Medicare and Medicaid are the backbone of care delivery in the U.S., covering millions of patients. But it doesn’t stand alone. Hospitals also rely on commercial insurers to do their part. Both are essential to funding healthcare for Americans. But as devastating cuts loom over Medicaid, insurers are using it as an excuse to hoard profits, leaving hospitals and patients to suffer.
With the Trump administration and the Department of Government Efficiency (DOGE) poised to slash $880 billion from Medicaid, the consequences would be severe. Patients would lose coverage, hospitals would be stretched even thinner, and insurers could seize the opportunity to pay out even less while pocketing record breaking profits. Furthermore, a cut to Medicaid is a cut to Medicare. Without Medicaid, many Medicare enrollees—especially those with limited income—would struggle to afford care, risking their health or having to choose between medical care and housing, food and other essentials. Cutting Medicaid would directly harm millions of Medicare enrollees and increase costs for the Medicare program and state budgets.
Medicare and Medicaid aren’t optional for millions of people. They’re the only thing keeping families, seniors, and people with disabilities from medical bankruptcy. As just one example, Medicaid funds nearly half of all births in the U.S. When those funds disappear, hospitals won’t just lose patients. They’ll lose entire service lines.
And it won’t stop there. When Medicaid spending drops, insurers follow suit. Here’s the playbook:
- Lower Medicaid spending reduces per-member costs. That means insurers can justify paying hospitals even less while increasing denials, delays, and out-of-pocket costs for patients.
- Commercial insurers will use the cuts as an excuse to renegotiate contracts, not to make care more sustainable, but to further cut what they reimburse providers.
- Hospitals lose critical funding from both sides. Medicaid funding drops, and insurers refuse to make up the difference through commercial contracts. The result? More rural hospital closures. Fewer service lines. More underfunded children’s hospitals. More patients losing access to care.
Meanwhile, insurers will be doing what they do best: making excuses, dodging responsibility, and inflating profits. They’ll claim hospitals just need to “manage costs” better. They’ll push “efficiency” measures that make it harder for patients to access care. They’ll deny more claims, delay more reimbursements, and squeeze hospitals while pretending their hands are tied.
Make no mistake: insurers aren’t just standing by while the system collapses. They’re accelerating the process.
Hospitals won’t survive by waiting for insurers to “step up.” They never do. Every dollar will be a fight because insurers will do what they always do: deny away while hospitals struggle to stay open.
If insurers won’t pay their fair share, it’s time for lawmakers, patients, and health systems to demand it.
Because this isn’t just about money. It’s about whether patients get the care they need, or if insurers get away with putting profits first, again.
