How Health Insurance Coverage Denials Affect Americans

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Findings from the Commonwealth Fund 2025 Affordability Survey and Focus Groups.

U.S. adults with private insurance are anxious and frustrated about getting and paying for the care they need through their health plan. One of patients’ main concerns is uncertainty about whether their insurer will cover a health procedure or prescription drug that their doctor says they need, particularly for a serious medical condition.

Insurers can deny coverage for a variety of reasons. For example, they might deem a treatment or procedure to be medically unnecessary. Payment can also be denied for care delivered by an out-of-network provider, or for services the plan simply doesn’t cover. Administrative or billing errors can also trigger a denial.1

In this brief, we report findings from the Commonwealth Fund 2025 Affordability Survey on patients’ and families’ experiences with insurance coverage denials. We pair these findings with those from focus groups on the same topic. We examine experiences with two types of denials: those that occur before care is received, which we refer to as prior authorization denials, and those that occur after care has been provided, which we refer to as claim denials.

SSRS interviewed a nationally representative sample of 6,353 adults ages 19 to 64 from July 22 to October 27, 2025. Our analysis focused on 4,589 respondents with private insurance, either through an employer or the Affordable Care Act (ACA) marketplaces and individual insurance market. To gain a deeper understanding of people who experienced coverage denials, SSRS also conducted eight online focus groups with a total of 45 privately insured adults across the United States. To learn more about the survey and the focus groups, see “How We Conducted This Survey.”

Highlights

  • Experience with denials: One in five (21%) U.S. working-age adults with private insurance reported that they or a family member had experienced an insurance company denial of coverage for medical care recommended by a doctor in the past year, either before or after the care was provided.
  • Treatment delays: Forty-one percent of people who experienced a prior authorization denial said it led to a delay in medical care, and more than a quarter (28%) said a health problem got worse because of it. More than 60 percent said the denial caused worry and anxiety.
  • Out-of-pocket costs and medical debt: Among people who experienced a claim denial, nearly 70 percent said it cost them or their household more money. More than two in five (43%) adults who experienced a claim denial reported that the denial led to medical debt that they are still paying off.
  • Appeals: Only about half of those who experienced a denial appealed the decision, citing uncertainty over their right to do so and whether it would make a difference if they did, as well as confusion about who to contact.

Survey and Focus Group Findings

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Who experiences coverage denials?

We asked U.S. working-age adults with private insurance coverage if their insurance, or the insurance of a household member, denied coverage for recommended medical care. One in five (21%) working-age adults reported a coverage denial in the past year for a health care service recommended by a provider, either their own or that of a family member. Thirteen percent reported a prior authorization denial, 8 percent reported a claim denial, and 1 percent experienced both a prior authorization denial and a claim denial.

In focus groups with people who reported having a prior authorization or claim denial, participants reported that coverage denials, and the process of challenging them, often had significant consequences for their finances, health, and well-being.

Denied: John’s Story

John, who is in his early 60s, had surgery on both rotator cuffs. His provider recommended physical therapy (PT) as part of his recovery. For the first surgery, his PT was fully covered. After the second surgery one year later, his insurance company denied coverage for PT.

He plans to appeal the denial through his PT provider. “I’m going back to the physical therapist to ask them to resubmit my application, see if they can reword it and make a better case for me.”

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Coverage denials can harm peoples’ health and financial well-being. Over half (63%) of working-age adults with private insurance who experienced a prior authorization denial of coverage for medical care said it caused them or their households worry or anxiety. About 40 percent said that a prior authorization denial delayed medical care, and more than a quarter (28%) said that their health problem worsened as a result. Three in 10 said they spent more money because of the prior authorization denial. That’s because when coverage is denied, some patients may elect to pay for their care out of pocket.

Denied: Sally’s Story

Sally, who is in her 40s, was due for a routine mammogram. Her gynecologist recommended that she also get an ultrasound, because she has dense breasts. Sally was told the ultrasound would be covered when she called prior to her appointment, but after she had the procedure, her insurance company refused to pay for it.

Sally says she’s still fighting the claim denial, but she’s feeling discouraged. She feels her insurance provider “will try to wiggle out of anything they can.”

Having a claim denied after receiving care leaves patients and their families on the hook for medical bills they didn’t expect. Nearly 70 percent of people who experienced a claim denial said that the denial cost them or their household more money. Thirty percent reported the denial had led to a delay in their health care, possibly because they were reluctant or financially unable to seek additional care. One in five people said their health problem worsened as a result.

For focus group participants, coverage denials were often a source of financial stress. Some patients who appealed their insurer’s denial said their health care provider had threatened to send their overdue bills to collections while they awaited their insurance company’s decision. They feared that their credit score would suffer if they continued waiting for an insurer’s decision.

I’m very busy right now. I haven’t pursued any avenue. I just paid for [the test]. I didn’t want to; I was afraid, and I haven’t learned much about credit, how it affects me, or whether it affects me. . . . I decided not to proceed with any legal means. I just paid it.

Oscar, a man in his 30s who had a claim denial for lab tests

Coverage denials also affected peoples’ subsequent medical care decisions. Some focus group participants said they were avoiding getting needed medical care because of their coverage denial. Following a coverage denial, one participant stopped seeking care for her ongoing health issue, which remains unresolved. Others are postponing future checkups or procedures because of how uncertain insurance coverage can be. Even just the anticipation of coverage denials and unexpected bills led some participants to avoid seeking care.

I feel like I’ve been unable to address the initial issue. . . . I don’t want to go back [to the doctor] with the very high chance [care] gets denied again.

Mary, a woman in her 20s who had a claim denial for lab tests

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Coverage denials can have serious financial consequences. More than two in five (43%) adults who had a claim denial said the denial caused them or their household to incur medical debt that they are still paying off. More than half of the adults said that their original bill was $1,000 or more.

For many focus group participants, the accumulation of medical debt because of a coverage denial had made them hesitant to get health care again. Worry about financial consequences of additional care further exacerbated the anxiety and stress they experienced.

Denied: Jaime’s Story

Jaime was at dinner with his wife when he lost consciousness. She called an ambulance from the restaurant, and Jaime was taken to the hospital. Arriving barely conscious, he was told the hospital was out of his plan’s network.

“Because of the type of insurance I have, they just said they couldn’t accept me due to the coverage. . . . I had to wait hours for them to call back and forth between the hospital and the insurance company before they finally allowed the hospital to provide coverage for me.”

Jaime’s insurance covered some of his tests at the hospital but not all of them — for example, they covered a magnetic resonance imaging scan but not an electrocardiogram. He said he was convinced that “anything they could find not to pay, basically, they didn’t.” A few months later, Jaime’s insurance notified him that they also would not cover the $3,000 ambulance bill.

Jaime was left with significant medical debt. He makes monthly payments, so the debt doesn’t affect his credit. He worries, however, about future medical bills.

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Even though patients have a right to appeal an insurer’s decision to deny coverage for a health care service, only about half appealed. When asked why they didn’t appeal a coverage denial, many people believed it would not make a difference. Many also doubted they had a right to appeal a decision or expressed confusion about who they were supposed to contact.

Patients in focus groups described a time-intensive, confusing, and highly frustrating process to appeal coverage denials. They often weren’t sure if they should contest the denial with their provider or insurance company, or even why they should have to appeal at all, since the denial was for care their doctor recommended.

[I] gave it my all in appealing the whole situation. . . . I got the run around like, ‘Oh, you need to speak to this person.’ Then they transferred me back to that person and the phone would ring and ring, and I’d give a voicemail and they wouldn’t call me back for two or three days. I’m still fighting with them.

Sally, a woman in her 40s with a claim denial for ultrasound

Several focus group participants felt that appealing a coverage denial would be futile. One thought that insurance companies take advantage of patients’ lack of knowledge about the health system. Many expressed frustration with the lack of transparency from insurers, saying patients “have no clue what’s going to be covered” when a doctor recommends health care. Over time, this pattern eroded participants’ trust in both their health care providers and insurance plans.

I hate the way it felt like I got conned. . . . I think [the insurance companies] know that the average person is not going to ask the right questions or know the right information. They take advantage of that, which I think is terrible, especially . . . those who are elderly or anything like that who don’t have the help or the resources.

Jaime, whose claim for emergency care was denied

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About half of people challenged their coverage denials, but they were not always successful. Among those who challenged prior authorization denials, 30 percent said that their insurer approved the recommended medical care, and a quarter received approval for a different type of care. But in one-third of appealed cases, the insurer continued to deny the care. Nearly 80 percent of people who challenged their prior authorization denial and had received a decision on their appeal at the time of the survey said they waited two weeks or more for their insurance company’s decision.

Among patients and their families who challenged a claim denial, only one-third (33%) said their insurer reduced or eliminated the amount of money they owed. Thirty-six percent said their insurer denied their appeal, similar to the share of people who were unable to reverse their prior authorization denials. More than 60 percent of those who challenged their claim denial and had received a decision on their appeal at the time of the survey said that their insurer took one month or more to reach a decision.

Some focus group participants described a time-consuming and stressful process to appeal coverage denials. They often felt “caught in the middle” between their provider and insurance company as they tried to navigate a system that seemed designed to work against them.

[The insurance company] said, ‘You’ve had enough [physical therapy appointments].’ My physical therapist [says I need more], he’s still arguing for me, but they said no. . . . It’s almost like they will always give you an initial denial and see whether or not you’ll actually fight them on it.

John, who had a prior authorization denial for physical therapy following shoulder surgery

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When asked who they held responsible for their coverage denial, nearly nine in 10 people blamed their insurance company. And many also blamed the health care system in general. Others viewed their providers as responsible for the denial, and more than one in five blamed the government for their experience.

In focus groups, some participants described how their ordeal with a coverage denial caused them to “totally lose trust” in their health care provider or insurance company, particularly when they had been explicitly told by at least one party that their care would be covered. Participants’ frustration with the health care system was palpable, and many remarked that insurance companies or the health system needed to change.

Denied: Nathan’s Story

Nathan didn’t anticipate a months-long fight with his insurance carrier while his wife battled cancer. Early in her treatment, the oncologist ordered genetic testing to look for mutations that would influence her response to therapies. Nathan and his wife were initially told that diagnostic genetic testing would be covered by their insurance, at least partially. But after the testing was completed, they were shocked to learn their insurance would not cover it.

Nathan began the frustrating process of contesting the denial. “You get in this loop of, holy cow, you ask eight people the same question. You get eight completely different answers.”

The couple eventually appealed to the oncologist, who submitted additional information to justify the necessity of the testing. While the insurance company elected to cover part of the testing, Nathan still couldn’t get a clear answer on his final bill amount.

What Can Government Do to Help Consumers?

Prior authorization can be a useful tool for protecting patients from low-value care that provides little benefit or might actually harm them. However, the processes insurers currently use lack clear rationales that patients and their providers can understand. Most troubling is that prior authorization is preventing patients from getting the care they need while placing additional burdens on physicians and their staff.

When asked what policymakers might do to help consumers, focus group participants said there should be greater transparency in insurer decision-making with “no ambiguity” in which procedures are covered. Some participants thought there should be external oversight by “another entity outside the insurers themselves” and said there must be clear reasons “why an insurance company is rejecting coverage, particularly when the test or procedure is ordered or recommended by a doctor.” There was also a desire for transparency to see where their premium dollars were going. Said one participant, “They are not using the money to pay for my care, and that is what frustrates me a lot.”

A Patchwork of Inadequate Laws and Regulations

The United States has a dated and patchwork system of regulations governing coverage denials and patients’ right to appeal them. Denial rules for employer plans have not been updated since 2000.2 In 2010, the ACA extended those rules to apply to all nongrandfathered individual and marketplace plans.3 While the Biden administration issued a new set of regulations on denials in 2024, these apply only to plans that fall under the jurisdiction of the Centers for Medicare and Medicaid Services (CMS), including marketplace plans in the 30 states that use the federal HealthCare.gov platform. They do not apply to employer plans or marketplace plans in states that run their own marketplaces.

Several states have passed laws that go further than federal requirements. States, however, lack jurisdiction over large, self-insured employers, which employ the majority of Americans.

In 2025, the largest U.S. health insurers announced a voluntary commitment to streamline prior authorization processes, including reducing the number of services subject to prior authorization and honoring preapprovals for a set period when people switch health plans.4

Clearly, there is a need to bring order to the fragmented set of laws governing coverage denials. Congress can accomplish this through standardization across all types of insurance and through the expansion and strengthening of rules regarding transparency in coverage decisions, oversight of insurers, and patients’ rights to appeal decisions. Options include:

Expanding the right to appeal. Consumers in nongrandfathered health plans, including employer plans, have the right to appeal coverage denials, and insurers are required to review and reconsider their decisions. If an insurer still denies coverage, patients have the right to an independent third-party review, and the insurer must accept the outcome of that review.

However, federal regulations restrict third-party appeals to denials based on medical necessity, which one study found made up just 5 percent of all denials.5 The majority of denials are for unspecified reasons, administrative issues, excluded services, and lack of referral or prior authorization.6 Consumers would be better served if all denials were eligible for external review.

Standardizing and streamlining prior authorization procedures in all health plans. The Biden administration issued a rule in 2024 seeking to increase transparency and standardization of prior authorization procedures for insurers selling plans in the 30 marketplaces that use HealthCare.gov, as well as those in other public programs.7 Beginning in January 2027, these payers must maintain a secure electronic portal with their list of covered items and services, documentation requirements for prior authorization, and a record of prior authorization requests and responses. CMS recently introduced a new proposed rule that would extend these requirements to prior authorization of prescription drugs.8

The federal government could expand both rules to cover all marketplace and employer plans. It also could require much greater transparency about insurer criteria for selecting services that need prior authorization.9

Learning from states’ approaches to prior authorization. At least 10 states have implemented a “gold card” approach for providers that reach a threshold level of prior authorization approvals. This enables providers to deliver certain services or prescribe drugs without seeking prior authorization.10 Several other states have shortened timelines for insurers to respond to prior authorization requests, required reviewers to meet clinical qualifications, or exempted or limited some services from prior authorization review, such as mental health care or care for chronic conditions. Although these state actions do not affect people in self-insured employer plans, they can inform federal policy.

Funding consumer assistance programs. The ACA authorized Consumer Assistance Program (CAP) grants to help states establish or strengthen services for patients to inform them of their rights and help them resolve health plan disputes. In the first year, CAP grants allowed states to recover more than $18 million for patients.11

Although federal funding for CAP grants has ended, the programs still exist in 31 states and the District of Columbia and continue to save consumers money (for example, Connecticut recovered $4.3 million for patients in 2021).12 Reinstating federal funding could help establish CAPs in the 20 states that currently don’t have them.

Reporting health care claim denials and appeals. The ACA requires all nongrandfathered health plans, including all employer plans, to report data on claim denials, the reasons for the denial, and the total number of denied and appealed claims.13 However, the federal government has limited enforcement to just marketplace plans sold through 30 marketplaces operated by the federal government. The Biden administration’s 2024 rule increases data reporting requirements for these plans, but patients may not be aware that this information is available on an insurer’s website.14 Expanding public reporting of these decisions to include all marketplace plans and employer plans — and making the data accessible and understandable to consumers on publicly accessible websites — would further the public’s understanding of insurer practices.

HOW WE CONDUCTED THIS SURVEY

The Commonwealth Fund 2025 Affordability Survey was administered by SSRS from July 22 to October 27, 2025. The survey consisted of telephone and online interviews in English and in Spanish and was conducted among a random, nationally representative sample of 6,353 adults ages 19 to 64 years living in the United States. The survey interviews were completed via a multiframe approach, which included address-based samples (ABS), prepaid cell phone samples, and the SSRS Opinion Panel. Interviews were conducted online or on the phone via ABS (n=1,794), via prepaid cell phones (n=328), and online via the SSRS Opinion Panel (n=4,231).

The sample was designed to exclude anyone age 65 and older, while also allowing for a sufficient sample of those anticipated to experience more health care affordability challenges (such as coverage denials, billing errors, or medical debt). Statistical results were weighted in stages to compensate for sample designs and patterns of nonresponse that might bias results. In the first stage of weighting, base weights were applied to account for sampling probabilities and were computed separately for each of the three sample frames. The base-weighted samples were combined using a compositing adjustment. Finally, the combined sample was calibrated to match target population benchmarks.

The resulting weighted sample is representative of the approximately 196 million U.S. adults ages 19 to 64. The survey’s margin of sampling error is +/– 1.5 percentage points at the 95 percent confidence level. The ABS portion of the survey achieved a 14.4 percent response rate, the prepaid cell portion achieved a 1.5 percent response rate, and the SSRS Opinion panel portion achieved a 2.5 percent response rate.

This brief focuses on 4,589 adults in the survey with private insurance. The resulting weighted sample is representative of approximately 130.6 million adults ages 19 to 64 with private insurance. The margin of sampling error for the subgroup of those with private insurance is +/– 1.7 percentage points at the 95 percent confidence level.

SSRS conducted eight online focus groups in April 2025, prior to fielding the survey. Six focus groups were in English, and two were in Spanish, with a total number of 45 participants. The focus groups informed the development of survey questions designed to capture people’s experience with coverage denials, billing errors, and medical debt. This brief highlights the experiences of the 27 participants who experienced coverage denials.

3 Health Systems Sue—Accusing CVS Health of Racketeering in 340B

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https://www.healthleadersmedia.com/cfo/3-health-systems-sue%E2%80%94accusing-cvs-health-racketeering-340b?utm_source=HealthLeaders&utm_campaign=b027204dc4-EMAIL_CAMPAIGN_2026_06_09_04_37&utm_medium=email&utm_term=0_adc94e5966-b027204dc4-532959885&mc_cid=b027204dc4&mc_eid=71a6a1464f

As major health systems accuse CVS Health of diverting hundreds of millions of dollars in 340B savings, the litigation highlights a broader challenge for hospital CFOs.

KEY TAKEAWAYS

Increasingly, 340B savings help offset Medicaid shortfalls and fund mission-driven services that operate at negative margins.

CFOs should evaluate whether existing PBM, specialty-pharmacy and contract-pharmacy agreements provide sufficient audit rights and data access.

Future financial risk may stem less from claims denials and more from opaque reimbursement methodologies, spread-pricing allegations and contract-performance issues embedded in complex pharmacy arrangements.

Three major health systems—including affiliates of the University of Michigan, Mount Sinai and the University of Kansas—have individually launched lawsuits against CVS Health alleging that the company and its subsidiaries diverted approximately $250 million in 340B drug-program savings through reimbursement practices that improperly retained funds intended for safety-net providers. The cases claim the alleged practices occurred between 2020 and 2025 and involved what plaintiffs describe as a concealed pricing arrangement that redirected 340B revenue away from hospitals.

However, the significance goes well beyond the courtroom.

The litigation underscores how dependent many health systems have become on supplemental revenue sources to offset chronic Medicaid underpayment and rising uncompensated care costs. The lawsuits arrive at a time when hospital margins remain fragile despite some post-pandemic stabilization, and when many organizations are increasingly reliant on pharmacy operations to support broader community-benefit and clinical programs.

A spokesperson for Mount Sinai commented: 

“Several health care systems across the country, including Mount Sinai, have brought this lawsuit to ensure that the funds that are supposed to be available to mission-driven hospitals like Mount Sinai that serve a disproportionate share of the Medicaid and uninsured population, are not wrongly skimmed off by for profit intermediaries.”

According to the complaints, the hospitals estimate they lost more than half of the 340B savings they should have received during the period in question. One University of Michigan-related lawsuit alone alleges more than $66 million in lost revenue.

This lawsuit highlights that pharmacy revenue has shifted into a deep finance issue.

Historically, 340B was seen as a beneficial and fairly stable funding mechanism, but with the program sitting at the center of disputes involving manufacturers, pharmacy benefit managers (PBMs), contract pharmacies and regulators, are the complications outweighing its worth? The CVS litigation highlights the growing complexity of revenue flows within vertically integrated healthcare organizations, where PBMs, specialty pharmacies and insurers may all participate in a single transaction.

With hospitals already grappling with Medicaid reimbursement rates that often fail to cover the cost of care, any disruption in 340B revenue can create disproportional financial consequences. Since many systems use 340B-generated savings to subsidize behavioral health programs, oncology services, rural outreach, and care for uninsured populations. A material reduction in those funds can quickly translate into operating-budget pressure.

The lawsuits also reveal that CFOs are increasingly scrutinizing third-party contracts for revenue leakage. Several of the complaints allege that hospitals struggled to obtain underlying data needed to audit transactions and verify reimbursement methodologies. The plaintiffs claim requests for transparency and audits were resisted, limiting their ability to independently validate payment calculations.

That issue should resonate across the industry.

As payer-provider relationships become more complex, CFOs may need to devote greater resources to contract analytics, pharmacy revenue-cycle oversight, and independent auditing capabilities. Revenue integrity programs that traditionally focused on claims and denials management may need to expand deeper into 340B administration, PBM contracts, and specialty-pharmacy arrangements.

Whether the hospitals ultimately prevail remains uncertain. CVS has not publicly conceded the allegations, and the claims will be tested through litigation. But the cases reinforce a reality many CFOs already recognize: in an era of Medicaid pressure and thin operating margins, protecting every dollar of supplemental revenue has become crucial. 

In Healthcare: 10 Issues where States are Accelerating Policy Changes

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In Healthcare: 10 Issues where States are Accelerating Policy Changes

In the United States, laws that define how our health system operates have evolved over our 250-year history. They’re built on allopathic medical pedagogy borrowed from our European roots and evolve around clinical innovations and technologies that improve outcomes and extend life.

Historically, federal agencies oversaw its evolution: the Departments of Health and Human Services (providers, insurers, drugs) Justice (antitrust), Federal Trade Commission i(interstate commerce, marketing practices) were primary actors with Agriculture (food supply) and Interior (natural resources) playing support roles. And the federal court system adjudicates challenges. But that’s changing: states are playing a bigger role. State attorneys general and Supreme Courts are pulled in more frequently.

Since the Supreme Court’s 2022 ruling in Dobbs v. Jackson Women’s Health Organization that overturned Roe v. Wade, healthcare issues have become more prominent in state lawmaking. That decision essentially delegated abortion rights to states to handle. And, in HR1 (One Big Beautiful Bill Act 2025), Congress cut federal Medicaid funding by almost $900 billion over 10 years essentially forcing states to find different ways to manage it. Today, Medicaid is 30.7% of the average state’s expenditures with half sourced from state general funds. OB3 will add fiscal pressure to every state.

In Campaign 2026, healthcare referenda will appear alongside candidates match-ups on many state ballots. Candidates in the 36 Gubernatorial/Territorial races and every Congressional race face questions about how they’ll “fix” healthcare. The combination of the public’s discontent with Congress and its dissatisfaction with the health system will prompt states to address a widening range of healthcare issues of consequence to their citizens. For some issues, Governors will issue Executive Orders, for others, referenda will appear on voter ballots and in others, legislation will be approved by their legislatures. The list is long…

  • Expansion of price transparency (PT) requirements for hospitals, insurers and (likely) physician services: Increased stipulations to increase awareness and use of pricing tools beyond current regulations.
  • Limitations on private equity ownership: States may require disclosures of private equity investments and many will seek modification of carried interest, clinical autonomy and governance structures.
  • Scope of practice expansion: States are expanding clinical responsibilities for advanced practice nurses, pharmacists and others to enable access to primary and preventive health services.
  • Prior authorization and payment integrity: States will require insurers to adopt business practices that reduce enrollee and provider challenges, financial shortfalls and disputes. In tandem, states will expand payment integrity alignment with evidence-based practices that reduce unnecessary care.
  • Implementation of site neutral payment policies: Despite federal pushback, states will align with employers and insurers to expand site neutral payment policies opposed by hospitals.
  • Re-calculation of community benefits and limitations on tax exemptions: Large, NFP systems will face state and federal regulatory pressure to forego/limit tax exemptions.
  • Price controls on prescription drugs (above and beyond most favored nation stipulations): States will enact legislation creating Drug Price Control Commissions to limit drug price escalation. In some, importation and restrictive formulary strategies will be enacted/expanded.
  • State constraints on PBM and GPO activity: States will advance business practice restrictions on PBMs and GPOs geared to consumer protections, greater transparency and increased competition.
  • Relief of Stark, Physician Self-Referral Limitations: Some states will expand physician ownership arrangements and enable physicians to compete with hospitals and other providers.
  • Integration of social services with local delivery systems: States will facilitate delivery systems in which public health and provider services are fully integrated and population health management improvement is optimized.

The bottom line:

Total state spending on for healthcare services increased 5.7% to $3.2 trillion in 2025 slightly more than the 38-year average of 5.6%. In fiscal 2025 federal funds to states rose 5.5% following three consecutive years of decreases from fiscal 2022 to fiscal 2024. Thus, states were forced to provide more funding for their healthcare programs even as the U.S. economy sputtered and, most recently, as affordability issues mounted for voters.

Healthcare’s future in the U.S. will continue to be framed by federal policies and the political system from which its laws originate, but its transformational changes will increasingly originate in states where affordability, funding and system effectiveness issues are tackled head-on.

Hospitals Face Rising Financial Risk as ACA Enrollment Falls

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The loss of millions of ACA marketplace enrollees will likely force hospitals to confront a growing share of uncompensated care and rising bad debt.

KEY TAKEAWAYS

ACA marketplace enrollment is projected to fall by 21.5% this year after enhanced premium tax credits expired, with more consumers choosing lower-premium, higher-deductible plans.

Hospitals could face growing financial strain from underinsured patients who carry coverage but delay care or struggle to pay large out-of-pocket costs.

The coverage shifts may disrupt payer mix forecasting, value-based care strategies, and revenue cycle performance at a time when hospitals are already navigating elevated costs.

The expiration of enhanced Affordable Care Act (ACA) subsidies is expected to significantly impact the healthcare coverage landscape, and hospital leaders could feel the downstream effects soon.

Analysis from KFF projects ACA marketplace enrollment could fall by 21.5%, or nearly five million people this year, dropping from 22.3 million to about 17.5 million covered lives. At the same time, consumers who remain insured are opting for higher-deductible bronze plans as premiums climb.

For providers, the shift threatens to create more patients who carry insurance, but with deductibles so high that care is often delayed and collections become more difficult.

According to KFF, the average ACA marketplace deductible jumped 37% year-over-year, increasing from $2,759 in 2025 to $3,786 in 2026, marking the largest increase in marketplace history. Bronze plan enrollment climbed from 30% to 40% of all marketplace selections, while silver plan enrollment dropped from 57% to a record-low 43%.

The enrollment decline largely stems from the expiration of enhanced premium tax credits that had expanded affordability and helped drive marketplace enrollment to record highs over the last several years. KFF estimated that average monthly premium payments rose 58% from $113 to $178 after the subsidies expired.

That fluctuation in affordability could meaningfully change hospital utilization patterns.

Patients facing higher out-of-pocket exposure often postpone elective procedures or avoid preventive services altogether until their conditions worsen. For hospitals already contending with thin margins and persistent costs, a growing population of underinsured patients could create additional pressure on revenue cycles and charity care programs.

The impact could particularly be felt for hospitals serving middle-income populations that previously benefited from expanded subsidies. KFF found that individuals above 400% of the federal poverty level, or the “subsidy cliff” population, accounted for nearly half (48%) of the decline in marketplace plan selections despite representing just 7% of 2025 enrollment.

Hospitals in states that experienced rapid ACA marketplace growth during the enhanced-subsidy era may see the biggest disruption. KFF identified 41 states with enrollment drops, with the largest seen in North Carolina (22%), Ohio (20%), West Virginia (17%), and Indiana, Delaware, and Arizona (all 16%).

The trend could also affect strategic priorities for health system executives, particularly around population health management and value-based care models that depend on stable insurance coverage and consistent patient engagement.

If marketplace depletion continues through the rest of the year, especially as consumers fail to keep up with higher premium payments, hospitals may need to revisit forecasting models tied to payer mix, utilization, and uncompensated care.

KFF noted that effectuated enrollment, which measures consumers who pay their premiums and maintain coverage, could decline between 17% and 26% this year due to midyear attrition and unpaid premiums, based on estimates from Wakely Consulting Group.

As a result, hospitals may invest more in front-end financial screening or Medicaid enrollment assistance and community outreach efforts aimed at preserving coverage continuity.

The concern for hospital leaders is that the coverage shifts come at a time when many organizations are already operating with limited financial flexibility. While hospitals have shown signs of improved operational discipline, many organizations continue to struggle with elevated expenses. Kaufman Hall’s latest National Hospital Flash Report for March found that bad debt and charity per calendar day was up 18% year-over-year, partly offsetting financial progress.

Hospitals Are Operating More Efficiently, Yet Financial Performance Is Still Lagging

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Hospitals reduced expenses and improved throughput in March, but rising uncompensated care and worsening payer mix are limiting margins, Kaufman Hall’s latest data reveals.

KEY TAKEAWAYS

Hospital margins improved in March, but year-to-date performance remains below 2025 levels despite operational gains.

Expenses declined month-to-month, potentially signaling short-term stabilization, though drug and supply costs are significantly higher year-over-year.

Health systems are being pushed toward targeted resource allocation and outpatient-focused service-line strategies.

Hospitals are showing signs of stronger operational discipline in early 2026, but those gains have yet to translate into meaningful financial growth.

While margins improved modestly and expenses dipped slightly month-to-month in March, hospitals continue to face persistent pressures like an eroding payor mix and a rise in uncompensated care that are offsetting operational progress, according to Kaufman Hall’s latest National Hospital Flash Report.

The average monthly operating margin, inclusive of health system allocations for the cost of shared services, increased from 1.8% in February to 2.9% in March. That jump pushed the adjusted year-to-date operating margins to 1.7%, up from 1.3% in February. However, Kaufman Hall’s data shows hospitals are well below 2025 levels overall, highlighting that recent gains have not been enough to reverse financial headwinds.

Expenses declined across the board on a month-to-month basis, suggesting some short-term stabilization after earlier increases. Decreases were seen in total daily expenses (4%), daily labor expenses (2%), daily non-labor expenses (5%), daily supply expenses (1%), daily drug expenses (1%), and daily purchased service expenses (8%).

Still, costs remain elevated on a yearly basis, particularly related to drugs (10%) and supplies (11%). Even with the March dip, expense relief has been uneven and not yet sustained enough to materially improve margins.

At the same time, hospitals continue to demonstrate incremental operational improvements. The report found a 2% reduction in average length of stay month-over-month and a 3% drop year-over-year. Meanwhile, daily outpatient revenue stayed flat in March but rose 12% year-over-year, indicating efforts to improve throughput and shift care to lower-cost settings. Adjusted discharges increased 4% year-over-year in March, and equivalent patient days per calendar day fell 3% month-over-month and 2% year-over-year, pointing to gains in capacity management and patient flow efficiency.

Less encouragingly, hospitals are still contending with higher levels of bad debt and charity care, which jumped 18% year-over-year, reflecting a worsening payer mix and ongoing challenges with government payers relative to commercial reimbursement.

“Hospitals continue to see the effects of payor mix erosion and cost pressures,” Erik Swanson, managing director and data and analytics group leader at Kaufman Hall, said in a statement. “Proactive steps to strategically allocate resources and manage spend, through areas such as length of stay, outpatient care and growing expenses, will continue to be key.”

Regional variation is also a defining feature of the current environment. The Northeast posted margin improvement despite historically weaker financial performance, while hospitals in the West saw the most pronounced increases in drug expenses. Those two outliers showcase the uneven cost and revenue forces across markets.

For hospital leaders, the latest data is further evidence that operational improvement alone is unlikely to fully restore margins right now. Many health systems have already spent the past several years striving to improve efficiency in areas like staffing and throughput, meaning future gains may be harder to achieve through traditional cost-cutting alone.

Instead, executives must prioritize more targeted resource allocation and service-line strategy, especially as hospitals invest more in outpatient settings.

Why Atlantic Health’s CEO Is Treating Innovation as a ‘Cultural Shift’

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Saad Ehtisham says the nonprofit health system is looking beyond typical ROI benchmarks for determining worthwhile investments in AI and digital tools for operational growth.

KEY TAKEAWAYS

Atlantic Health views innovation as an organizational and cultural transformation effort rather than simply a technology initiative.

The system’s AI investments are focused on reducing friction across care delivery, including clinician documentation burden and patient scheduling delays.

CEO Saad Ehtisham sees workforce resilience and consumer access as long-term strategic returns, alongside traditional financial performance metrics.

For many health systems, innovation has become shorthand for digital expansion and AI deployment designed to create a return on investment. At Atlantic Health, president and CEO Saad Ehtisham frames that approach in another way.

“We’re looking at innovation much differently than most systems are and not as a tool, but as a cultural shift,” Ehtisham told HealthLeaders.

That philosophy is driving the New Jersey-based health system’s use of technology to improve workflows for clinicians while simplifying access for patients.

Investment, according to Ehtisham, is flowing into ambient listening tools, workflow automation, digital scheduling capabilities, and AI applications aimed at reducing friction across care delivery.

A Happier Workforce is a Better Workforce

One of Atlantic Health’s biggest strategic priorities involves workforce sustainability.

The system has emphasized upskilling employees and encouraging leaders to think beyond traditional operational silos, Ehtisham highlighted. The organization wants managers and staff members to develop enterprise-level understanding that allows them to grow internally rather than looking for opportunities outside the system.

“What we want to do is make sure our team members don’t stay in the vertical expertise that they’re framed in, but they have the ability to cross-train into a different vertical and be able to grow in their acumen,” Ehtisham said.

Technology investments have become integral to that workforce strategy.

Atlantic Health recently piloted ambient listening tools that document physician-patient conversations during appointments. While many organizations evaluate those platforms through productivity or revenue gains, Ehtisham is more interested in the impact on clinician experience and long-term sustainability.

“How does that make our clinicians’ and physicians’ lives a lot easier and their flow throughout the day?” Ehtisham said. “Does that reduce their pajama time where they can spend more time with their families instead of having to be in their computers?”

Atlantic Health is also exploring agentic AI capabilities that can respond to certain administrative patient questions through Epic’s MyChart platform. The goal is to reduce after-hours inbox management that contributes to physician burnout.

“It is increasing the resilience of our physicians and that will in turn increase their ability to want to practice longer and want to be with the system,” Ehtisham said. “So that’s our ROI. And I don’t think you can put a dollar value on that. You probably could, you get a mathematician, you can quantify that through some algorithm. I would rather not.”

That same mindset has influenced nursing operations.

Atlantic Health has deployed robots capable of retrieving supplies and handling tasks that frequently pull nurses away from bedside care, Ehtisham noted.

“Twenty-five percent of the time our nursing or any nurse in any health system is spending is non-patient facing,” he said.

By supplementing those activities through automation, the system can allow its team members to focus on taking care of the patient and performing at the top of their license.

As Ehtisham puts it, staff are more likely to produce 150% output if they’re working at 90% of their capability from a resource intensity standpoint, and happier in what they do.

Pictured: Saad Ehtisham, president and CEO, Atlantic Health.

Opening the Digital Front Door Wider

Atlantic Health’s innovation strategy extends into consumer access.

One of the earliest operational changes implemented under Ehtisham involved measuring the next available appointment within 30 days across clinics and reducing delays that prevented patients from getting timely care.

“That was one operational lever we pulled early on,” he said.

According to Ehtisham, improving appointment access generated gains in consumer experience while contributing to stronger financial performance.

“We’re beginning to see it from consumer experience,” he said. “They’re much happier being able to get in when they want to be seen.”

The system is now experimenting with on-demand self-scheduling capabilities designed to better connect patients with its ambulatory infrastructure.

Atlantic Health continues to expand outpatient locations anchored around primary care as well. Many of those sites include rotating specialty services, imaging, laboratory capabilities, and physical therapy offerings intended to create centralized outpatient destinations.

The organization’s digital ambitions also include patient-facing AI applications.

Ehtisham said Atlantic Health is looking at developing its own version of Claude or ChatGPT, capable of guiding consumers toward the appropriate level of care based on conversations occurring through the platform. He envisions systems eventually using those interactions to direct patients toward physician appointments or virtual visits while simultaneously transferring relevant information into the clinical workflow before the encounter begins.

“We know consumers are going on those platforms and typing in, ‘I have this, what should I be?’” Ehtisham said. “That’s a platform that’s being engineered by non-healthcare providers systems. We’d rather get into that technology.”

Keeping Financial Discipline in Focus

Even as Atlantic Health expands technology investments, Ehtisham acknowledged the tension many health systems face when balancing the pursuit of innovation with financial realities.

“Healthcare is the only place where you bring in technology, the cost goes up versus going down,” he said. “We’re trying to invert that thinking.”

That influences how Atlantic Health approaches vendor relationships and operational deployment. Ehtisham said the system prefers working more deeply with select partners capable of improving workflows end-to-end, rather than as a one-off.

He pointed to operational throughput as one example. The organization is evaluating how technology can reduce bottlenecks beginning in the emergency department and continuing through inpatient discharge processes. Smoother patient flow can improve experience while generating financial yield through shorter lengths of stay, Ehtisham stressed.

“It starts creating this pipeline of revenue streams and future predicted models that’s going to be coming through market share that you’re going to be gaining over time,” he said. “It doesn’t happen overnight. But you have to commit to what you’re trying to do.”

Innovation can’t happen without resourcing though, which is why Atlantic Health has dedicated annual capital dollars specifically toward technology investments tied to operational improvements.

“It’s more of a derivative,” Ehtisham said. “You’ve got to generate so much operating margin in order to invest in that,” creating a direct link between financial discipline and innovation capacity.

Why Hospitals Are Targeting Leadership, Administrative Jobs in Latest Layoffs

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As financial challenges persist and clinical labor remains difficult to replace, many hospitals are turning to restructuring for cost savings.

KEY TAKEAWAYS

Care New England, Washington Regional Medical System, and Intermountain Health all announced layoffs that prominently affected administrative functions.

Hospitals are increasingly embracing “The Great Flattening,” consolidating nonclinical roles to reduce overhead while preserving frontline care capacity.

While leaner organizational structures may improve efficiency and speed decision-making, reducing leadership layers can also create operational strain and place added burden on remaining staff.

Three notable health systems announced layoffs in recent days, and in all three cases, management and leadership roles were largely affected. Even as labor costs continue to climb, clinical talent remains scarce, making administrative jobs often the primary target of workforce reductions.

Healthcare, and hospitals specifically, are not immune to “The Great Flattening” impacting corporate America. Companies across industries have spent recent years trimming down middle management, if not outright eliminating those positions, for the purpose of creating leaner workforce structures and cutting overhead.

In the case of hospitals, many have taken the step to consolidate functions that aren’t directly tied to delivering patient care.

The trend became particularly visible over the past week with Care New England, Washington Regional Medical System, and Intermountain Health all initiating reductions.

Providence, Rhode Island-based Care New England eliminated more than 30 leadership and nonclinical positions as part of a restructuring to address financial pressures and help close an estimated $20 million budget gap for fiscal year 2026. System president and CEO Michael Wagner said in a statement that “current financial conditions have made additional cost-saving measures unavoidable.”

Elsewhere, Washington Regional Medical System announced a restructuring plan that included 86 job cuts through consolidation of management and support functions. “By restructuring our management operations and consolidating roles, Washington Regional will reduce redundancies and optimize efficiency while still providing the high-quality care our community has come to expect,” Lucas Campbell, president and CEO of Washington Regional, said in the announcement.

At Intermountain Health, the 93 positions that were eliminated amid clinic closures and operational changes in Colorado and Montana looked a little different. While clinical roles were affected as part of the restructuring, the organization also pointed to leadership and administrative consolidation to improve efficiency and better align resources.

Though the circumstances surrounding the three systems differed, the overlap across the layoffs was the emphasis on leadership restructuring and administrative streamlining.

The logic behind these restructurings is straightforward: clinical workers are difficult to replace, whereas administrative costs often represent one of the few areas where organizations can still reduce spending relatively quickly.

According to Kaufman Hall’s latest National Hospital Flash Report for March, hospitals are operating more efficiently, but financial performance is still being weighed down by rising expenses. Length of stay, for example, was down 3% year-over-year, indicative of improved throughput. However, that clinical efficiency requires adequate staffing, and that labor is costly, as seen in a 4% rise in labor expense per calendar day year-over-year.

To just maintain their thin margins, hospitals are being forced to cut costs in areas that won’t directly hinder patient flow. That’s why administrative restructuring is often viewed as a less disruptive path toward reducing overhead while sustaining operational efficiency.

The result can also be a faster decision-making structure, allowing organizations to be strategically nimbler during a time when moving slow can leave hospitals behind the curve.

Still, the benefits come at a price. The loss of leadership and management may not be felt in financial performance immediately, but over time, it can create operational strain and place additional burden on remaining leaders and frontline staff.

For hospital executives, the question they must answer is how far their organization can streamline before efficiency gains start to create new organizational pressures.