Providers face $80B losses without Medicaid expansion

Hospitals in 41 states that expanded Medicaid eligibility could lose approximately $80 billion in 2026 following Medicaid funding cuts under the Trump administration, according to a new analysis from the Urban Institute and Robert Wood Johnson Foundation.

In addition to massive revenue losses because of higher uninsurance, providers would also see uncompensated costs increase by $18.9 billion in 2026 if all 41 states and D.C. drop Medicaid expansion.

Hospitals would be hit the hardest by revenue losses, with an estimated $31.9 billion hit. Their burden of uncompensated care would also be the largest at about $6.3 billion.

The Trump administration has proposed substantial cuts to federal funding to Medicaid over the next ten years, including a reduction of the 90% match rate for beneficiaries who gained access through Medicaid expansion in states that chose to increase eligibility.

To date, 41 states and Washington D.C. have expanded Medicaid under the Affordable Care Act (ACA). Medicaid expansion widens eligibility to most adults with incomes up to 138% of the Federal Poverty Level, which was $21,597 for an individual in 2025.

Under the ACA, the federal government provides states with an enhanced Federal Medical Assistance Percentage that boosts the state's general matching rate. State general matching rates vary from 50% to 74% of Medicaid costs.

However, reducing the match rate would significantly impact providers, especially if states drop Medicaid expansion next year because of the loss of the 90% match rate, the analysis showed.

Researchers estimate a 38% increase in uninsured, nonelderly adults if all 41 states (including D.C.) drop Medicaid expansion. This would bring the total of uninsured adults to 39.3 million in 2026 from 28.5 million in 2025, with most of the newly uninsured being adults who enrolled after Medicaid expansion.

They also projected a loss of about 800,000 Medicaid beneficiaries from the reversal of the "welcome mat" effect under which family members of newly-eligible adults under Medicaid expansion rules were more likely to enroll in the program.

Some of the newly insured population would shift to other forms of health insurance coverage, but this shift, coupled with larger uninsured rates, would still lead to a general decline in healthcare utilization and spending across public and private payers. More uninsured people are also more likely to seek uncompensated care from hospitals, researchers explained.

“A funding reduction of this magnitude would not only cause a massive coverage loss but would also be financially devastating for hospitals and other healthcare providers,” Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, said in a statement. “Hospitals are major employers and are often the economic bedrock of their communities. These cuts would have major ripple effects on local economies, especially in rural areas.”

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.