The proposed spending package from President Donald Trump will negatively impact Medicaid insurers through increased administrative costs and tighter eligibility standards according to industry experts. The bill requires states with Medicaid expansion under the Affordable Care Act to verify work requirements for low-income adults every six months.
The Medicaid market faces potential operational challenges and enrollment reductions for UnitedHealth, CVS’s Aetna, Centene and Molina due to this policy change. The two companies face significant risk from this policy change because Medicaid plans generate almost all of their business and most of Centene’s revenue.
The work verification requirement presents an implementation challenge for state Medicaid offices because they lack sufficient resources according to industry analysts who predict the 2026–2027 rollout. The Congressional Budget Office predicts that 7.8 million people will lose their health insurance coverage by 2034.
Insurers will either withdraw from unprofitable markets or concentrate on maintaining their healthiest members by offering better benefits. The new requirements might force some insurance companies to take on sicker patients who demonstrate better ability to comply with the new rules.
Insurers will face additional margin pressure because federal payments to states are expected to decrease while reimbursement rates will decrease. According to Jeff Jonas of Gabelli Funds carriers will withdraw from markets unless they maintain scale and strong profit potential.
