10 states where hospitals will struggle most if Medicaid is cut: Report

The potential rollback of federal support for Medicaid expansion could significantly hamper hospital revenue — particularly those serving rural or underserved communities — leading to substantial declines in hospital spending and increases in uncompensated care. 

An analysis published March 11 by the Urban Institute and the Robert Wood Johnson Foundation highlights the states that would be most affected by Medicaid cuts and the implications for hospital leaders navigating an increasingly uncertain healthcare landscape.

Currently, the federal government covers 90% of the costs for Medicaid expansion enrollees in the 41 states (including Washington, D.C.) that have opted into the ACA expansion. However, proposed changes by House Republicans could drastically alter this funding model by imposing per capita spending caps, work requirements and reducing the enhanced Federal Medical Assistance Percentage from 90% to each state’s standard Medicaid matching rate, which varies between 50% and 74%.

A federal Medicaid funding cut would likely force some states to drop Medicaid expansion altogether, leading to an estimated 10.8 million more uninsured Americans, according to the analysis. This would have dire financial consequences for hospitals, which rely on Medicaid reimbursements to offset the costs of providing care to low-income populations.

If all states were to eliminate Medicaid expansion due to reduced federal funding, the U.S. would see a $80 billion decrease in overall healthcare spending in 2026. Hospitals would bear the brunt of this loss, experiencing a $31.9 billion reduction in revenue and a $6.3 billion spike in uncompensated care costs, according to the report. 

Researchers found that the following states would suffer the most severe reductions in hospital spending if such Medicaid cuts are implemented:

Click here for more details on the analysis from the Urban Institute and the Robert Wood Johnson Foundation.