Fitch Ratings has downgraded the health insurance industry’s outlook to deteriorating from neutral because of rising utilization and Medicaid and ACA cuts proposed in Republicans’ One Big Beautiful Bill Act.
The bill was passed by the House of Representatives on May 22 and included nearly $1 trillion in Medicaid and ACA marketplace cuts over the next decade. The Congressional Budget Office estimates the combined measures could leave 11 million more Americans uninsured by 2034.
The Senate Finance Committee’s budget reconciliation draft, released June 16, aims to rein in Medicaid spending through even tighter eligibility rules, a reduction in provider tax limits and an expansion of work requirements for enrollees.
“While the final form of the legislation remains unclear, we expect meaningful revenue headwinds for payers managing coverage for state Medicaid programs,” Fitch analysts wrote June 17.
Fitch said Medicaid work requirements and more frequent eligibility determinations are expected to significantly reduce Medicaid enrollment, and insurers will begin facing “adverse consequences” to premium revenue over the next year because of the expected expiration of ACA premium tax credits.
“Coverage losses of this magnitude would be unprecedented for our country,” AHIP President Mike Tuffin said in May, noting the potential for an increase in premiums in the individual market and a set back around efforts to tackle chronic disease.
Low- and middle-income individuals are offered premium tax credits to help them purchase health coverage on the ACA marketplace. Originally authorized by the American Rescue Plan Act in 2021, the tax credits were extended by the Inflation Reduction Act through the end of this year. According to CMS, 24.3 million people were enrolled in ACA coverage for 2025, a 13% increase from the previous year.
