https://www.axios.com/2026/01/13/aca-medicaid-hospitals-changes-2026?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Sweeping changes to Medicaid and the Affordable Care Act are combining with rising health costs to make 2026 a high-stakes year for hospital operators.

Why it matters: 

While major health systems like HCA are likely to weather the worst, some safety net providers and facilities on tight margins could close or scale back services as uncompensated care costs mount and uncertainty around future policies swirls.

• “We took a big hit in 2025,” said Beth Feldpush, senior vice president of policy and advocacy at America’s Essential Hospitals.
• “I don’t think that the field can absorb any further hits without us really seeing a crisis.”

State of play: 

Last year’s GOP tax-and-spending law will decrease federal Medicaid funding by nearly $1 trillion over the next decade, translating into millions more uninsured, lower reimbursements and higher costs for hospitals.

• The Trump administration is also considering big changes to the way Medicare pays for outpatient services that could reduce hospital spending by nearly $11 billion over the next decade, including paying less for chemotherapy.

Hospitals have the rest of this year to boost their balance sheets, invest in technology including AI, and even consider merger plans before the biggest changes take effect in 2027, Fitch Ratings wrote in its annual outlook for the nonprofit hospital sector. The financial outlook remains stable for the sector overall next year, the report predicts.

• “People are already very proactively looking at those out years and saying, if that’s the worst-case scenario that I’ve got to deal with, what can I do today to make that impact less,” said Kevin Holloran, a senior director at Fitch.

Threat level: 

Hospitals in some instances have started closing unprofitable services like maternity care and behavioral health care in the face of financial pressures.

• More than 300 rural hospitals are at immediate risk of closing their operations entirely, according to a December report.
• Safety net providers also are going to court to fight an administration effort to make them pay full price for medicines they currently get at a steep discount and reimburse them later if they’re found to qualify under the government’s 340B discount drug program.
• “Those hospitals that have been underperforming … they are going to continue to struggle,” said Erik Swanson, managing director at consulting firm Kaufman Hall. “Those who are doing really, really well may continue to see growth in their performance.”

Private equity firms will likely continue buying up and building new businesses in outpatient service areas like ambulatory surgery, labs and imaging, he said.

• “Hospitals and health systems should continue to expect quite a bit of challenge and disruption in those spaces.”

Congress still could extend the industry some lifelines, though any effort to delay or roll back some of the biggest Medicaid cuts face tough odds this year.

• Sen. Josh Hawley (R-Mo.) introduced a bill to repeal parts of the GOP budget law that would slash hospitals’ Medicaid dollars.
• Lawmakers are debating whether to renew enhanced ACA subsidies that expired at the end of 2025 and could result in millions more uninsured patients, but that effort would also have to overcome significant GOP opposition.
• “Our job is to make sure that we create a predicate that, as these provisions come online, they may very well need to be revisited,” said Stacey Hughes, the American Hospital Association’s executive vice president for government relations and public policy.

What’s ahead: 

Beyond policy changes, hospitals also are dealing with inflationary pressures, including rising medical supply costs, and administrative overhead from insurer pre-treatment reviews.

• Those trying to pad their margins may ramp up their use of artificial intelligence to code patient visits in a way that increases reimbursements from public and private payers, Raymond James managing director Chris Meekins wrote in an analyst note.
• While hospitals have historically been able to navigate big policy challenges, if things don’t go their way, it could turn into a “tornado of trouble,” Meekins wrote.