Medicaid Non-Expansion States Face Significant Coverage and Financial Pressures Under New GOP Budget Law
The recent Republican-passed budget law, incorporating many priorities from the Trump administration, poses significant challenges for patients and hospitals in states that have not expanded Medicaid under the Affordable Care Act (ACA). Despite GOP lawmakers in these non-expansion states advocating for a conservative approach to government programs, the new budget law creates burdens comparable to those in states that expanded Medicaid. Georgia, a non-expansion state with just over 11 million residents, is projected to lose ACA marketplace coverage at rates similar to California, which has over three times Georgia's population, according to KFF estimates.
Key provisions of the budget law include increased paperwork requirements for ACA enrollees, reduced enrollment periods, and cuts to navigators who assist with plan selection, all leading to lower enrollment, especially in non-expansion states like Florida and Texas where more residents depend on ACA marketplace coverage. The legislation also cuts federal Medicaid spending by over $1 trillion over the next decade, impacting over 71 million low-income and disabled Americans. Tens of millions of people are forecasted to lose coverage due to these changes.
Though much of the law targets states that expanded Medicaid, non-expansion states face parallel challenges without the benefits of expanded coverage. The potential expiration of enhanced ACA subsidies at the end of the year could intensify coverage losses and premium increases, particularly acute in non-expansion states with a higher share of marketplace enrollees. KFF projects that Florida alone could see 2.2 million individuals become uninsured if subsidies lapse.
The expiration of enhanced subsidies is expected to push ACA premiums up by more than 75% on average, based on KFF analysis, causing some insurers to preemptively raise rates. The Congressional Budget Office estimates that subsidy expiration could raise the number of uninsured Americans by an additional 4.2 million by 2034 on top of losses from the new budget law. This scenario threatens insurance market stability, especially in states like Wyoming with small populations and limited insurer participation.
Hospital leaders and health policy experts emphasize that states refusing Medicaid expansion are confronting significant financial pressures and coverage losses. Many such states also spend less per Medicaid enrollee, offer fewer benefits, and cover fewer populations compared to expansion states, exacerbating access and quality issues.
The budget law reduces Medicaid physician and hospital payments starting in 2028 by phasing down supplemental payment programs until rates approach Medicare levels. For states like Mississippi, which used directed payments to substantially increase Medicaid reimbursements and support rural hospitals, this rollback threatens the financial viability of health care providers.
While a $50 billion federal fund aims to help rural hospitals and clinics offset funding cuts from Medicaid and ACA changes, analyses indicate it will cover only about one-third of rural Medicaid reductions. States such as Florida, Georgia, and Mississippi have also missed out on expanded federal Medicaid funding, which could alleviate some financial strain and improve benefits.
Non-expansion states have historically leveraged uncompensated care pools financed under prior Trump administration policies. These pools fund hospitals for treating uninsured patients but do not provide comprehensive health coverage or preventive care, underscoring a systemic gap in access for low-income populations.
Industry officials highlight deteriorating health care outcomes in non-expansion states due to low Medicaid reimbursement rates, which hinder access to specialty care such as dental and obstetric services. Hospital closures, particularly labor and delivery units, have occurred in places like Florida. These access issues may drive up emergency care costs and overall spending.
State officials in non-expansion states show mixed responses to recent budget changes, with some emphasizing that their Medicaid programs prioritize children, families, and disabled individuals but do not anticipate large immediate impacts. Nonetheless, the long-term fiscal and health system consequences of the federal cuts remain a concern.
The new budget law and the possible end of enhanced ACA subsidies present complex challenges across the U.S. healthcare system, disproportionately impacting states that have opted against Medicaid expansion. These policy shifts highlight the interconnectedness of federal funding decisions, state Medicaid policy choices, insurance market dynamics, and access to care for low-income Americans.