Medicaid Overhaul Puts Millions at Risk as Jan. 1 Rules Near

A deadline 11 weeks away

On January 1, 2027, the biggest change to Medicaid in decades takes effect in every expansion state. Most adults in the expansion population, ages 19 to 64, will have to document 80 hours a month of work, school, community service or other approved activity. If they can't, they must prove they qualify for an exemption. They will also have to re-verify their eligibility every six months, where today it happens once a year.3633 The rules come from the One Big Beautiful Bill Act, which President Trump signed in July 2025. Coverage of the law puts its federal Medicaid cuts at roughly $900 billion to $1 trillion over ten years.1039

The obvious story is who loses coverage. The larger story is the cost of that coverage loss, and who ends up paying it. Hospitals will absorb more uncompensated care. Employers and their workers are already budgeting for the steepest benefit-cost increase in more than two decades. Seniors shopping for Medicare Advantage plans this fall face a headline price drop that hides higher out-of-pocket costs. Taken together, the reporting suggests 2027 will be the year that coverage losses in one program start showing up as higher bills in all the others.

How many people lose coverage depends on which estimate you use

Everyone agrees the losses will be large. The estimates differ widely because they measure different things. The Congressional Budget Office expects the work requirements alone to add 4.8 million people to the uninsured by 2034.33 It projects about 10.5 million fewer people on Medicaid over the decade, with the work rule making up about half of that.38 FactCheck.org, summarizing CBO, says the law as a whole would leave 10 million more people uninsured, 7.5 million of them from Medicaid.10

The Urban Institute's numbers are larger and arrive sooner. It projects that 4.9 million to 10.1 million expansion enrollees could lose coverage in 2028 from the work rule and six-month redeterminations combined. Where a state falls in that range depends mostly on how aggressively it uses automatic data-matching and how broadly it defines exemptions.34 A separate study in the Annals of Internal Medicine looked at all working-age Medicaid adults, not just the expansion group. It found about 8.3 million people who would fall short of the 80-hour threshold, and about one-third of them reported an illness or disability that limits their ability to work.40 NBC News reports the round figure of about 10 million Americans at risk.31

The exact number matters less than how the losses happen. Every analysis points the same way: most people who lose coverage won't be ineligible. They'll be dropped over paperwork. Urban researchers estimate that more than 90% of the expansion adults likely to lose coverage already work, attend school, care for family members or have health problems that should exempt them.32 KFF data show that over six in ten Medicaid enrollees under 65 already work. Fewer than one in ten are out of work for reasons other than caregiving, illness, disability or school.33

The groups at greatest risk show where this paperwork problem bites. Urban projects that adults aged 50 to 64 could see enrollment fall 30% to 65%. Self-employed workers face losses of up to 73%. Students and family caregivers are explicitly exempt or compliant under the law, yet they are still projected to lose coverage in large numbers.34 People ages 19 to 24 often have gig work or move frequently, and 1.1 million to 2.3 million of them could lose Medicaid.36 A study in JAMA Health Forum identified a separate problem: about 2 million employed enrollees may not get enough steady hours to meet the threshold. Women were 22% more likely than men to have hours that were too few or too irregular.39

Early states show what's coming

Nebraska began enforcing the requirements on May 1, 2026, ahead of the federal deadline. State figures released September 29 showed more than 1,000 people lost or were denied coverage between May and August. Advocates expect that number to rise as the state reviews enrollees on a rolling basis.33 Human Rights Watch interviewed a 64-year-old man who said he was dropped while being treated for kidney cancer, even though his health prevents him from working. It also documented a pregnant woman who lost coverage because her pregnancy was overlooked on a form.33 Georgia's longer-running program points the same direction. Over 100,000 people are estimated to be eligible, but only 20,321 were enrolled as of August 2026.33 KFF found the program has cost more than $40 million.32

Federal rules have made the job harder. Human Rights Watch says CMS guidance issued June 1 requires burdensome case-by-case reviews. That guidance also allows people to self-report an exemption only until January 2028.33 Meanwhile, state eligibility offices that are already short-staffed must handle twice as many redeterminations.33 A new $2 million campaign called Keep Your Care, backed by SEIU and two advocacy groups, plans to help enrollees through the process in seven expansion states.37

Hospitals will absorb the cost first

People who lose coverage still get sick. As Rep. Jill Tokuda put it in comments to the Daily Yonder, rural hospitals keep treating patients who lose coverage, and they absorb the cost.6 The law also squeezes hospitals in other ways. It limits state-directed payments and provider taxes, which states use to send extra Medicaid money to hospitals. It also adds new copays starting in 2028 for some enrollees.1 One national estimate cited by the Kentucky Center for Economic Policy projects that lost revenue from the work rule alone could cut hospital operating margins in expansion states by 13.3%.1

Rural hospitals are the most exposed. KFF estimated that the law would reduce federal Medicaid funding for rural areas by $137 billion over ten years. A Manatt analysis put the loss to rural hospitals alone at about $57 billion.10 The law's $50 billion Rural Health Transformation Program mostly cannot be spent on existing services or uncompensated care, and it ends after five years while the cuts continue.10 In Kentucky, the state's projected annual award would offset less than a tenth of the estimated $10.9 billion in rural Medicaid cuts.1 The Center for Healthcare Quality and Payment Reform counts about 700 rural hospitals at risk of closure, 264 of them at high risk. That figure describes hospitals already in financial trouble. It is not a forecast of how many the law will close.9 Researchers told FactCheck.org that predicting specific closures is difficult. They were confident, though, that uncompensated care will rise.10 Hospitals are already cutting services. In the past year, rural hospitals closed labor and delivery units in Georgia and Maine, and one Maine hospital closed entirely.2

The cost spreads to employer plans

This is where the Medicaid story affects people who have never been on Medicaid. Marsh, formerly Mercer, surveyed more than 1,800 employers and projects benefit costs per employee will rise 8.2% in 2027. That is the largest increase since 2003 and the fifth straight year of elevated growth. Without planned plan changes, the figure would be 11%.1118 Other forecasters predict more: Aon projects 9.5%, and WTW projects an underlying trend of 11.1%.14 PwC's survey of health-plan actuaries puts the trend at 9%, the highest in 17 years.17

Most coverage cites GLP-1 drugs, cancer therapies, provider consolidation and AI-assisted billing as the main drivers.1119 Several analyses also point to public coverage losses. Mercer lists reduced government health spending as one of the structural reasons costs are outpacing inflation.11 Benefits advisers note that lower public-program payments push costs onto commercial plans.16 A Kentucky health-policy group says a growing uninsured population shifts unpaid care costs onto people with insurance.15 No survey has measured how much of the 2027 increase comes from that shift. It is reasonable to expect the share to grow as the Medicaid cuts phase in through 2028.

Workers will feel it directly. About two-thirds of large employers plan to raise the share of premiums workers pay, and 59% of employers plan cost-cutting changes such as higher deductibles.12 Aon found workers' total health costs rose 7.9% in 2026, the fastest pace in a decade.14 People buying their own coverage are getting hit harder. ACA marketplace insurers proposed a median 15% premium increase for 2027 after the enhanced subsidies expired.14

Medicare Advantage: lower premiums, higher out-of-pocket costs

Medicare Advantage looks like the exception. CMS projects the average monthly premium will fall from $14.37 to $12, a 16.5% drop. CMS Administrator Mehmet Oz attributed the stability to cutting "handouts to big insurance companies."29 That average is less helpful than it sounds. It includes low-premium special needs plans, which pull the number down. Leerink analyst Whit Mayo estimates the industry-weighted average premium is actually up about 1%. He also finds average out-of-pocket maximums up 10% and Part D deductibles up 30%.26 The median in-network out-of-pocket limit rose from $6,500 to $7,100.21 The Part D out-of-pocket cap also rises from $2,100 to $2,400.22

The average also hides plans that are leaving. Nearly 250,000 Ohioans will lose their current plan. Federal rule changes have reduced options for people enrolled in both Medicare and Medicaid.24 The overall pattern holds here too: premiums stay low while patients carry more of the cost through deductibles and copays.

What to watch

The Medicaid cuts take effect after the November midterms, and both parties are campaigning on rural health care.610 What actually decides how many people lose coverage will happen in state agencies over the coming year. The key questions are whether states automate exemptions and staff up for twice-yearly checks. Urban's analysis finds that even the best-run states will lose millions of eligible enrollees, and that poor execution could double the losses.34 Those losses will show up first as uncompensated care at hospitals and then as higher premiums for people with insurance.