Hospitals Brace for Uncompensated Care Surge Amid Push to Reshape Medicaid and ACA

As the House’s so-called “Big Beautiful Bill” barrels toward a Senate showdown, a new Congressional Budget Office (CBO) analysis confirms what many health system leaders feared: this legislation is not just a political stunt. It is a systemic disruption to health coverage, Medicaid financing, and hospital solvency.

The bill, officially H.R. 1, passed the House on May 22. It combines sweeping Medicaid changes, cuts to ACA-related subsidies, and a new moratorium on provider tax arrangements. The result, according to the CBO’s June 4 projection, is that 16 million additional people would be uninsured by 2034 if the legislation and its accompanying rule changes are enacted. Of that total, 10.9 million would lose coverage solely because of provisions within H.R. 1.

This is not just a coverage issue. It is a direct blow to hospitals’ financial models, particularly those that depend on Medicaid reimbursement and subsidies to offset uncompensated care.

Medicaid Work Requirements and the Disenrollment Trap

Among the most damaging provisions is the proposed imposition of work requirements for Medicaid enrollees. The CBO estimates that 7.8 million people would lose coverage under this policy alone. Despite Republican claims that such requirements would promote employment and personal responsibility, decades of evidence show they are a thinly veiled disenrollment mechanism.

The Kaiser Family Foundation has extensively studied Medicaid work requirements, most recently in Arkansas, where over 18,000 individuals lost coverage before the policy was blocked by federal courts. The majority were not noncompliant but caught in documentation failures, lack of internet access, or misunderstanding of the rules (KFF analysis).

These administrative burdens often hit the most vulnerable: those with unstable housing, irregular work, or chronic illness. Few of them gain employer-sponsored coverage once disenrolled. As the CBO noted, none would be eligible for ACA subsidies under the bill’s framework.

The Provider Tax Moratorium and State-Level Medicaid Chaos

Another under-discussed provision is the bill’s moratorium on new or increased provider taxes. These taxes are a linchpin of how states finance Medicaid. They allow states to collect funds from hospitals and nursing homes and then use that money to draw down matching federal Medicaid dollars.

According to the Medicaid and CHIP Payment and Access Commission (MACPAC), over 40 states use provider taxes as part of their Medicaid financing structure. Banning these mechanisms would force states to either reduce provider payments, cut benefits, or limit enrollment.

The CBO projects that the moratorium would alone cause 400,000 people to lose coverage by 2034. But that estimate may be conservative. States under fiscal pressure could enact even more severe cuts, especially in already underfunded programs such as behavioral health and rural health access.

Hospital Bottom Lines Are Not Ready for This Wave of Uncompensated Care

Uninsurance is not an abstract policy outcome. It translates directly into higher uncompensated care burdens, especially for hospitals in Medicaid expansion states and those serving low-income populations.

The American Hospital Association (AHA) has already flagged concerns about the projected increase in uninsured patients. A 2023 AHA report found that hospitals provided over $45 billion in uncompensated care in 2021 alone (AHA data). That number would likely climb substantially under H.R. 1, eroding the modest margin gains hospitals have made post-pandemic.

Hospitals are also staring down a future with fewer federal supports. If the ACA premium tax credits expire at the end of 2025, as current law dictates and the bill fails to renew, the loss of subsidies would further thin insurance coverage for millions in the individual market. The Urban Institute estimates that without these subsidies, premiums would rise by over 50 percent for many lower-income enrollees (Urban Institute brief).

A Senate Reckoning That Could Redefine Medicaid for a Generation

While President Trump has urged Senate Republicans to pass the Big Beautiful Bill before July 4, resistance is mounting. Senate moderates are balking at the scope of the Medicaid cuts and the projected deficit increase. Hospitals, patient advocates, and state Medicaid directors are mobilizing against the legislation, warning of its destabilizing effect on access, state budgets, and provider networks.

If enacted, H.R. 1 would fundamentally reshape the U.S. healthcare safety net—not through innovation or value-based redesign, but by reviving failed policies and stripping away essential financing tools.

For hospitals, this is not a political debate. It is a financial and clinical crisis in the making. Margins may be recovering, but the proposed policies in H.R. 1 would leave too many patients uninsured, too many providers underpaid, and too many communities without a functioning healthcare safety net.