By Elizabeth O'Brien

If you get health insurance through your employer, you might think proposed Medicaid cuts in President Donald Trump's tax and spending bill would have no bearing on you. But lost Medicaid revenue would push up costs for all Americans, including those with job-based coverage.

A new report from the labor union AFL-CIO highlights how interconnected the U.S. health system is. If Congress passes Republicans' "One Big Beautiful Bill Act," premiums would increase by up to $485 per person a year for the 179 million Americans with employer-based coverage, the analysis finds.

To help pay for tax breaks, the legislation would make nearly $800 billion in cuts to Medicaid over 10 years, according to the latest estimates from the Congressional Budget Office $(CBO)$. The legislation also fails to extend enhanced premium subsidies set to expire at the end of 2025 for Affordable Care Act plans, and the report factors in the impact of that omission as well.

Medicaid covers about one in five Americans, or more than 70 million people, including low-income recipients, people with disabilities, and older adults who meet financial criteria for long-term care coverage. The proposed cuts would cause 7.8 million people to lose Medicaid coverage, according to the CBO. Jointly funded by the federal government and individual states, Medicaid is a major source of revenue for hospitals, providing 19% of reimbursements, according to the AFL-CIO report.

The Affordable Care Act covers about 24 million Americans, and the expiration of the extra financial assistance would cause 4.2 million people to be uninsured in 2034, according to CBO estimates. Provisions tightening requirements for ACA coverage in the bill would also lead to coverage losses. In total, the CBO estimates 16 million people would be uninsured as a result of the bill in 2034.

If the bill passes, uninsured patients would cause a spike in uncompensated care -- care provided by hospitals that they can't get reimbursed for, since the patient doesn't have insurance. Federal law requires hospitals to provide emergency care to patients regardless of their ability to pay. Hospitals would face an additional $63 billion in uncompensated care over the next decade if the proposed cuts go through, according to a separate report by the Urban Institute with support from the Robert Wood Johnson Foundation.

Rep. Brett Guthrie (R, KY), Chairman of the House Committee on Energy and Commerce, which has oversight of Medicaid, has said the bill aims to strengthen Medicaid for America's most vulnerable citizens while reducing waste, fraud, and abuse in the program.

Hospitals have limited options when coping with uncompensated care, says Martie Ross, office managing principal, Kansas City, and director of PYA Center for Rural Health Advancement. One option is to try to negotiate higher rates from their commercial payers -- which in turn increases employers' costs and what employees pay in premiums.

Hospitals without the leverage to do that would see their operating margins dwindle from already low rates, Ross says, noting that 40% of hospitals operate at a loss today. If uncompensated care grows, it might force some hospitals -- especially struggling rural hospitals -- to close their doors, restricting access to care for communities that often have few other options.

Even if hospitals don't shutter completely, reduced revenue could mean more limited hours and less expansive services for all customers, says Tom Leibfried, policy analyst with the AFL-CIO.

"You're going to feel it in terms of your premiums, but many communities will also see a marked reduction in access to care," Leibfried says.

Write to Elizabeth O'Brien at elizabeth.obrien@barrons.com

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June 20, 2025 16:56 ET (20:56 GMT)

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