The Perfect Storm of OBBBA and ACA

Hospitals are about to hit a perfect storm of  two powerful climate conditions set both hit in 2026; the One Big Beautiful Bill Act (OBBBA) and revisions to the Patient Protection and Affordable Care Act (ACA).

Together, these laws overhaul Medicaid eligibility, Marketplace enrollment, and subsidy structures beginning in 2026 and 2027 fundamentally altering how hospitals manage a growing population expected to have limited to no coverage resulting in uncompensated care and increasing emergency service utilization.

Enacted as Public Law 119-21, the OBBBA represents the largest Medicaid policy reversal in a decade. Its core provisions include:

• Effective January 1, 2027, able-bodied adults aged 19–64 in expansion states must verify at least 80 hours per month of employment, school, or volunteer activity to maintain Medicaid coverage. For reference 40 states and Washington, DC participate in the Medicaid expansion program.
• States must verify eligibility every six months, instead of annually.
• For expansion populations, the retroactive coverage period shrinks from 90 days to 30 days, limiting hospital reimbursement for newly eligible or reinstated patients.
• Certain lawful immigrants, including some refugees and asylees, will lose eligibility.
• Caps on provider taxes are expected to decrease states’ payments to hospitals and providers.
• Enhanced matching funds from the American Rescue Plan Act expire January 1, 2026, removing the incentive for non-expansion states to grow coverage.
• Federal Medicaid funding is suspended for one year from certain nonprofit reproductive health providers, including Planned Parenthood.

According the AMA, there is an estimated 12–16 million people who are projected to lose coverage nationwide. The highest impact will fall on low-income adults, older pre-Medicare adults, and individuals with disabilities who cannot meet new verification requirements.

Hospitals, particularly rural and safety-net facilities are anticipated to have an increase in self-pay encounters, charity care cases, and extended inpatient stays. For care management teams, this translates to higher discharge complexity and expanded coordination with community agencies and free clinics who continue to deal with anemic operating margins.

In parallel, revisions to the Affordable Care Act will be tightening enrollment and verification procedures:

• Beginning 2026, individuals must verify income, citizenship, and household composition before premium subsidies apply.
• Automatic Marketplace plan renewals will end by 2028, requiring manual re-enrollment each year.
• Changes have been made to special enrollment periods and the open enrollment period.
• Advance payments during pending verification will cease; applicants must pay full premiums until eligibility is confirmed.
• Of much political red/blue debate is the temporary subsidies and expanded tax credits set to expire December 31, 2025.

These changes will also increase the uninsured rate, particularly among lower-income workers cycling between Medicaid and Marketplace eligibility.

Programming note:

Listen live on October 28 when Tiffany Ferguson delivers this report during Talk Ten Tuesday, 10 am Eastern with Chuck Buck and Angela Comfort.