The double-digit hit coming to hospital margins

Modern Healthcare – Friday, September 19, 2025
By Tim Broderick

Hospitals in Medicaid expansion states could see double-digit declines in 2027 operating margins as a result of new Medicaid work requirements, according to a study released Thursday.

The analysis by the Commonwealth Fund, a nonprofit foundation focused on healthcare policy, found that hospitals in expansion states could see their operating margins decrease by 0.4 to 0.5 percentage point, or a drop of -11.7% to -13.3%.

Safety-net hospitals would be among the worst affected, as they treat more Medicaid and low-income patients than other facilities. Rural hospitals also could take a significant hit, the organization found.

For its analysis, the organization examined 2023 hospital cost reports for 2,958 acute-care hospitals in Medicaid expansion states and an Urban Institute projection of the number of people who would lose Medicaid coverage.

In July, the nonpartisan Congressional Budget Office estimated 10 million people will become uninsured and the healthcare industry will lose $1.1 trillion as a result of the tax law signed July 4 by President Donald Trump.

Among states, the Commonwealth Fund found a 0.1 percentage-point decrease in 2027 operating margins in Vermont and Nebraska, and up to a -2.8 percentage-point decrease in Nevada. Washington, D.C., may be hardest hit with a -4.5 percentage-point decrease.

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