Georgia’s cautionary tale for hospitals as Medicaid work rules expand

A new federal law set to take effect in 2027 is raising red flags for hospitals — particularly safety-net and rural providers — as it introduces sweeping changes to Medicaid eligibility.

The One Big Beautiful Bill Act, signed into law this summer, includes a nationwide Medicaid work requirement that mandates adults ages 19 to 64 work, attend school or volunteer for at least 80 hours per month to maintain coverage. While policymakers aim to reduce long-term dependency, hospital industry experts warn the move could significantly disrupt access to care and hospital finances, according to an Oct. 28 report from Kaufman Hall.

Five things to know:

1. Safety-net hospitals face an up to 30% hit to their operating margins on average, but hospitals in certain states and rural areas could be hit even worse. Hospitals in Medicaid expansion states could see operating margins shrink by up to 13.3% on average under the new work requirements, according to a Sept. 18 analysis by The Commonwealth Fund. Safety-net hospitals may see reductions of up to 29.6%, with some rural hospitals facing even steeper declines.

2. In 2023, Georgia launched its own Medicaid work requirement. While state officials lauded the program, a Government Accountability Office report published Sept. 3 found it led to coverage losses without increasing employment. Many beneficiaries were disenrolled due to difficulties navigating reporting systems, leading to higher uncompensated care costs. Georgia reportedly spent twice as much on administration as it did on enrollee care.

3. Kaufman Hall outlines five major challenges for hospitals:

• Financial exposure from increased charity care and bad debt.
• Operational complexity tied to inconsistent documentation and real-time eligibility tracking.
• Reputational risk from care delays or aggressive collections.
• Policy uncertainty amid expiring ACA subsidies and Medicaid DSH cuts.
• Pre–ACA cycle of coverage loss could return.

4. The new policy could mirror the pre-ACA environment, where millions cycled in and out of coverage. Hospitals would be left managing more last-minute denials, self-pay patients and varying state requirements, according to the report. 

5. Though implementation begins in 2027, Kaufman Hall recommends hospitals and health systems begin preparing immediately. Steps include updating financial assistance policies, shoring up eligibility processes, partnering with community organizations for volunteer-hour tracking, and aligning strategies with boards and community stakeholders.

“Hospitals have a choice: prepare now or pay later,” according to the report. Hospitals and health systems that delay may face higher bad debt, reputational harm and reduced flexibility when the new rules take hold.

Click here to access the Kaufman Hall report. 

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