A new Commonwealth Fund analysis revealed nearly 3,000 U.S. general acute care hospitals could face significant financial losses due to upcoming Medicaid work requirements set to take effect in 2027. States must establish work requirements for certain Medicaid beneficiaries that need to work at least 80 hours a month, complete community service, participate in work programs, or enroll in educational programs to maintain eligibility.
Projections are these requirements will result in 5.1 to 5.8 million people losing insurance coverage, with only 400,000 to 500,000 transitioning to employer-sponsored or private insurance. This could cost hospitals between $10.9 billion and $12.4 billion in revenue losses. Safety-net hospitals face the most severe impact, with projected operating margin decreases of 25.9% to 29.6%.
Impact on Hospitals and Health Systems
The financial implications for hospitals and health systems are substantial, with projected revenue losses forcing many hospitals to make difficult operational decisions, including staff reductions, payroll cuts, and elimination of clinical services that benefit all patients, not just those affected by the work requirements. Safety-net hospitals, which already operate on thin margins and serve the most vulnerable populations, face the greatest risk of financial instability or potential closure.The increase in uncompensated care costs will disproportionately affect hospitals in states that expanded Medicaid under the Affordable Care Act, as these facilities have grown accustomed to receiving Medicaid reimbursement for previously uninsured patients. This could create healthcare access deserts in already underserved communities and force remaining hospitals to absorb displaced patients, further straining their resources.