In July 2025, Congress passed the Working Families Tax Cut legislation (WFTCL), also called the One Big Beautiful Bill Act or H.R. 1. This legislation is projected to cut federal Medicaid funding by more than $1 trillion over 10 years and increase the number of uninsured individuals by 10 million in 2034.
In December 2025, Congress also failed to extend enhanced premium tax credits for individuals enrolled through the Affordable Care Act (ACA) marketplaces. The expiration of these subsidies will increase the number of uninsured Americans by an additional 4.2 million people in 2034.
We estimate that these congressional actions will increase hospital uncompensated care costs by $466 billion between 2025 and 2034. These cuts will disproportionately harm essential hospitals, which serve a high share of Medicaid and uninsured patients. Although essential hospitals account for just 6% of acute-care hospitals nationwide, we estimate they would bear 25% of the added uncompensated care costs.
These policy changes will affect hospital uncompensated care costs in two ways:
- As the number of uninsured people rises, hospitals will face higher unpaid care costs for uninsured individuals.
- Reduced Medicaid payments will increase hospitals’ Medicaid shortfall—the gap between the cost of caring for Medicaid patients and the payments hospitals receive for those services.
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