Hospitals are confronting a new and unexpected pressure point in 2026: Fewer patients losing coverage are transitioning to Medicaid.
The slowdown, emerging alongside ACA exchange attrition, is adding to uninsured volumes and complicating payer mix assumptions for some of the nation’s largest for-profit health systems.
Historically, patients who lose exchange coverage or lack employer-sponsored insurance often transition to Medicaid if they qualify. That pipeline appears to be narrowing, according to executives at four of the country’s largest for-profit health systems: Nashville, Tenn.-based HCA Healthcare, Franklin, Tenn.-based Community Health Systems, Dallas-based Tenet Healthcare and King of Prussia, Pa.-based Universal Health Services.
During HCA’s April 26 first-quarter earnings call, CFO Mike Marks described the Medicaid conversion slowdown as “pretty nascent” — something the company saw late in 2025 that “really popped up” in the first quarter of 2026.
Executives said the shift may be partly tied to immigration-related concerns.
“We largely think about this as people who this year are less willing to fill out Medicaid applications,” Mr. Marks said. “We suspect that could be driven a bit by concerns around immigration and the like.”
“It may not be the full reason why, but that is a piece of the story in terms of the year-over-year growth in slowdown in Medicaid conversion that is impacting our uninsured volume increase,” Mr. Marks said. “Broadly, our budgets and plans for 2026 reflected the payer mix shifts and the patient amount-due collections that we anticipated being impacted by the exchanges.”
Saum Sutaria, MD, chair and CEO of Dallas-based Tenet Healthcare, described similar dynamics in markets with large immigrant populations.
“Especially because we are in a lot of important border communities where we do a lot of work for the broader communities that are there, we do see a little bit of hesitation at times with those populations,” Dr. Sutaria said April 30 during the company’s first-quarter earnings call. “We partner a lot with the important [federally qualified health centers] in those markets, and there is just kind of this tone of hesitation. The impact at the end of the day on the hospitals has been minimal because we are there taking care of people who are sick and have needs.
“But on the outpatient side, for people who are doing more primary care and other things in the community, we are hearing about a little bit more impact and certainly hesitation from coming in to consume care.”
HCA executives emphasized the early-stage nature of the trend.
“We are dealing with some dynamics we haven’t experienced before, and it is too early to suggest that it has peaked or not peaked,” HCA CEO Sam Hazen said. “We just need a little bit more time to judge it.”
HCA, a 189-hospital system, has been the most explicit in quantifying the full-year exchange impact, projecting a $600 million to $900 million adjusted EBITDA headwind for 2026.
The roughly $150 million impact recorded in the first quarter represents only a portion of that range, with executives expecting pressure to build as more patients exhaust grace periods or lose coverage.
Universal Health Services projected a $75 million pretax exchange headwind for the year, assuming a 25% to 30% decline in covered exchange patients. While the company reported a 5% decline in exchange volumes in the first quarter, CFO Steve Filton said the effective drop may be closer to 10% to 12% after accounting for patients who ultimately lose coverage due to unpaid premiums.
“While we could identify a 5% decline in [health insurance exchange] volumes in Q1, we expect some patients recognized as HIX will later be identified as not having coverage due to nonpayment of premiums,” Mr. Filton said, putting the effective first-quarter exchange volume decline closer to 10% to 12% once reserves are applied.
“We continue to believe the decline could reach 25% to 30% for the year. We were not expecting to be at that level in Q1,” he said. There are still dynamics around premium payments and coverage status that we will learn more about over the next quarter or more, and we are being conservative from an accounting perspective.”
Across the sector, hospital executives are maintaining guidance but signaling heightened uncertainty.
Dr. Sutaria described the current environment as a “transitionary period,” in which health systems are relying on cost controls and operational discipline while the full scope of the disruption unfolds.
“There are some coverage changes that are occurring … [and] we will see how all that settles out,” he said. “If you look at our earnings in the first quarter, they were driven by consistency across our markets in terms of efficiency opportunities … and discipline around flexing our cost structure.”
With insurers exiting ACA markets, enrollment shifting toward plans with higher patient cost-sharing and Medicaid conversion rates softening, hospitals are facing a growing share of patients with limited or no coverage.
Visibility into coverage status also remains limited at the point of care, making it more difficult to accurately assess reimbursement risk in real time. As a result, payer mix is increasingly shifting toward uninsured and underinsured patients, a trend likely to continue pressuring hospital margins in the coming quarters.
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