Five Fast Facts: The Impact of Medicaid Cuts on Pennsylvania

May 21, 2025

By Cameron Brown, HAP policy analyst

Medicaid is a critical component of Pennsylvania’s health care system, providing coverage to approximately 3 million residents across all counties. Proposed federal cuts to Medicaid funding pose significant risks to the state’s health care infrastructure and the well-being of its most vulnerable populations.

1. Coverage losses could be substantial, leaving many people unable to pay

Recent analyses indicate that Pennsylvania is among the states at highest risk for health care coverage losses if Congress’ proposal to enact work requirements for some beneficiaries is approved. Increasing the population of uninsured Pennsylvanians will lead to less healthy communities and fewer options for affordable preventative care, which will dramatically increase uncompensated care absorbed by hospitals that are already struggling financially. This puts access to care for the full community, not just Medicaid beneficiaries, at risk. 

2. Rural hospitals could face closures and service reductions

Proposed Medicaid cuts by Congress could significantly increase uncompensated care, potentially leading to the closure of struggling rural hospitals or reductions in care deemed financially unsustainable. Pennsylvania may lack the resources to compensate for these reductions, threatening access to essential health services in underserved communities. When rural hospitals are faced with rising costs and persistent inflation, even a freeze of state Medicaid financing structures becomes a funding cut that will damage their financial stability.

3. Coverage losses among parents put children at risk

Congress’ proposed Medicaid barriers to access might be targeted towards able-bodied adults, but children in Pennsylvania are far more likely to be negatively impacted. Coverage losses among parents would affect families’ financial stability, and because health insurance coverage gains among parents increase the likelihood that their children are also covered—coverage losses among parents could similarly mean that fewer children will be covered, decreasing access to essential health care for Pennsylvania’s most vulnerable.

4. Economic consequences extend beyond health care

Proposed budget cuts to Medicaid could affect 477,000 health care jobs and the ripple effects they create in the statewide and local economies. When hospitals support 1 in 9 jobs statewide and deliver a $186.5 billion economic impact, the consequences of Congress’ cuts could be especially acute. These negative effects will not be offset by the impact of work requirements, as there is little evidence that those additional rules actually increase employment.

5. Greater administrative burdens could increase costs and constrain providers

Pennsylvania has faced challenges in reassessing Medicaid coverage, with faulty technology and staffing shortages complicating the process. The imposition of additional eligibility determinations and work requirements, both of which are measures that Congress is proposing, will exacerbate these challenges and increase the administrative burden on hospitals and providers. The added regulatory complexity of these new rules could lead to increased costs, eligible individuals losing coverage, and further strain on the health care system.

The bottom line: Proposed Medicaid cuts present significant risks to Pennsylvania’s health care system, economy, and vulnerable populations. Policymakers must carefully consider how crucial Medicaid is for patients and providers alike to ensure the continued provision of essential health services across the commonwealth, and to all Pennsylvanians.

For more information and resources on Medicaid policy in Pennsylvania, visit HAP’s Medicaid Advocacy Hub.