Federal Cuts to Medicaid and ACA Will Raise Costs, Increase Uninsured

The recent health care legislation significantly reduces federal funding for Medicaid and Affordable Care Act (ACA) insurance by approximately $911 billion over the next decade, marking the largest cuts in U.S. health care funding history. These cuts are projected to leave around 16 million Americans without health coverage, leading to decreased use of preventive care and a rise in emergency room visits.

This shift results in increased uncompensated care costs for hospitals and community clinics, which consequently pass these costs on to commercial insurers, causing a rise in premiums for all insured individuals. One critical provision in the law is the introduction of work requirements for Medicaid recipients aged 19-64 without dependents, mandating 80 hours per month of work, community service, or qualifying education. However, experience from states like Arkansas and Georgia indicates that these requirements have led to significant coverage loss mainly due to administrative challenges rather than non-compliance. Additionally, the elimination of provider taxes, which fund essential state Medicaid programs by enabling higher federal matching funds, is expected to severely impact state health care budgets, compelling cuts to provider payments, eligibility, and covered services.

California, heavily reliant on these provider taxes, anticipates an increase in uncompensated hospital care costs by $9.5 billion over the next ten years, threatening the viability of community clinics, public hospitals, and behavioral health services. Industry leaders advocate for policy adjustments to ease implementation, minimize harm, and foster patient engagement while emphasizing the need for innovative, sustainable strategies to stabilize and equitably serve vulnerable populations dependent on public health insurance programs. Overall, this legislative shift emphasizes substantial challenges within the health insurance, regulatory, and provider sectors, highlighting critical areas for strategic response and compliance oversight.