Health care outlook: Volatility and potential coverage gaps

Last year saw some of the most significant health care reforms since the enactment of the Affordable Care Act in 2010. The outlook for health care in 2026 will be shaped by the events of 2025, with an environment of volatility and fissures in coverage that will ripple through all sectors of the health care system.

That was among the predictions offered by some advisors at Manatt Health, who gave their outlook on federal health programs for the coming year.

Medicaid spending and funding will be a major theme for public health in 2026, said Melinda Dutton, partner at Manatt Health. H.R. 1, the One Big Beautiful Bill Act, brought about changes in Medicaid provider taxes that will lead to a major portion of funding being taken away from Medicaid. The cuts will impact states as they find ways to make up for that decreased federal funding

“For state policymakers, that’s heavily on their minds. How do they fund that gap?” she asked.

A big focus in 2026 will be on changes to Medicaid eligibility for those who obtained coverage during the COVID-19 emergency – a cohort of Medicaid beneficiaries known as “the expansion group.” Those eligibility changes include implementing work requirements.

“That will be heavy lift at a time when states don’t have the guidance and have limited resources to do this,” Dutton said.

Affordability is an issue

The expiration of enhanced premium tax credits on Dec. 31 led to what Ellen Montz called “a jump off the affordability cliff” for ACA coverage. After four years of double-digit growth in the ACA marketplace, the market saw a 5% drop – about 1 million lives – in enrollment for 2026.

Montz, who is Manatt Health managing director, said she predicts ACA enrollment will continue to drop. “Millions who were auto-enrolled for 2025-26 will likely not be able to afford to pay their first binder premium to stay enrolled,” she said.

In addition, ACA enrollees are opting for skimpier coverage – moving from gold or silver plans to bronze plans – to compensate for higher premium costs. The result, she said, will be lower consumer satisfaction with their plans and lower utilization of care.

Montz said some states have stepped in to fill the gap left by the expired tax credits by offering tax credits on their own state exchanges. But she questioned whether that is sustainable.

Looking ahead to 2026, Montz predicted the following for the ACA marketplace and insurers who offer coverage in that space.

1. A focus on retention. How do you keep the customers you already have in your plan?
2. A resurgence of plans that don’t have to follow ACA rules – such as short-term health plans. However, there is a concern that those plans will skim some of the healthy population out of the risk pool.
3. Marketplaces will focus on the value proposition for consumers.
4. A look at how the ACA marketplaces attract new customers.
5. Future regulations, such as new rules on essential health benefits, medical loss ratios and the end of auto-renewal in the marketplace. These rules will impact whether plans stay in the ACA market.

Medicare looks at costs

Three areas - accountability, cost containment and technological innovation – will dominate Medicare in 2026, said Mandy Cohen, Manatt Health national advisor.

Accountability will include a focus on expanding audits to eliminate fraud in Medicare. Cost containment will center on lowering prescription drug costs. The Centers for Medicare & Medicaid Services recently announced the selection of prescription drugs covered under Medicare Part D for the third cycle of the Medicare Drug Price Negotiation Program.

Technology innovation also ties in with cost containment, she said. Medicare will look for ways to manage its beneficiaries’ chronic diseases by using technology to lower costs.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.