Refugees Lose Medicaid Coverage While States Gain New Drug Price Rebates, Both Effective October 1

Two Medicaid changes took effect Thursday, October 1, 2026. They reflect different priorities in the Trump administration's approach to federal health spending.

Refugees lose coverage

An estimated 280,000 people are losing Medicaid or CHIP coverage this month, according to an analysis by KFF Health News. The cuts stem from changes to "Alien Medicaid Eligibility" in H.R. 1, the One Big Beautiful Bill Act that Republicans passed last summer. The law narrows which legal immigrants can enroll, and refugees and other humanitarian entrants, including people waiting on green card approval after fleeing war or persecution, are now losing access.

Mustafa Rfat, a professor of social work at the University of Nebraska at Omaha who arrived in the U.S. as a refugee from Iraq in 2011, told NPR he's fielding panicked calls from refugees with disabled children. "I spent these past two weeks just talking with so many of them, literally just terrorized by the reality that their children with disabilities are losing coverage," he said. Rfat says Medicaid let him get treatment for a severe spinal condition while he rebuilt his life across three states. He's since become a U.S. citizen, earned a doctorate, and become a professor.

Ben D'Avanzo, senior strategist at the National Immigration Law Center, says the people affected are among the most vulnerable legal immigrants in the country. "These are people who we have long, in the United States, welcomed, and populations who have had very strong, historic bipartisan support," he told NPR.

None of the available reporting includes an administration official defending this specific provision of H.R. 1. The broader law was sold to Congress on fiscal-responsibility grounds, narrowing federal benefits to citizens and the most established legal residents. Whether that tradeoff was worth it for a small, legally admitted population with no other coverage option is the open question advocates are raising, not whether Congress has the authority to set eligibility rules, which it clearly does.

States get drug price rebates

On the same date, the administration extended its most-favored-nation drug pricing deals to state Medicaid programs in all 50 states, Washington, D.C., and Puerto Rico. President Trump announced the move from the Oval Office, calling it "historic action" that will let states "invest those savings in providing better health care and higher quality service for the American people," according to Breitbart's account of the announcement.

The White House says state Medicaid programs will get rebates through what it's calling the GENEROUS Medicaid Payment Model, ensuring Medicaid doesn't pay more than the most-favored-nation price already negotiated with 26 drugmakers, including Eli Lilly, Merck, AstraZeneca, Novartis, and Johnson & Johnson. The Council of Economic Advisers estimates the deal will save Medicaid more than $64 billion. Trump himself floated a higher figure, saying savings "could be $100 billion," which is his own projection, not a CEA estimate.

CMS Administrator Dr. Mehmet Oz told reporters, "We are rescuing state budgets with this program, Mr. President," adding that even Democratic-run states are opting in because "it is such a good deal that every state realized they need to take it." No source identifies any state that has declined to participate, and no source quotes a state official independently confirming the savings figures.

A parallel fight over disability rights

A third development this week touches the same population bearing the brunt of the refugee cuts. A federal judge agreed to strip "integration" language from Section 504 regulations after the Justice Department declined to defend its own rule in Texas v. Kennedy, a lawsuit brought by states challenging the integration mandate, according to NPR Illinois. The mandate, in place in some form since 1977, required federally funded programs to serve disabled people in the most integrated setting possible rather than in institutions.

Bruce Darling, president of the Center for Disability Rights, called the ruling "like a knife in your chest." Jennifer Mathis of the Bazelon Center for Mental Health Law said the decision doesn't undo protections under the Americans with Disabilities Act or the Supreme Court's Olmstead decision, but creates legal uncertainty. "That lack of clarity will impact people's rights," she said. The Justice Department did not respond to NPR's requests for comment on why it reversed decades of bipartisan federal policy.

What's unresolved

Darling's organization is backing a proposed federal law to codify integration protections independent of the stripped regulation. Disability advocates and refugee groups are watching whether Congress revisits the H.R. 1 eligibility provisions before more coverage losses hit in future enrollment cycles. No court challenge to the refugee Medicaid cuts has been reported in these sources, and the appeal status of Texas v. Kennedy has not been confirmed.