Brief Health Care Providers Would Experience Significant Revenue Losses and Uncompensated Care Increases in the Face of Reduced Federal Support for Medicaid Expansion
Results by State and Substate Region, Under the Scenario Where All States Drop the Medicaid Expansion
Fredric Blavin, Matthew Buettgens, Michael Simpson
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Currently, the federal government pays 90 percent of costs for Medicaid enrollees who are eligible under the Affordable Care Act’s (ACA) Medicaid expansion in all 41 states (including DC) that chose to expand eligibility. However, GOP leadership in the House has proposed substantial cuts in federal funding to Medicaid over the next 10 years, potentially including per capita caps, work requirements, and a reduction of the 90 percent match rate (known as the enhanced Federal Medical Assistance Percentage, or FMAP) for the ACA expansion population to each state’s general matching rate.

This brief focuses on the effects on providers, through reductions in health care spending and increases in uncompensated care, under the scenario where all states drop the ACA Medicaid expansion in response to the loss of the enhanced FMAP. We also estimate the change in spending at the state and substate levels.

Why This Matters

Because lower spending on health care services means lower revenue for health care providers and fewer services rendered, the resulting decline in revenue could have adverse consequences for providers and their communities, particularly for hospitals that are already financially at-risk.

What We Found

If all states drop the Medicaid expansion, the following can be expected:

  • Spending on health care services would decrease by nearly $80 billion, with declines varying significantly within and across states.
  • Spending on uncompensated care on behalf of uninsured people would increase by $18.9 billion in 2026 in response to declines in health insurance coverage.
  • Among all provider types, hospitals would face the largest revenue losses ($31.9 billion) and burden of uncompensated care increases ($6.3 billion).
  • Additionally, $20.9 billion less would be spent on prescription drugs; $20.7 billion less on other health care services, such as dental care, home health care, and services delivered by providers other than hospitals and office-based physicians; and $6.4 billion less on services provided by office-based physicians.

How We Did It

We simulated health insurance coverage, provider revenue, and uncompensated care costs using the Urban Institute’s Health Insurance Policy Simulation Model.

Additional Materials

A separate appendix table includes projections of total health care and hospital spending with and without the Medicaid expansion at the substate level.
Research and Evidence Health Policy
Expertise Aging, Medicare, and Long-Term Care Health Care Coverage, Costs, and Access Modeling Federal and State Health System Reform
Tags Medicaid and the Children’s Health Insurance Program  Health care delivery and payment Health insurance Health care spending and costs Data analysis Health Insurance Policy Simulation Model (HIPSM) Medicaid Analysis to Inform 2025 Reconciliation