The Looming Financial Crisis
Hospitals in states that expanded Medicaid eligibility face a potential $80 billion loss in 2026 due to proposed funding cuts under the Trump administration. According to analysis from the Urban Institute and Robert Wood Johnson Foundation, these cuts would devastate healthcare providers across 41 states.
The financial impact extends beyond direct revenue losses. Providers would also see uncompensated care costs rise by $18.9 billion if all expansion states abandon their programs. Hospitals would bear the heaviest burden, suffering an estimated $31.9 billion in revenue losses plus $6.3 billion in uncompensated care costs.
Understanding Medicaid Expansion
Under the Affordable Care Act (ACA), 41 states and Washington D.C. expanded Medicaid eligibility to adults with incomes up to 138% of the Federal Poverty Level—$21,597 for individuals in 2025. This expansion was supported by an enhanced Federal Medical Assistance Percentage, boosting state matching rates that typically range from 50% to 74%.
The Trump administration has proposed significant cuts to federal Medicaid funding over the next decade, including reducing the 90% match rate for expansion beneficiaries. This reduction would dramatically impact healthcare providers, especially if states respond by abandoning expansion altogether.
Widespread Coverage Loss
Researchers project a 38% increase in uninsured, non-elderly adults if all expansion states drop their programs. This would push the total number of uninsured adults from 28.5 million in 2025 to 39.3 million in 2026.
The analysis also anticipates a loss of approximately 800,000 Medicaid beneficiaries from the reversal of the “welcome mat” effect—where family members of newly-eligible adults were more likely to enroll in the program.
Economic Ripple Effects
While some newly uninsured individuals might find other coverage options, the overall effect would be a substantial decline in healthcare utilization and spending. More uninsured people would inevitably seek uncompensated care from hospitals.
“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,” warns Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. “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.”
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