California Planned Parentho0od Funding
Key Takeaways: California Governor Gavin Newsom announced a $140 million emergency funding package for Planned Parenthood to keep 109 clinics operating after federal funding was cut by Congress in July 2025. The organization needs approximately $27 million monthly to operate all facilities, with 80% of California Planned Parenthood patients relying on Medi-Cal, making the federal defunding particularly impactful. California joins Washington, Colorado, and New Mexico as states providing public funds to replace lost federal Medicaid dollars, though Planned Parenthood facilities continue facing closures and elimination of primary care services in some counties despite state assistance.
What it means for hospitals and health systems: The loss of Planned Parenthood clinics creates additional pressure on hospitals and health systems to absorb patients needing primary care, cancer screenings, and reproductive health services, particularly in underserved communities already facing provider shortages. Hospitals may see increased emergency department visits and delayed care as roughly 13,000 patients lose access to primary care providers in areas like Orange and San Bernardino counties. The situation highlights the broader vulnerability of safety-net providers that hospitals often rely on as partners in the care continuum, and may force hospitals to expand services or face capacity challenges as displaced patients seek alternative care sites.
KFF 2025 Employer Health Benefits Survey
Key Takeaways: Average annual premiums for employer-sponsored health insurance reached $26,993 for family coverage in 2025, up 6% from 2024, with workers contributing $6,850 toward family premiums on average. Single coverage premiums averaged $9,325, increasing 5% over the prior year, outpacing both wage growth at 4% and inflation at 2.7%. About 19% of large firms now cover GLP-1 drugs like Wegovy for weight loss, though 57% do not cover such drugs and 24% are unsure, with many employers expressing concerns about the high costs of these medications. Nearly three in ten covered workers are now enrolled in high-deductible health plans that qualify for Health Savings Accounts, and 72% face out-of-pocket maximums exceeding $3,000 for single coverage.
What it means for hospitals and health systems: Hospitals face continued challenges as part-time and low-wage workers have limited coverage access, with only 27% of large firms and 18% of small firms offering coverage to part-time workers, creating a larger uninsured and underinsured patient population. Rising deductibles and out-of-pocket maximums mean hospitals will likely see increased bad debt and charity care as patients struggle to afford their share of costs even when insured. The growth of high-deductible health plans and employer concerns about controlling costs may lead to more restrictive networks and coverage limitations that affect hospitals’ contracting and reimbursement, particularly as employers explore strategies to manage expenses like GLP-1 drug coverage through tighter utilization controls.
Key Takeaways: States increasingly use private vendor algorithms to determine Medicaid eligibility for home and community-based services affecting 3 million elderly and disabled Americans, with federal Medicaid cuts projected to reduce funding by $1 trillion over the next decade threatening these optional programs. A new report analyzing five states’ algorithms found wide variation in how eligibility is determined, with some states heavily weighting factors like incontinence while others don’t consider it at all, revealing that decisions are politically motivated rather than based purely on patient needs. Meeting minutes from Nebraska show vendors explicitly recommending that states “tighten up” eligibility criteria to align with less generous states, with one vendor acknowledging that the notion of clear-cut eligibility standards is “a myth” despite public messaging emphasizing validity and reliability.
What it means for hospitals and health systems: With projected $1 trillion in Medicaid cuts threatening home care programs, hospitals will likely face increased admissions and longer lengths of stay as fewer patients qualify for home-based care alternatives to institutional settings. The variability and lack of transparency in algorithmic eligibility determinations means hospitals cannot reliably predict which patients will receive home care authorization, complicating discharge planning and potentially leading to readmissions when patients are denied needed services. As states reduce home care eligibility to control costs, hospitals may see rising emergency department utilization from patients whose conditions deteriorate without adequate home support, increasing uncompensated care burdens particularly as work requirements cause additional coverage losses.
Government Shutdown and ACA Subsidies
Key Takeaways: The federal government shutdown began October 1, 2025, after Democrats refused to pass funding without extending expiring ACA subsidies and Republicans declined to include the extension, with over 32,000 HHS employees furloughed though Medicare and Medicaid benefits continue. Medicare telehealth services for over 6.7 million older adults expired with the shutdown, reverting to pre-pandemic rules limited primarily to rural residents, while community health centers face funding uncertainty.
Enhanced ACA premium tax credits expire December 31, 2025, and KFF estimates this will cause subsidized enrollees’ premium payments to more than double on average from $888 annually to $1,904 in 2026, a 114% increase, with middle-income enrollees above 400% of poverty losing subsidies entirely. CMS temporarily recalled all furloughed employees starting October 27 to support Medicare and ACA marketplace open enrollment periods, paying staff through user fees rather than appropriations.
What it means for hospitals and health systems: Hospitals may experience payment delays and longer wait times for Medicare eligibility processing due to federal furloughs, though core benefit payments continue uninterrupted. The expiration of enhanced ACA subsidies threatens coverage for approximately 2 to 4.2 million people who may become uninsured, significantly increasing hospitals’ uncompensated care burden particularly in states that expanded Medicaid where enrollment growth was strongest.
The loss of Medicare telehealth coverage forces many homebound seniors to seek in-person care, potentially increasing emergency department visits and hospital admissions for patients who cannot easily travel to appointments or who delay care due to access barriers. Disproportionate Share Hospital (DSH) payments that were set to expire October 1 without extension represent billions in critical funding for safety-net hospitals serving high proportions of low-income and uninsured patients.
Key Takeaways: The Social Security Administration announced on October 24, 2025, that Social Security and SSI beneficiaries will receive a 2.8% cost-of-living adjustment for 2026, increasing average retirement benefits by approximately $56 per month starting in January for nearly 71 million beneficiaries. The 2.8% increase is larger than 2025’s 2.5% but far smaller than recent years when inflation was high, with the 2026 Medicare Part B premium projected to jump to over $206 from $185 in 2025, consuming nearly half the COLA increase for average beneficiaries. Many beneficiaries say the COLA adjustments haven’t kept pace with their rising expenses, particularly healthcare costs, as Social Security serves as the primary income source for 40% of older Americans.
What it means for hospitals and health systems: The modest 2.8% Social Security COLA combined with substantial Medicare Part B premium increases means many seniors will have effectively flat or reduced disposable income, limiting their ability to afford higher cost-sharing for hospital services and medications. Hospitals should anticipate increased financial assistance requests and bad debt as beneficiaries struggle to cover out-of-pocket healthcare costs despite the nominal benefit increase.
The gap between COLA increases and actual healthcare inflation may drive more seniors to delay elective procedures or forgo recommended care, potentially leading to more complex and costly acute care episodes when conditions worsen, while also increasing pressure on hospital charity care programs and patient financial assistance policies.
On the Horizon
The shutdown drags on…the House of Representatives is on recess next week. Looks like this Shutdown is going to drag on to November.