Hospitals and health systems across the country are telling some Medicare and Medicaid patients that they can’t schedule telehealth appointments due to the federal government’s shutdown, now heading into its second week. That’s because Medicare reimbursement for telehealth expired on September 30, leaving health systems with the choice of pausing such visits or keeping them going in hopes of retroactive reimbursement after the shutdown ends.
Reimbursement for the Hospital at Home program, which allows patients to receive care without being admitted to a hospital, also lapsed with the shutdown. That led to providers scrambling to discharge patients under the program or admit them to a hospital. Mayo Clinic, for example, had to move around 30 patients from their homes in Arizona, Florida and Wisconsin to its facilities.
At issue in the government shutdown is healthcare, specifically tax credits for middle- and lower-income Americans that enable them to afford health insurance on the federal exchanges set up by the Affordable Care Act. Democrats want to extend those tax credits, which are set to expire at the end of the year, while Republicans want to reopen the government first and then negotiate about the tax credits in a final budget.
The impasse has prevented the Senate from overcoming a filibuster, despite a Republican majority. Around 24 million Americans get their health insurance through the ACA, and the loss of tax credits will cause their premiums to rise an average of 75%–and as high as 90% in rural areas–and likely cause at least 4 million people to lose coverage entirely.
The government’s closure has reverberated through its operations in healthcare. The Department of Health and Human Services has furloughed some 41% of its staff, making it harder to run oversight operations. CDC’s lack of staff will hinder surveillance of public health threats. And FDA won’t accept any new drug applications until funding is restored.
When the government might reopen remains unclear. Most shutdowns are relatively brief, but the longest one, which lasted 35 days, came during Donald Trump’s first term. Senate majority leader John Thune, R-S.D., and Speaker of the House Mike Johnson, R-La., have both said they won’t negotiate with Democrats, and the House won’t meet again until October 14.Bettors on Polymarket currently expect it to last until at least October 15. Pressure on Congress will increase after that date because there won’t be funds available to pay active military members.
Since the murder of UnitedHealth executive Brian Thompson in New York City December 4, 2024, attention to health insurers has heightened. National media coverage has been brutal. Polls have chronicled the public’s disdain for rising premiums and increased denials. Hospitals and physicians have amped-up campaigns against prior authorization and inadequate reimbursement. For many health insurers, no news is a good news day. Here’s ChatGPT’s reply to how insurers are depicted:
“Media coverage of US health insurers focuses heavily on the challenges consumers face due to high costs, coverage denials, and complicated policies, often portraying insurers as profit-driven entities that hinder care access. Investigations reveal insurers using technology to deny claims and push for denials during prior authorization, while other reports highlight market concentration and the increasing influence of large companies like UnitedHealth Group and Centene. Media also covers the marketing efforts of insurers, particularly for Medicare Advantage plans, and public frustration with the industry. “
In some ways, it’s understandable. Insurance, by definition, is a bet, especially in healthcare. Private policyholders—individuals and employers– bet the premiums they pay pooled with others will cover the cost of a condition or accident that requires medical care. In the 1960’s, federal and state government made the same bet on behalf of seniors (Medicare) and lower-income or disabled kids and adults (Medicaid). But they’re bets.
But the rub is this: what healthcare products and services costs and their prices are hard to predict and closely-guarded secrets in an industry that declares itself the world’s best. Claims data—one source of tracking utilization—is nearly impossible to access even for employers who cover the majority of U.S. population (56%).
Spending for U.S. healthcare is forecast to increase 54% through 2033 from $5.6 trillion to $8.6 trillion— the result of higher costs for prescription drugs and hospital stays, medical inflation, technology, increased utilization (demand) and administrative costs (overhead). Insurers negotiate rates for these, add their margin and pass them thru to their customers—individuals, employers and government agencies. It’s all done behind the scenes.
The public’s working knowledge of how the health system operates, how it performs and what key players in the ecosystem do is negligible. For most, personal experience with the system is their context. We understand our personal healthiness if so inclined or fortunate to have a continuous primary care relationship. We understand our medications if they solve a problem or don’t. We understand our hospitals if we or a family member use them or occasionally visit, and we understand our insurance when we enroll choosing from affordable options that include the doctors and hospitals we like and when we’re denied services or billed for what insurance doesn’t cover.
Today, corporate names like UnitedHealth Group, Humana, Cigna, Elevance, CVS Aetna and Centene are the health insurance industry’s big brands, corralling more than 60% of the industry’s private and government enrollment with the rest divided among 1,149 smaller players. Today, the public’s perception of health insurers is negative: most consider insurance a necessary evil with data showing it’s no guarantee against financial ruin. Today, it’s an expensive employee benefit for employers who are looking for alternative options for workforce stability. And only 56% of enrollees trust their health insurer to do what’s best for them.
Ours is a flawed system that’s not sustainable: insurers are part of that problem. It’s premised on dependence:patients depend on providers to define their diagnosis and deliver the treatments/therapeutics and enrollees depend on insurers to handle the logistics of how much they get paid and when. At the point of service, patients pay co-pays and after the fact, get an “explanation of benefits” along with additional out of pocket obligations. Hospitals and physicians fight insurers about what’s reasonable and customary compensation, and patients unable to out-of-pocket obligations are handed off to “revenue cycle specialists” for collection. Wow. Great system! Mark it up, pass it thru and let the chips fall where they may—all under the presumed oversight of state insurance commissioners who are tasked to protect the public’s interests.
Do insurers deserve the animosity they’re facing from employers, hospitals, physicians and their enrollees? Yes, but certainly some more than others. Facts are facts:
Since 2020, health insurance premium costs have increased 2-4 times faster than household necessities and wages for the average household. Affordability is an issue.
Denials have increased.
Enrollee trust and satisfaction with insurers has plummeted.
And industry profits since 2023 have taken a hit due to post-pandemic pent-up demand, pricey drugs including in-demand GLP-1’s for obesity and increased negotiation leverage by consolidated health systems.
Most Americans think not having health insurance is a bigger risk than going without. But most also think healthcare is fundamental right and the government should guarantee access through universal coverage.
Having private insurance is not the issue: having insurance that ensures access to doctors and hospitals when needed reliably and affordably is their unmet need.
In the weeks ahead, employers will update their employee health benefits options for next year while facing 9-15% higher costs for their coverage. States will decide how they’ll implement work requirements in their Medicaid programs and assess the extent of lost coverage for millions. Insurers who sponsor market place plans suspended by the Big Beautiful Bill will raise their individual premiums hikes 20-70% for the 16 million who are losing their subsidies.
Medicare Advantage (Medicare Part C) insurers will skinny-down the supplements in their offerings and raise premiums alongside Part D increases, And, every insurer will inventory markets served and product portfolio profitability to determine investment opportunities or exit strategies. That’s the calculus every insurer applies every year, adjusting as conditions dictate.
Most private insurers pay little attention to the 8% of Americans who have no coverage; those inclined tend to be smaller community-based plans often associated with hospitals or provider organizations.
Most are concerned about continuity of care for their enrollees: they know 12% had a lapse in their coverage last year, 23% are under-insured and 43% missed a scheduled appointment or treatment due to out-of-pocket costs involved.
And all are concerned about the long-term financial viability of the entire health insurance sector: margins have plummeted since 2020 from 3.1% to 0.8%%, medical loss ratio’s have increased from 98.2% in 2023 to 100.1% last year, premiums increase grew 5.9% while hospital and medical expenses grew $8.9% and so on. The bigger players have residual capital to diversify and grow; others don’t.
Criticism of the health insurance industry is justified for the most part but the rest of the story is key. The U.S. system is broken and everyone knows it. But health insurers are not alone in bearing responsibility for its failure though their role is significant.
The urgent need is for a roadmap to a system of health where the healthiness and well-being of the entire population is true north to its ambition. It’s a system that’s comprehensive, connected, cost-effective and affordable. Protecting turf between sectors, blame and shame rhetoric and perpetuation of public ignorance are non-starters.
PS: Two important events last week weigh heavily on U.S. healthcare’s future:
In Verona, WI, the Epic User Group Meeting showcased the company’s plans for AI featuring 3 new generative AI tools — Emmie for patients, Art for clinicians and Penny for revenue cycle management. Per KLAS, the private company grew its market share to 42% of acute care hospitals and 55% of acute care beds at the end of 2024.
In Jackson Hole, WY, the Federal Reserve Bank of Kansas City’s annual economic symposium where Fed Chair Jay Powell signaled a likely interest rate cut in its September 16-17 meeting and changes to how the central bank will assess employment status going forward.
Healthcare is labor intense, capital intense and 26% of federal spending in the FY 2026 proposed budget. The Fed through its monetary policies has the power and obligation to foster economic stability. Epic is one of a handful of companies that has the potential to transform the U.S. health system. Transformation of the health system is essential to its sustainability and necessary to the U.S. economic stability since healthcare is 18% of the country’s GDP and its biggest private employer.
When Congress passed pandemic-era enhancements to Affordable Care Act (ACA) premium subsidies in 2021, it wasn’t just a policy tweak — it was a lifeline. But unless lawmakers act, those subsidies will vanish on January 1, 2026.
According to KFF, the average ACA enrollee could see premiums spike 75% overnight. For many, that will mean a choice between things like their health coverage and rent or food. The Congressional Budget Office estimates more than 4.2 million people could lose coverage over the next decade as a result. Below is where the expired subsidies will hurt the hardest:
1. Young adults… and their parents’ wallets
Young people who’ve aged out of their parents’ plans and buy coverage through the ACA marketplaces will see some of the steepest jumps.
If they decide to forgo coverage, as KFF Health News warns: The so-called “‘insurance cliff’ at age 26 can send young adults tumbling into being uninsured.”
The ACA is the only real option for many small-business owners, freelancers and gig workers. These are the folks that conservatives say we should encourage to build and grow their own businesses who make up the backbone of Main Street. Losing the enhanced subsidies means many will face premiums hundreds of dollars higher per month. Some will be forced to close shop and turn to jobs at out-of-town corporations flush enough to afford to offer subsidized coverage to their workers, a direct hit to local economies.
3. States already in crisis
States aren’t in a position to plug the gap.Politico reports that California, Colorado, Maryland, Washington, and others are scrambling to soften the blow, but even the most ambitious state-level plans can’t replace hundreds of millions in lost federal funding.
And this comes right after Medicaid cuts in the One Big Beautiful Bill Act that will hit hospitals, clinics and low-income communities. In Washington state alone, officials expect premiums to jump 75% when the subsidies expire, with one in four marketplace enrollees dropping coverage. That means more uninsured patients showing up in ERs, less preventive care, and more strain on already struggling rural hospitals.
4. (Already) disappearing alternatives to Big Insurance
The ACA marketplaces aren’t just a safety net for individuals but also home to smaller non-profit and regional health plans that give Americans an alternative to the “Big 7” Wall Street-run insurance conglomerates. These community-rooted plans are already facing financial headwinds from shrinking enrollment and Medicaid funding cuts. When premiums spike in 2026, many could lose enough members to be forced out of the market entirely.
And here’s the real danger: The Big 7 can weather this storm. Their huge market capitalizations, government contracts, pharmacy benefit manager (PBM) divisions and sprawling care delivery businesses give them insulation from ACA marketplace losses. In fact, they may see this as an opportunity to buy up the smaller competitors that fail, which would further consolidate their dominance over our health care system. Or they could just decide to flee the ACA marketplace entirely because the population will skewer sicker and older, creating a death spiral that the big insurers will not want to touch. What little consumer choice exists outside the big corporate insurers could vanish, and even that could disappear.
5. <65 year olds
Perhaps the most vulnerable group will be Americans in their 50s and early 60s who lose their jobs or retire early (often not by choice) and find themselves too young for Medicare but facing incredibly high premiums on the individual market. Under ACA rules, insurers can charge older enrollees up to three times more than younger adults for the same coverage. The enhanced subsidies have been the only thing keeping many of these premiums within reach.
Take those subsidies away, and a 60-year-old who loses employer coverage could see their monthly premium shoot into four figures. For those living off severance, savings or reduced income, choosing to gamble with their health and wait it out until 65 may be the only option.
Congress knows the stakes. Will they act?
Making the subsidies permanent would cost $383 billion over 10 years, which would be a political hurdle for a Congress intent on deep budget cuts. But the cost of inaction is far higher, both in human and economic terms. These subsidies have kept coverage affordable for millions, fueled small business growth, and stabilized state health systems during one of the most turbulent economic periods in recent memory. Without them, the hit to many folks could be a Frazier-level K.O.
But let’s face it — what I’m advocating for isn’t perfect either. The prospect of extending these subsidies raises a question: Should taxpayers be footing the bill for health insurance premiums when insurance corporations are reporting tens of billions in annual profits and paying hefty dividends to shareholders?
The short answer, for now, unfortunately, is yes. Because this is the deck we’ve been dealt and we can’t let Americans fall into medical debt, lose their homes – or their lives. Extending the ACA subsidies is not pretty. But for Americans, it’s just a bob and weave.
People who buy health insurance through the Affordable Care Act (ACA) are set to see a median premium increase of 18 percent, more than double last year’s 7 percent median proposed increase, according to an analysis of preliminary filings by KFF.
The proposed rates are preliminary and could change before being finalized in late summer. The analysis includes proposed rate changes from 312 insurers in all 50 states and DC.
It’s the largest rate change insurers have requested since 2018, the last time that policy uncertainty contributed to sharp premium increases. On average, ACA marketplace insurers are raising premiums by about 20 percent in 2026, KFF found.
Insurers said they wanted higher premiums to cover rising health care costs, like hospitalizations and physician care, as well as prescription drug costs. Tariffs on imported goods could play a role in rising medical costs, but insurers said there was a lot of uncertainty around implementation, and not many insurers were citing tariffs as a reason for higher rates.
But they are adding in higher increases due to changes being made by the Trump administration and Republicans in Congress. For instance, the majority of insurers said they are taking into account the potential expiration of enhanced premium tax credits.
Those subsidies, put in place during the COVID-19 pandemic, are set to expire at the end of the year, and there are few signs that Republicans are interested in tackling the issue at all.
If Congress takes no action, premiums for subsidized enrollees are projected to increase by over 75 percent starting in January 2026, according to KFF.
But some states are pushing back.
Arkansas Gov. Sarah Huckabee Sanders (R) on Wednesday called on the state’s insurance commissioner to disapprove the proposed increases from Centene and Blue Cross Blue Shield. The companies filed increases of up to 54 percent and 25.5 percent, respectively, she said.
“Arkansas’ Insurance Commissioner is required to disapprove of proposed rate increases if they are excessive or discriminatory, and these are both,” Huckabee Sanders said in a statement.
“I’m calling on my Commissioner to follow the law, reject these insane rate increases, and protect Arkansans.”
The healthcare industry is still licking its wounds from $1 trillion in federal funding cuts included in the One Big Beautiful Bill Act (OBBBA) signed into law July 4.
Adding insult to injury, the Center for Medicare and Medicaid services issued a 913-page proposed rule last Tuesday that includes unwelcome changes especially troublesome for hospitals i.e. adoption of site neutral payments, expansion of hospital price transparency requirements, reduction of inpatient-only services, acceleration of hospital 340B discount repayment obligations and more.
The combination of the two is bad news for healthcare overall and hospitals especially: the timing is precarious:
Economic uncertainty: Economists believe a recession is less likely but uncertainty about tariffs, fear about rising inflation, labor market volatility a housing market slowdown and speculation about interest rates have capital markets anxious. Healthcare is capital intense: the impact of the two in tandem with economic uncertainty is unsettling.
Consumer spending fragility: Consumer spending is holding steady for the time being but housing equity values are dropping, rents are increasing, student loan obligations suspended during Covid are now re-activated, prices for hospital and physicians are increasing faster than other necessities and inflation ticked up slightly last month. Consumer out-of-pocket spending for healthcare products and services is directly impacted by purchases in every category.
Heightened payer pressures: Insurers and employers are expecting double-digit increases for premiums and health benefits next year blaming their higher costs on hospitals and drugs, OBBBA-induced insurance coverage lapses and systemic lack of cost-accountability. For insurers, already reeling from 2023-2024 financial reversals, forecasts are dire. Payers will heighten pressure on healthcare providers—especially hospitals and specialists—as a result.
Why healthcare appears to have borne the brunt of the funding cuts in the OBBBA is speculative:
Might a case have been made for cuts in other departments? Might healthcare programs other than Medicaid have been ripe for “waste, fraud and abuse” driven cuts? Might technology-driven administrative costs reductions across the expanse of federal and state government been more effective than DOGE- blunt experimentation?
Healthcare is 18% of the GDP and 28% of total federal spending: that leaves room for cuts in other industries.
Why hospitals, along with nursing homes and public health programs, are likely to bear the lion’s share of OBBBA’ cut fallout and CMS’ proposed rule disruptions is equally vexing. Might the high-profile successes of some not-for-profit hospital operators have drawn attention? Might Congress have been attentive to IRS Form 990 filings for NFP operators and quarterly earnings of investor-owned systems and assume hospital finances are OK? Might advocacy efforts to maintain the status quo with facility fees, 340B drug discounts, executive compensation et al been overshadowed by concerns about consolidation-induced cost increases and disregard for affordability? Hospital emergency rooms in rural and urban communities, nursing homes, public health programs and many physicians will be adversely impacted by the OBBBA cuts: the impact will vary by state. What’s not clear is how much.
My take:
Having read both the OBBBA and CMS proposed rules and observed reactions from industry, two things are clear to me:
The antipathy toward the healthcare industry among the public and in Congress played a key role in passage of the OBBBA and regulatory changes likely to follow.
Polls show three-fourths of likely voters want to see transformational change to healthcare and two-thirds think the industry is more concerned with its profit over their care: these views lend to hostile regulatory changes. The public and the majority of elected officials think the industry prioritizes protection of the status quo over obligations to serve communities and the greater good.
The result: winners and losers in each sector, lack of continuity and interoperability, runaway costs and poor outcomes.
No sector in healthcare stands as the surrogate for the health and wellbeing of the population. There are well-intended players in each sector who seek the moral high ground for healthcare, but their boards and leaders put short-term sustainability above long-term systemness and purpose. That void needs to be filled.
The timing of these changes is predictably political.
Most of the lower-cost initiatives in both the OBBBA changes and CMS proposals carry obligations to commence in 2026—in time for the November 2026 mid-term campaigns. Most of the results, including costs and savings, will not be known before 2028 or after. They’re geared toward voters inclined to think healthcare is systemically fraudulent, wasteful and self-serving.
And they’re just the start: officials across the Departments of Health and Human Services, Justice, Commerce, Labor and Veterans Affairs will add to the lists.
Medicaid cuts have received the lion’s share of attention from critics of Republicans’ sweeping tax cuts legislation, but the GOP’s decision not to extend enhanced ObamaCare subsidies could have a much more immediate impact ahead of next year’s midterms.
Extra subsidies put in place during the coronavirus pandemic are set to expire at the end of the year, and there are few signs Republicans are interested in tackling the issue at all.
To date, only Sens. Lisa Murkowski (R-Alaska) and Thom Tillis (R-N.C.) have spoken publicly about wanting to extend them.
The absence of an extension in the “big, beautiful bill” was especially notable given the sweeping changes the legislation makes to the health care system, and it gives Democrats an easy message: If Republicans in Congress let the subsidies expire at the end of the year, premiums will spike, and millions of people across the country could lose health insurance.
In a statement released last month as the House was debating its version of the bill, House and Senate Democratic health leaders pointed out what they said was GOP hypocrisy.
“Their bill extends hundreds of tax policies that expire at the end of the year. The omission of this policy will cause millions of Americans to lose their health insurance and will raise premiums on 24 million Americans,” wrote Senate Finance Committee ranking member Ron Wyden (D-Ore.), House Ways and Means Committee ranking member Richard Neal (D-Mass.) and House Energy and Commerce Committee ranking member Frank Pallone (D-N.J.).
“The Republican failure to stop this premium spike is a policy choice, and it needs to be recognized as such.”
More than 24 million Americans are enrolled in the insurance marketplace this year, and about 90 percent — more than 22 million people — are receiving enhanced subsidies.
“All of those folks will experience quite large out-of-pocket premium increases,” said Ellen Montz, who helped run the federal ObamaCare exchanges under the Biden administration and is now a managing director with Manatt Health.
“When premiums become less affordable, you have this kind of self-fulfilling prophecy where the youngest and the healthiest people drop out of the marketplace, and then premiums become even less affordable in the next year,” Montz said.
The subsidies have been an extremely important driver of ObamaCare enrollment. Experts say if they were to expire, those gains would be erased.
According to the Congressional Budget Office (CBO), 4.2 million people are projected to lose insurance by 2034 if the subsidies aren’t renewed.
Combined with changes to Medicaid in the new tax cut law, at least 17 million Americans could be uninsured in the next decade.
The enhanced subsidies increase financial help to make health insurance plans more affordable. Eligible applicants can use the credit to lower insurance premium costs upfront or claim the tax break when filing their return.
Premiums are expected to increase by more than 75 percent on average, with people in some states seeing their payments more than double, according to health research group KFF.
Devon Trolley, executive director of Pennie, the Affordable Care Act (ACA) exchange in Pennsylvania, said she expects at least a 30 percent drop in enrollment if the subsidies expire.
The state starts ramping up its open enrollment infrastructure in mid-August, she said, so time is running short for Congress to act.
“The only vehicle left for funding the tax credits, if they were to extend them, would be the government funding bill with a deadline of September 30, which we really see as the last possible chance for Congress to do anything,” Trolley said.
Trolley said three-quarters of enrollees in the state’s exchange have never purchased coverage without the enhanced tax credits in place.
“They don’t know sort of a prior life of when the coverage was 82 percent more expensive. And we are very concerned this is going to come as a huge sticker shock to people, and that is going to significantly erode enrollment,” Trolley said.
The enhanced subsidies were first put into effect during the height of the coronavirus pandemic as part of former President Biden’s 2021 economic recovery law and then extended as part of the Inflation Reduction Act.
The CBO said permanently extending the subsidies would cost $358 billion over the next 10 years.
Republicans have balked at the cost. They argue the credits hide the true cost of the health law and subsidize Americans who don’t need the help. They also argue the subsidies have been a driver of fraudulent enrollment by unscrupulous brokers seeking high commissions.
Sen. Bill Cassidy (R-La.), chair of the Senate Health, Education, Labor and Pensions Committee, last year said Congress should reject extending the subsidies.
The Republican Study Committee’s 2025 fiscal budget said the subsidies “only perpetuate a never-ending cycle of rising premiums and federal bailouts — with taxpayers forced to foot the bill.”
But since 2020, enrollment in the Affordable Care Act marketplace has grown faster in the states won by President Trump in 2024, primarily rural Southern red states that haven’t expanded Medicaid. Explaining to millions of Americans why their health insurance premiums are suddenly too expensive for them to afford could be politically unpopular for Republicans.
According to a recent KFF survey, 45 percent of Americans who buy their own health insurance through the ACA exchanges identify as Republican or lean Republican. Three in 10 said they identify as “Make America Great Again” supporters.
“So much of that growth has just been a handful of Southern red states … Texas, Florida, Georgia, the Carolinas,” said Cynthia Cox, vice president at KFF and director of the firm’s ACA program. “That’s where I think we’re going to see a lot more people being uninsured.”
New Medicaid funding rules proposed by Congress this week would halt efforts at the state level to better fund rural hospitals and deliver services to the most vulnerable populations in those areas. You can be certain that the administrators and staff of those hospitals, as well as leaders of the communities they serve, are watching closely to see if the cuts are enacted.
Lawmakers at the federal level are trying to make deeper cuts to Medicaid spending in an effort to lower the amount of deficit spending that would be created by President Trump’s spending plan. Trump has dubbed the plan his “big beautiful bill.”
Feds Would Strip Rural Hospitals of Lifeline Funds
Republican members of the Senate Finance Committee this week released their version of the bill that would drain funding for rural hospitals, which rely heavily on Medicaid funds to treat patients. It’s estimated that 25 to 40 percent of services provided by such hospitals are funded by Medicaid.
The federal government and states share the up-front medical costs for Medicaid patients. The federal government then reimburses states up to 50 percent of their Medicaid spending every year.
Many states fund their portion of the cost by taxing entities that provide those services to Medicaid patients.
The latest proposal in Congress would not only restrict how many patients could receive benefits, but it would also stop states from implementing those provider tax programs to help fund Medicaid services provided to residents.
At the federal level, the thinking is that if states keep taxing providers to fund Medicaid services, then the federal government will have to keep reimbursing states a portion of those costs.
The downside to that is many experts, along with several Republicans in Congress, namely Sens. Susan Collins of Maine, Lisa Murkowski of Alaska and Josh Hawley of Missouri, have predicted it will decimate rural hospitals.
West Virginia Republican Sen. Jim Justice went a step further, saying that the plan to limit states’ use of provider taxes will “really hurt a lot of folks.” Despite that statement, Justice said he is OK with the freeze.
State Lawmakers Sound the Alarm
There are 39 states with at least three or more provider taxes used to help fund Medicaid services. Alaska is the only state with no such tax.
Some states, such as Ohio, have set up a new rural hospital fund using provider taxes to help rural hospitals deliver Medicaid services to patients.
Ohio Governor Mike DeWine and the Republican-led state legislature set up a pilot program called the Rural Ohio Hospital Tax Pilot Program. The measure would allow counties to levy a tax on their local hospitals that would then be used to fund Medicaid services.
DeWine said the pilot program would help ease the financial stress rural hospitals face in Ohio. The plan contained in Ohio House Bill 96 has the blessing of the Ohio Hospital Association.
A group of Republican state lawmakers recently sent a letter to their federal counterparts pleading with them to remove the bill language because it would “torpedo” plans to keep rural hospitals functioning.
The American Hospital Association, a 130-year-old trade group of more than 5,000 hospitals and health care providers, this month released the impact on rural hospitals if this plan went into effect.
More than $50 billion would be lost by 2034, and more than 1.8 million rural Americans would lose health benefits.
Kentucky residents would be impacted the most, with 143,000 losing benefits, followed by 135,000 Californians. More than 86,000 Ohioans would lose Medicaid coverage under the plan by 2034, making it the third most impacted state.
To blunt the effects of the cuts, Collins reportedly is proposing the establishment of a $100 billion relief fund that could provide financial support to affected providers, rural hospitals in particular. Whether that or a similar but smaller fund will wind up in the final draft of the legislation apparently will be decided this weekend. Meanwhile, the Senate parliamentarian has ruled against many of the provisions of the Senate version of the bill, including the Finance Committee’s provider tax framework, which puts the whole thing in flux.
Senate leaders say they plan a long series of votes on amendments of the bill on Sunday. The “vote-arama” likely will go on throughout Sunday night and into Monday. If the Senate does pass its version of the bill, it will have to go back to the House. Lawmakers are under a self-imposed deadline to get the legislation to Trump by the July 4 holiday.
Nearly 12 million people would lose their health insurance under President Trump’s “big, beautiful bill,” an erosion of the social safety net that would lead to more unmanaged chronic illnesses, higher medical debt and overcrowding of hospital emergency departments.
Why it matters:
The changes in the Senate version of the bill could wipe out most of the health coverage gains made under the Affordable Care Act and slash state support for Medicaid and SNAP.
“We are going back to a place of a lot of uncompensated care and a lot of patchwork systems for people to get care,” said Ellen Montz, a managing director at Manatt Health who oversaw the ACA federal marketplace during the Biden administration.
The big picture:
The stakes are huge for low-income and working-class Americans who depend on Medicaid and subsidized ACA coverage.
Without health coverage, more people with diabetes, heart disease, asthma and other chronic conditions will likely go without checkups and medication to keep their ailments in check.
Those who try to keep up with care after losing insurance will pay more out of pocket, driving up medical debt and increasing the risk of eviction, food insecurity and depleted savings.
Uninsured patients have worse cancer survival outcomes and are less likely to get prenatal care. Medicaid also is a major payer of behavioral health counseling and crisis intervention.
Much of the coverage losses from the bill will come from new Medicaid work reporting requirements, congressional scorekeepers predict. Work rules generally will have to be implemented for coverage starting in 2027, but could be earlier or later depending on the state.
Past experiments with Medicaid work rules show that many eligible people fall through the cracks verifying they’ve met the requirements or navigating new state bureaucracies.
Often, people don’t find out they’ve lost coverage until they try to fill a prescription or see their doctor. States typically provide written notices, but contacts can be out of date.
Nearly 1 in 3 adults who were disenrolled from Medicaid after the COVID pandemic found out they no longer had health insurance only when they tried to access care, per a KFF survey.
Zoom out:
The Medicaid and ACA changes will also affect people who keep their coverage.
The anticipated drop-off in preventive care means the uninsured will be more likely to go to the emergency room when they get sick. That could further crowd already bursting ERs, resulting in even longer wait times.
Changes to ACA markets in the bill, along with the impending expiration of enhanced premium subsidies, may drive healthier people to drop out, Montz said, skewing the risk pool and driving up premiums for remaining enrollees.
States will likely have to make further cuts to their safety-net programs if the bill passes in order to keep state budgets functioning with less federal Medicaid funding.
The other side:
The White House and GOP proponents of the bill say the health care changes will fight fraud, waste and abuse, and argue that coverage loss projections are overblown.
Conservative health care thinkers also posit that there isn’t strong enough evidence that public health insurance improves health.
Reality check:
Not all insurance is created equally, and many people with health coverage still struggle to access care. But the bill’s impact would take the focus off ways to improve the health system, Montz said.
“This is taking us catastrophically backward, where we don’t get to think about the things that we should be thinking about how to best keep people healthy,” she said.
The bottom line:
The changes will unfold against a backdrop of Health Secretary Robert F. Kennedy Jr.’s purported focus on preventive care and ending chronic illness in the U.S.
But American health care is an insurance-based system, said Manatt Health’s Patricia Boozang. Coverage is what unlocks access.
Scrapping millions of people’s health coverage “seems inconsistent with the goal of making America healthier,” she said.
Last Thursday, the Make America Healthy Again Commission released its 68-page report “Making America’s Children Healthy Again Assessment” featuring familiar themes—the inadequacy of attention to chronic disease by the health system, the “over-medicalization” of patient care vis a vis prescription medicines et al, the contamination of the food-supply by harmful ingredients, and more.
HHS Secretary Kennedy, EPA Administrator Zeldin and Agriculture Secretary Rollins pledged war on the corporate healthcare system ‘that has failed the public’ and an all-of-government approach to remedies for burgeoning chronic care needs.
Also Thursday, the House of Representatives passed its budget reconciliation bill by a vote of 215-214. The 1000-page bill cuts federal spending by $1.6 trillion (including $698 billion from Medicaid) and adds $2.3 trillion (CBO estimate/$3.4 to $5 trillion per Yale Budget Lab) to the national deficit over the next decade. It now goes to the Senate where changes to reduce federal spending to pre-pandemic level will be the focus.
With a 53-37 advantage and 22 of the 36 Senate seats facing mid-term election races in November, 2026, the Senate Republican version of the “Big Beautiful Bill” will include more spending cuts while pushing more responsibility to states for funding and additional cuts. The gap between the House and Senate versions will be wider than currently anticipated by House Republicans potentially derailing the White House promise of a final Big Beautiful Bill by July 4.
And, over the last week and holiday weekend, the President announced a new 25% tariff on Apple devices manufactured in India and new tariffs targeting the EU; threatened cuts to federal grants to Harvard and cessation of its non-citizen student enrollment, a ‘get-tougher’ policy on Russia to pressure an end of its Ukraine conflict, and a pledge to Americans on Memorial that it will double down on ‘peace thru strength’ in its Make America Great Again campaign.
These have 2 things in common:
1-They’re incomplete. None is a finished product.
The MAHA Commission, working with the Departments of Health & Human Services, Interior and Agriculture, is tasked to produce another report within 90 days to provide more details about a plan. The FY26 budgeting process is wrought with potholes—how to satisfy GOP deficit hawks vs. centrist lawmakers facing mid-term election, how to structure a bill that triggers sequestration cuts to Medicare (projected $490 billion/10 yrs. per CBO), how to quickly implement Medicaid work requirements and marketplace enrollment cuts that could leave insurance coverage for up to 14 million in limbo, and much more. And the President’s propensity to “flood the zone” with headline-grabbing Truth Social tweets, Executive Orders and provocative rhetoric on matters at home and abroad will keep media occupied and healthcare spending in the spotlight.
2-They play to the MAGA core.
The MAGA core is primarily composed of older, white, Christian men driven by a belief that the United States has lost its exceptionalism through WOKE policies i.e. DEI in workplaces and government, open borders, globalization and excessive government spending and control. In the 2024 Presidential election, the MAGA core expanded incrementally among Black, Hispanic, and younger voters whose concerns about food, energy and housing prices prompted higher-than expected turnout. The MAGA core believes in meritocracy, nationalism, smaller government, lower taxes, local control and free-market policies that encourage private investment in the economy. The core is price sensitive.
The health system per se is not a concern but it’s the affordability and lack of price transparency are. They respect doctors and frontline caregivers but think executives are overpaid and prone to self-promotion. And the MAGA core think lawmakers have been complicit in the system’s lack of financial accountability largely beneficial to elites.
Looking ahead to the summer, a “Big Beautiful Bill” will pass with optics that allow supporters to claim fiscal constraint and lower national debt and opponents to decry insensitive spending cuts and class warfare against low-and-middle-class households.
Federal cuts to Medicaid and SNAP (Supplemental Nutrition Assistance Program) will be prominent targets in both groups—one a portrayal of waste, fraud and abuse and the other tangible evidence of societal inequity and lack of moral purpose. Each thinks the other void of a balanced perspective. Each thinks the health system is underperforming and in need of transformational change but agreement about how to get there unclear.
As MAHA promotes its agenda, Congress passes a budget and MAGA advances its anti-establishment agenda vis a vis DOGE et al, healthcare operators will be in limbo. The dust will settle somewhat this summer, but longer-term bets will be modified for most organizations as compliance risks change, state responsibilities expand, capital markets react and Campaign 2026 unfolds.
And in most households, concern about the affordability of medical care will elevate as federal and state funding cuts force higher out of pocket costs on consumers and demand for lower prices.
The summer will be busy for everyone in healthcare.
PS: Changes in the housing market are significant for healthcare: 36% of the CPI is based on shelter vs. 8% for medical services & products, 14% for food and 6% for energy/transportation. While the overall CPI increased 2.3% in the last 12 months, medical services prices increased 3.1%. contributing to heightened price sensitivity and delayed payments.
It has not escaped lawmaker attention: revenue cycle management business practices (debt collection) are being scrutinized in hospitals and community benefit declarations by not-for-profit hospitals re-evaluated. The economics of healthcare are not immune to broader market trends nor is spending for healthcare in households protected from day-to-day fluctuations in prices for other goods and services.
Health insurers are starting to notify states that tariffs will drive up the premiums they plan to charge individual and small group market enrollees next year.
Why it matters:
The Trump administration’s trade policy is adding another layer of uncertainty for health costs as Congress considers Medicaid cuts and is expected to sunset enhanced subsidies for Affordable Care Act coverage.
“There are sort of a perfect storm of factors that are driving prices up,” said Sabrina Corlette, research professor at Georgetown’s Center on Health Insurance Reforms.
The big picture:
Health insurers calculate monthly premiums in advance of each year based on the expected price of goods and services and projected demand for them.
Tariffs announced by President Trump are expected to drive up the cost of prescription drugs, medical devices and other medical products and services. Some of that difference ultimately would be passed down to enrollees.
Where it stands:
A handful of health insurers administering individual and small group plans have already explicitly told state regulators that tariffs are forcing plans to raise enrollee premiums more than they otherwise would next year, KFF policy analyst Matt McGough wrote in an analysis published Monday.
Independent Health Benefits Corporation told New York regulators in a filing last month that it plans to raise premiums for its individual market enrollees 38.4% next year.
About 3% of that is directly due to tariffs, based on projections of how much they’ll increase drug prices and the use of imported drugs, Frank Sava, a spokesperson for Independent Health, told Axios.
Similarly, UnitedHealthcare of Oregon said in a filing that nearly 3% of its planned 19.8% premium increase for small group enrollees next year is due to uncertainty around tariffs, particularly on how they’ll affect pharmaceutical prices.
Insurers “don’t have any historical precedent or data to project what this is going to mean for their business and health costs,” McGough said to Axios. “I think it really makes sense that they’re trying to hedge their bets.”
Insurers can’t change their premiums throughout the year. But if health plans do overshoot their premium estimates in rate filings, they have to pay enrollees back the difference in rebates.
While there may be a competitive advantage to keeping premiums lower, there isn’t really a way for insurers to make up for extra unplanned costs after the fact.
Yes, but:
Some insurers indicated that while they’re keeping a close eye on tariff-related impacts, they aren’t baking them into their premium rates yet.
“There is uncertainty around inflation and the economy due to possible tariffs however we did [not] put anything for this in this filing,” Kaiser Foundation Health Plan of the Northwest’s report to Oregon reads.
State regulators can also push back on insurers’ premium calculations before they’re finalized, McGough noted.
What we’re watching:
While some states have earlier deadlines, insurers have to submit their 2026 ACA marketplace plan rates to the federal regulators by July 16, and proposed rates will be posted by August 1.
That’s when we’ll get a better picture of how seriously tariffs are concerning health insurers.
HENRY KOTULA 