The impending cuts to Medicaid funding will pull at the fabric of US communities, health systems, and payers. But strategic collaboration could help mend—or even prevent—some of the anticipated tears.
Currently, 71.3 million people (roughly 20% of the US population) are insured through Medicaid. As a result of $793 billion in reductions taking effect over the next decade, approximately 8 million fewer people will have Medicaid coverage, according to the latest Congressional Budget Office projections. Nearly half of these funding cuts will come through new work reporting requirements and semiannual eligibility redeterminations for adults who were eligible for Medicaid through the Affordable Care Act (ACA) expansion.
The annual impact of these funding cuts will start at $17 billion in 2026, escalating to $165 billion in 2034. Both providers and payers will be heavily impacted by these cuts.
They will result in reductions in revenue and increases in uncompensated care, potentially leading to hospital closures, especially in rural communities. They will also lead to altered care demands and access points, a sicker and higher-risk Medicaid population, and potential state reductions to benefits or managed care rates. And they are already creating turmoil for managed care organizations (MCOs), evidenced by many of them withdrawing guidance as they reassess projections.
Although recovering from these policies will be challenging, health systems and payers have a stronger opportunity to succeed by working together.
Three areas for collaboration that could result in the greatest benefit
While the historical business of healthcare has often led health systems and payers to be at odds, numerous organizations in recent years have found innovative ways to collaborate toward common goals. Building on such models, health systems and payers that partner in three key areas could realize the most benefit for their communities and organizations in the face of significant Medicaid changes:
1. Protect eligibility and access to care by providing navigation support.
For members most likely to lose coverage or churn in and out of Medicaid, payers and health systems can jointly create or enhance navigation supports. Two supports are critical:
- Navigating administrative requirements for insurance coverage, including new work and community engagement requirements and semiannual eligibility verification to maintain Medicaid enrollment.
- Ensuring appropriate care utilization, including prevention, early intervention, and presentation at the proper care setting.
Assumptions:
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Work requirements will take effect for states that have already filed as early as 2026. (This includes Arkansas, Arizona, Ohio, Indiana, Kentucky, and South Carolina. Georgia already has work requirements in place.) While work requirements must be in place by December 31, 2026, some states can show good faith effort until December 31, 2028. This projection assumes a ramp-up of 65% of those who will lose eligibility in 2027, 80% in 2028, and 90% in 2029, with a slower ramp-up after 2029 as all states should have requirements in place.
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Immigrant coverage will be reduced as federal matching would drop for states that cover non-citizens. This begins end of 2026. The majority will lose coverage in 2027, with a ramp-up over 5 years.
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Eligibility redeterminations begin in 2027, with a ramp-up over 4 years.
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The moratorium on the implementation rule happens immediately. This projection assumes a 5-year ramp-up.
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Provider tax caps start in 2028 and reach the final cap of 3.5% in 2032. The resulting loss of Medicaid eligibility would increase between 2028 and 2032.
Source: Chartis analysis of data from: (1) Rhiannon Euhus, et al, “Allocating CBO’s estimates of federal Medicaid spending reductions across the states: Enacted reconciliation package,” KFF, July 23, 2025, https://www.kff.org/medicaid/issue-brief/allocating-cbos-estimates-of-federal-medicaid-spending-reductions-across-the-states-enacted-reconciliation-package/; and (2) Congressional Budget Office, “Estimated effects on the number of uninsured people in 2034 resulting from policies incorporated within CBO’s baseline projections and H.R. 1, the One Big Beautiful Bill Act,” June 4, 2025, https://www.cbo.gov/system/files/2025-06/Wyden-Pallone-Neal_Letter_6-4-25.pdf.
One way to achieve this is for health systems and payers to jointly partner with community organizations to embed eligibility or care navigation specialists in the health system. These specialists can identify and support newly uninsured patients and direct them to free or low-cost care, such as local charitable clinics and prescription assistance programs. In conjunction, health systems and payers can also collaborate on enhanced monitoring, creating automated roster monitoring or real-time alerts for providers when individuals’ Medicaid status changes.
For instance, HealthFirst in New York City operates in-person and virtual community offices, where representatives answer patients’ questions about their plans and programs, assist with enrollment, and help verify eligibility. Parkland Health in Dallas employs patient access staff who review applications and help patients secure Medicaid coverage and charity care.
As a complement to the work of these specialists, setting up a community-based digital support structure could also provide help for this population at scale. For instance, an automated system could prompt individuals to get preventive care at the appropriate time with local low- or no-cost providers. Digital tools could also proactively reach out to individuals who need to prepare for eligibility verification, and artificial intelligence (AI) agents could help guide them through the process. AI can also tailor communications to recipients’ language and reading-level needs, enabling optimal understanding and engagement.
These supports can help patients access preventive, management, or non-acute care before their conditions become acute and costly. In some markets, supporting vulnerable populations in this way could qualify for managed care organizations’ community reinvestment requirements.
2. Improve outcomes and lower costs by collaboratively managing care.
As the uninsured rate increases, providers will see an increased volume of uncompensated care. Meanwhile, the Medicaid risk pool may shift as healthier individuals brought in through expansion become ineligible and the average patients who retain coverage may be sicker or have more complex care needs.
Source: America’s Essential Hospitals, “Additional hospital uncompensated care costs projected under proposed senate revisions to H.R. 1,” analysis of CBO cost estimates and economic baseline, June 2025, https://essentialhospitals.org/wp-content/uploads/2025/06/Additional-Hospital-Uncompensated-Care-Costs-Projected-Under-Proposed-Senate-Revisions-to-H.R.-1.pdf.
Given tight margins across the industry, health systems and payers will need to stabilize spend for these populations while sustainably supporting continuity of care. By proactively managing care together, they can help close the uncompensated care gap, reduce shortfalls, and sustain access to critical services. High-impact options include:
- Proactively connect patients with necessary services. By working together to manage the uninsured population’s care needs, health systems and payers can redirect care to appropriate settings and reduce losses. For example, Carelink in Cook County, Illinois, enrolls uninsured individuals, supports their access to key services, and helps them avoid unnecessary costly care—all while capturing revenue on a sliding scale. Sponsored by the local public health system and administered by its health plan, the program offers discounted primary, specialty, diagnostic, inpatient, and emergency services to reduce barriers to care.
- Optimize enhanced care management programs with providers that have the capacity and resources to best serve complex population segments (e.g., adults or children experiencing co-occurring substance use, other behavioral health, and/or medical conditions). To support these efforts, health systems and payers can collaboratively analyze performance across these programs, identifying opportunities for improvement. They can also evaluate opportunities for payment models that award providers for improved outcomes and/or cost avoidance for high-risk populations or conditions.
- Link managed care organizations’ (MCOs) required community reinvestment dollars to programs that drive down inappropriate, costly, and uncompensated care. These investments must align with state-approved health improvement goals, such as reducing avoidable emergency department (ED) utilization. For instance, HealthChoices MCOs in Pennsylvania partnered with a health system and local housing providers to offer care coordination support, medical respite, and short-term transitional housing for patients who overutilize the ED. Programs such as this have led to a 24% reduction in ED utilization.
- Reinforce the analytics infrastructure and build tools for streamlined data sharing. This could include AI that enables predictive risk modeling on evolving patient needs, proactive patient monitoring, and automated communications and agents that guide patients to beneficial services at the right time.
3. Advocate for Medicaid through data and storytelling.
While current federal law calls for major funding cuts, state policy decisions will also influence the impact at the state level. And even at the federal level, some policies can shift along with public opinion and election cycles. Health systems and payers that come together to share the concrete impact of these policies can become powerful agents for change.
Source: Chartis analysis, August 2025.
As our colleagues at Jarrard Inc., a Chartis Company, recently observed, the healthcare industry can help policymakers and the public understand the true ramifications of policy changes by leveraging hard data and personal storytelling. Sharing data and analytics can quantify the health outcomes and economic impacts for a city, county, state, or region in a very tangible way.
For instance, demonstrating how access will decline may mean identifying specific facilities that will no longer be able to provide services like behavioral health or obstetrics, the number of patients and jobs affected, and the resulting health and economic hardships for those communities.
Getting to know patient stories through community partnerships can identify people who are willing to be the names and faces of those stories—the real human cost. What is the cascading impact of lost coverage on patients’ health, productivity at work, and engagement in the community?
Keeping this story alive in the public consciousness is crucial to influence future policymaking. Organizations that tell this story face-to-face with members of the public and policymakers will be particularly effective. While digital media has its place, direct in-person storytelling can leave a lasting impression.
In particular, the public very strongly trusts voices in whitecoats. In fact, a Jarrard survey of consumers in April found they trust nurses (89%) and physicians (82%) on developing healthcare policy, laws, and solutions far more than their governor (47%) or Congress (25%). Clinicians who are equipped with specific patient stories and the latest data on how these patients represent many more individuals and families in the community can be especially effective at driving home the message.
Health systems and payers that are actively engaged with the public and policymakers on an ongoing basis can influence future policy for the better.
Strengthening the safety net requires collaboration
Access, financial, and operational challenges will be considerable under the new Medicaid cuts. Time is of the essence to help mend the safety net before it’s pulled too far apart.
A new standard of partnership between health systems and payers will be critical for serving patients and sustaining organizations. While joint advocacy could bring about improvements in the future, collaborative models should also lay the foundation for coverage, care, and sustainability in an ever-changing political and financial landscape.
Additional contributors: Dan Delaney, Managing Partner and Leader, HealthScape Advisors; David Jarrard, Chairman, Jarrard Executive Committee; Cindy Lee, Chief Strategy Officer; and Isaac Squyres, Senior Partner, Jarrard
