changes does not dull the full impact. We all stand to lose, and our ongoing collaboration is essential to building a movement of resistance.