Pennsylvania Fiscal Watchdog Flags Medicaid Losses

June 12, 2026

Pennsylvania’s Independent Fiscal Office (IFO) says Medicaid coverage losses due to last year’s federal budget reconciliation (H.R. 1) have already started, forcing hospitals to absorb more uncompensated care.

In a recent budget brief, the commonwealth’s fiscal watchdog said that even though community engagement requirements for the Medicaid expansion population won’t take effect until January 2027, medical assistance (MA) enrollment has already declined by just more than 3 million residents over the past year.

“Residents who lose MA coverage and remain uninsured will increase costs for hospitals, particularly hospitals that serve a disproportionate share of low-income residents,” the IFO noted.

Here are some key takeaways from the analysis:

• Widespread losses imminent:  Between 280,000 and 310,000 Pennsylvanians are expected to lose health care coverage as a result of changes in H.R. 1, increasing uncompensated care for hospitals.
• Early disenrollments:  The IFO said the early wave of coverage losses ahead of H.R. 1 changes may be connected to Supplemental Nutrition Assistance Program changes that took effect last year and concerns about immigration enforcement.
• State budget savings:  Because the state and federal government share Medicaid costs, coverage losses are expected to generate $220 million to $300 million in savings for Pennsylvania’s state budget, freeing up funds to be invested elsewhere.

HAP has put proposals in front of state policymakers to invest state budget dollars in supporting distressed hospitals and protecting access to care as hospital brace to absorb more uncompensated care and deep cuts to payments that already fail to cover costs. A January report by national consulting firm Oliver Wyman projects that without policy intervention, up to 12–14 more Pennsylvania hospitals could close by 2030 because, even before cuts from H.R. 1, they are already underfunded compared to their peers in other states.

Read the IFO budget brief online.