Marketplace Pulse: Medicaid Enrollment Past, Present, Future

The Marketplace Pulse series provides expert insights on timely policy topics related to the health insurance marketplaces. The series, authored by RWJF Senior Policy Adviser Katherine Hempstead, analyzes changes in the individual market; shifting carrier trends; nationwide insurance data; and more to help states, researchers, and policymakers better understand the pulse of the marketplace.

Many are bracing for the impact of substantial coverage losses in 2026, particularly among Medicaid enrollees, with last year’s One Big Beautiful Bill Act projected to cause large reductions in Medicaid enrollment due to the implementation of a national Medicaid work requirement starting in 2027. As a result, approximately 4.6 to 5.2 million adults in the Medicaid expansion population are predicted to lose coverage. These projected impacts will compound and amplify existing negative trends within Medicaid, which has been losing enrollees for several years. A recent analysis describes the context for these declines and the implications for patients, providers, and insurers.  One clear takeaway is that coverage loss among Medicaid enrollees is already well underway.

During the pandemic, states were given additional funding if they maintained continuous eligibility in Medicaid. Enrollment rose, peaking at approximately 94.6 million in mid-2023. The "unwinding" process began at about that time, as states began reinstating eligibility redeterminations. This effort was largely, though not completely, finished by August 2024, by which time Medicaid enrollment had fallen approximately 15%, to about 80 million.

Since then, enrollment has continued to decline, dropping to 76.8 million in October 2025. This amounts to an additional 4% enrollment reduction since the unofficial end of the unwinding period.  And, while nationally, Medicaid enrollment still exceeds pre-pandemic levels, this is not the case everywhere. Enrollment in Medicaid and the Children’s Health Insurance Program (CHIP) among children has fallen below pre-pandemic levels in 20 states. This is the case for adults in 12 states. States with the biggest enrollment losses are primarily in the South and West, and include Montana, New Mexico, Arkansas, and Colorado. 

Signs of coverage loss

As a result of the unwinding process, approximately 25 million people were disenrolled, more than half as a result of administrative or procedural issues rather than a true lapse in eligibility. While many have regained their Medicaid coverage and others were eligible for alternative sources of coverage, survey data suggests approximately one-quarter of those disenrolled became uninsured.  And even if many who lost coverage for administrative reasons have since regained their coverage, this trend has been more than offset by continued enrollment declines. The persistence of net disenrollment from Medicaid is poorly understood, but it may reflect the tail end of the unwinding process, and may also be attributed at least in part to the “chilling effect” of enhanced immigration enforcement. Disenrollment thus far has disproportionately impacted Black and Hispanic enrollees, threatening to reverse recent gains in health equity.  

While the net impact of these trends on the uninsurance rate cannot yet be measured with precision, it is clear that coverage loss has already begun. The inability to pay for care affects individuals and providers alike. People without coverage forgo care, as reflected in a January survey, where 36% of all adults and 75% of uninsured adults reported skipping or postponing care because of the cost. While this negatively affects revenue for doctors and hospitals, free and charitable clinics have reported a surge in demand, with increased volume and waitlists in some centers. The great majority of clinic patients (84%) are uninsured, and more than half are working. A report on hospital charity care and bad debt from December 2025 showed a 10% spike from the year before.

Insurer headwinds

Disenrollment from insurance is almost always selective, as people with more acute health needs will make more effort to hang on to their coverage. Reductions in Medicaid enrollment have thus been accompanied by increased acuity, with exiting members generally being healthier than those who remain. This has had financial consequences for insurers, who argue that rates established by states do not sufficiently account for the changing composition of the membership.

The underwriting margin, a common measure of profitability, measures the difference between revenue and claims after accounting for reinsurance and administrative expenses. A target level for the underwriting margin in Medicaid managed care is between 1-2% of revenue.  Figure 2 shows how the underwriting margin declined along with enrollment, falling from nearly 3% at the height of the Public Health Emergency to -1% in 2024.

An assessment of more recent data showed a similar pattern. The Minimum Loss Ratio (MLR), which simply looks at the relationship between revenue and claims, increased from an average 90.9% in 2024 to 91.2% for the subgroup of states analyzed. In a number of states, insurers were very clearly underwater. In Idaho and Minnesota, the MLR in 2025 exceeded 100%, while in Colorado and Maryland it was above 95%.

Medicaid, until recently, has been seen as a coveted segment for many health insurers, with high and growing volume even if margins are relatively low. Not long ago, insurers were so eager for Medicaid business that it had become commonplace to challenge adverse results of state procurement decisions. With states under unprecedented fiscal pressure and future disenrollment on the horizon, margin problems do not seem likely to go away anytime soon.

Beyond Medicaid, the health insurance sector is generally financially pressured, with both rising costs and increased utilization compressing margins in many segments. Many insurers have initiated layoffs and other cost-cutting measures to reduce administrative costs, but it is not clear that it will be enough to turn this segment around in the short run. There may be changes such as increased risk corridors or other adjustments to the worsening financial climate. There is also the potential for insurer exits, especially by vertically integrated companies that may try to deploy their assets elsewhere. This will not necessarily be beneficial for those insurers that remain. Financial difficulties of health insurers may not elicit mass outpourings of sympathy, but as has been witnessed in many other markets, there will doubtlessly be negative consequences for enrollees and providers as insurers search for additional ways to reduce costs.