1314 Results found.
2026 Marketplace Open Enrollment: Where the Numbers Currently Stand
On January 28, 2026, the Centers for Medicaid & Medicare Services (CMS) posted a detailing 2026 Open Enrollment (OE) results. Although this report is neither a complete nor final picture of 2026 Marketplace enrollment activity, it is likely to be the last OE data CMS publishes for some time. A comparison of 2026 and 2025 Open Enrollment results can be found in Table 1.
Table 1. Comparison of 2026 and 2025 Open Enrollment
| 2026 | 2025 | Net Change | |
| Total | 22,973,219 | 24,166,491 | (1,193,272) |
| New Consumers | 3,382,189 | 3,938,907 | (556,718) |
| Returning Consumers | 19,591,030 | 20,227,584 | (636,554) |
A summary of our analysis on these 2026 OE results and how they compare with 2025 data can be found below. This analysis builds on the findings in Wakely鈥檚 from January 2026.
- Overall, topline plan selections are down from last year. Total enrollment decreased by 5%, with new enrollment down 14% and renewals down 3%.
- State-based marketplace (SBM) enrollment declined modestly, but the data are as of January 10, and many SBMs are continuing to enroll people through the end of January.
- New Mexico plan selections increased by 14% over last year, the largest increase of any state, driven by state-funded subsidies mirroring the expired enhanced premium tax credits (ePTCs).
- Georgia plan selections decreased by 14%, the largest SBM year-over-year decline.
- The federally facilitated marketplace (FFM) experienced an overall decrease of 5%. FFM data are as of January 15 and therefore measures plan selections after the OE period has ended. Within the FFM, state-by-state results varied significantly.
- Texas led all FFM states with a 5% increase, whereas Ohio and North Carolina experienced 20% and 22% decreases in enrollment, respectively.
- Some of this variation is surprising and not readily explainable from the available data and will be a focus of future 红领巾瓜报 and Wakely analyses.
- The data include neither effectuated enrollment nor paid enrollment鈥攄ata which will be key to fully understanding 2026 enrollment trends and the impact of changing federal policies, including the ePTC expiration and changing eligibility standards introduced in 2026 as the result of P.L. 119-21 (OBBBA).
- from SBMs suggest significantly higher rates of cancellations and disenrollments than in previous years.
- SBMs are also sharing that they expect high rates of affordability-driven voluntary and non-payment terminations throughout the first half of 2026.
- Monitoring paid enrollments, attrition, and grace period dynamics, including retro-terminations, will be key to understanding market dynamics and 2027 pricing.
红领巾瓜报 and Wakley experts have considerable experience working with states, insurers, and federal policymakers with jurisdiction over the Marketplace. We work with these entities to inform, analyze, and influence federal policies and conduct impact analyses on pricing, enrollment, administration, and operations. 红领巾瓜报 also provides strategic and project management support for the implementation of finalized policies.
Please contact Taylor Gehrke at [email protected], Michael Cohen at [email protected], or Zachary Sherman at [email protected] with questions, follow-up, or if you would like expert assistance exploring any of the issues discussed in this post.
Related Resources:
- Upcoming Webinar February 4, 2026 at 12pm ET: 2027 ACA Considerations: Proposed NBPP and Other Key Changes and Trends
Medicaid Changes in the OBBBA and Implications for the Marketplace and Individual Market in 2027
In recent years, the individual market has undergone significant disruption. The expiration of enhanced premium tax credits (ePTC) at the end of 2025 and sweeping eligibility changes under the 2025 Budget Reconciliation Act (OBBBA) have reshaped鈥攁nd will continue to reshape鈥攖he individual market.
The number of changes facing states and issuers in coming years are significant. As a result, it is unsurprising that discussion and analysis on the individual market impacts of the new Medicaid requirements is limited and expected to result in large numbers of Medicaid beneficiaries being disenrolled. Between community engagement requirements (i.e., work requirements), increases in eligibility checks, and loss of eligibility for certain immigrant population, the expectation is that millions of people will leave Medicaid in 2027.
This brief explores how these coming changes will reshape coverage pathways and costs, and examines implications for consumer affordability and churn, issuer pricing and risk pools, and state administrative burdens鈥攁longside strategies for states, issuers, and policymakers to mitigate adverse effects.
CMS ACCESS Model: A New On-Ramp to Outcomes-Based, Tech-Enabled Care in Traditional Medicare
The Centers for Medicare & Medicaid Services (CMS) Innovation Center recently published applications for its new (Advancing Chronic Care with Effective, Scalable Solutions), a 10-year voluntary initiative beginning July 2026. The model is designed to advance outcomes-based, technology-enabled care delivery in Original Medicare and aligns with the Innovation Center鈥檚 priorities of strengthening prevention, empowering beneficiaries, and promoting performance-based competition. ACCESS is particularly suited to organizations with mature clinical operations and data infrastructure, offering a new pathway for tech-supported services.
This article summarizes the model鈥檚 design, highlights key considerations for prospective applicants, and addresses common questions our Medicare and technology experts fielded during a recent Health Management Associates (红领巾瓜报)/Leavitt Partners webinar.
What the ACCESS Model Is Testing
ACCESS evaluates whether Outcome-Aligned Payments (OAPs)鈥攔ecurring payments contingent on measurable clinical improvement鈥攃an reduce spending while maintaining or improving quality for beneficiaries with chronic conditions. The model tests whether incentivizing technology supported care can produce reliable clinical outcomes while complementing traditional care delivery.
Who may participate? Organizations must be Medicare Part B鈥揺nrolled providers or suppliers (excluding DMEPOS [Durable Medical Equipment, Prosthetics, Orthotics, and Supplies] and labs). Participants may enroll beneficiaries directly, operate across multiple clinical tracks, and manage all qualifying conditions within each selected track. Beneficiary participation is voluntary, and individuals may switch ACCESS participants every 90 days.
Clinical tracks. At launch, the four clinical tracks reflect high-prevalence chronic conditions with established care pathways and strong evidence for technology-supported interventions:
- Early Cardio-Kidney-Metabolic (eCKM)听
- Cardio-Kidney-Metabolic (CKM)听
- Musculoskeletal (MSK)听
- Behavioral Health (BH)听
Payment. OAPs vary by track and performance period. CMS pays a portion prospectively each quarter and withholds 50 percent pending reconciliation based on:
- Clinical outcomes attainment: The percentage of aligned beneficiaries who complete the 12鈥憁onth performance period and achieve track鈥憇pecific clinical targets relative to their baseline.听
- Substitute鈥憇pend test: Ensures beneficiaries do not receive duplicative听fee-for-service (FFS)听services for conditions managed under ACCESS.听
Technology and data exchange. ACCESS takes a tech-forward approach. Key expectations include use of Fast Healthcare Interoperability Resources (FHIR庐) based Application Programming Interfaces (APIs)鈥痜or eligibility, consent, claims sharing, and care coordination鈥攑art of the broader federal push to modernize the health data ecosystem. CMS also plans to publish a public directory that lists participants, tracks, cost-sharing policies, and risk-adjusted outcomes to enable consumer and clinician choice.
Regulatory coordination. To complement ACCESS and expand the pipeline of technology-supported interventions, the US Food and Drug Administration鈥檚 (FDA) (Technology-Enabled Meaningful Patient Outcomes) allows selected US-based digital health device manufacturers to participate while generating real-world evidence. Up to 40 device manufacturers may participate across clinical areas.
This coordinated CMSFDA effort is intended to reduce barriers to innovation and accelerate access to safe, effective digital tools that can support chronic disease management.
Key Considerations for Applicants
Program integrity and fraud/abuse. CMS has emphasized program integrity across Medicare and Medicaid, and ACCESS reflects that emphasis. Applicants and their parent organizations should expect rigorous screening. Participants must also operationalize controls to pass the substitute spend test and maintain auditable evidence of outcomes and beneficiary consent.
Overlap with Accountable Care Organizations (ACOs) and other models. Patients may participate in ACCESS and be aligned with an ACO simultaneously; however, 鈥減articipant overlap鈥� raises important operational and financial issues. ACCESS includes an FFS exclusion policy that prohibits participants or affiliated entities from billing Medicare FFS for any services delivered to the same beneficiaries for the duration of their ACCESS episode. As a result, traditional providers, ACO-aligned clinicians, and integrated delivery systems must assess whether they can segment patient populations or if partnering is more feasible.
Eligibility and clinical scope. ACCESS is focused on relatively stable, chronically ill beneficiaries and excludes those with more acute/severe conditions. Participants must accept responsibility for all qualifying conditions a beneficiary has within a track.
翱耻迟肠辞尘别蝉听辫别谤蹿辞谤尘补苍肠别.听The听ACCESS Model places substantial听emphasis on clinical听performance听and care coordination. Participants听are paid in full only if enough patients hit outcomes targets.听Early cohorts will听likely skew听toward organizations with mature clinical protocols, robust engagement models, and demonstrated outcomes.听Applicants should听be听financially听prepared听to听tolerate withholds, beneficiary switching, and听follow-on听period payment reductions after year one.听
Digital infrastructure and interoperability. ACCESS presumes API-driven data exchange, including consent capture, eligibility checks, claims/clinical data integration, and bidirectional information sharing with the patient鈥檚 broader care team. Applicants should ensure they have a FHIR API server and meet the requirements described in the CMS .
Go-to-market and referral strategy. Beneficiary alignment is voluntary and will be facilitated by CMS鈥檚 planned public directory with risk-adjusted outcomes. Access participants will benefit from strong referral relationships鈥攅specially with ACOs and primary care providers鈥攂oth to enroll eligible beneficiaries and to minimize substitute services. A field strategy grounded in evidence, patient engagement, and interoperability with local providers is critical to success.
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for the first ACCESS Model performance period are due April 1, 2026, with model launch in July 2026; applications submitted later would start January 1, 2027. Because ACCESS is a rolling, decade-long model, some organizations may choose to stage entry.
ACCESS is the most explicit Innovation Center opportunity to date on outcomes-based, tech-enabled chronic care in Traditional Medicare. It offers digital health and advanced care organizations a direct line to FFS beneficiaries with payment tied to results, not activities. Success will favor teams that combine clinical excellence, consumer-grade engagement, and API-level interoperability, as well as manage program integrity, ACO overlap, and beneficiary churn.
For questions or support assessing readiness, developing an application, or operationalizing the model, contact Amy Bassano, , or Kate de Lisle.
CMS Releases 2027 Advance Notice with Medicare Advantage and Part D Rates
The Centers for Medicare & Medicaid Services (CMS) released the on January 26, 2026. The Advance Notice begins CMS鈥檚 annual rate-setting cycle and describes proposed updates to Medicare Advantage (MA) growth rates, benchmark rebasing, risk adjustment, Star Ratings, and Part D payment parameters. CMS previously released a鈥�痠n November 2025 that included policy changes to the Star Ratings system and enrollment policies for MA and Part D starting in contract year 2027. (Read the 红领巾瓜报 (红领巾瓜报) summary here.)
Comments on听the Advance Notice are due February 25, 2026, and听CMS will publish the final CY 2027 rate announcement no later than April 6, 2026.听听
This article provides an early look at the proposed methodological updates and draft capitation rates. Wakely, an 红领巾瓜报 Company, will publish a detailed analysis of the Advance Notice in early February.
Payment Impact on Medicare Advantage Organizations
CMS estimates a national per capita MA growth rate of 5.10 percent from 2026 to 2027, with fee-for-service (FFS) non-end-stage renal disease (non-ESRD) growth of 5.10 percent and FFS dialysis end-stage renal disease (ESRD) growth of 6.17 percent.
The听5.10听percent growth rate reflects projected increases in per听capita听FFS听Medicare spending for beneficiaries who are听aged/have听disabilities听and serves as the primary driver of 2027 benchmark updates, interacting with rebasing and risk adjustment changes to听determine听final capitation payments.听The growth rate听reflects听updates听to听how CMS pays for skin substitutes听in the 2026 Medicare Physician听Fee听Schedule. These updates resulted in significantly lower projected costs听and materially reduced听the growth听rate.听
These preliminary estimates inform the development of MA benchmarks and may change in the final rate announcement.听
Table 1. Estimated Impact of Proposed Payment Changes on Medicare Advantage Plan Payments, CY 2027
| 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 听 Year-to-Year Percentage Change听 | |
| Impact | CY 2027 Advance Notice |
| Effective Growth Rate | 4.97% |
| Rebasing/Re-pricing | TBD |
| Change in Star Ratings | -0.03% |
| MA Coding Pattern Adjustment | 0% |
| Risk Model Revision and Normalization | -3.32% |
| Sources of Diagnoses | -1.53% |
| Expected Average Change | 0.09% |
| Source: Centers for Medicare & Medicaid Services. 2027 Medicare Advantage and Part D Advance Notice. January 26, 2026. Available at: https://www.cms.gov/newsroom/fact-sheets/2027-medicare-advantage-part-d-advance-notice. | |
Medicare Advantage Benchmarks, Rebasing, and Risk Adjustment
The Advance Notice describes CMS鈥檚 approach and changes that will affect payment to plans, including:
- Excluding from the risk adjustment process diagnoses submitted from chart reviews with unlinked claim records. In the Fact Sheet, CMS estimates this change will reduce Part C payments by 1.53 percent.听
- Rebasing听county听FFS听rates for 2027 using 2020鈥�2024 claims data, continuing听CMS鈥檚听practice of updating benchmarks annually to reflect the most current FFS experience. The Advance Notice also reiterates the statutory framework for calculating benchmarks, including applicable and specified amounts, benchmark caps, and quality bonus payments.听
- Updating听the CMS Hierarchical Condition Category (CMS-HCC) and Prescription Drug Hierarchical Condition Category (RxHCC) risk adjustment models and associated normalization factors for CY 2027 and听continuing听to apply the statutory MA coding pattern difference adjustment to account for systematic differences in diagnosis coding between MA and FFS.听
Quality Bonus Payments, Star Ratings, and Part D Updates
CMS states that contracts with 4 or more Stars receive a 5 percentage-point quality bonus, while new and low-enrollment contracts receive a 3.5percentage-point bonus. The Advance Notice also includes updates related to Part C and Part D Star Ratings measures and methodological refinements.
For Part D, CMS outlines proposed updates to the defined standard benefit parameters for CY 2027, as well as changes to Part D risk adjustment, normalization, premium stabilization, reinsurance, and risk-sharing, with additional policy context provided in the Contract Year 2027 Medicare Advantage and Part D proposed rule.
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The CY 2027 Advance Notice provides early signals on benchmark growth, rebasing, and payment methodology changes that will shape MA and Part D payments听in听2027. Stakeholders should begin evaluating the potential implications for bid development, benefit design, and financial performance as CMS moves toward听finalizing听rates in April.听
红领巾瓜报 supports Medicare Advantage and Part D stakeholders with payment impact modeling, scenario analysis, and strategic advisory services related to benchmark rebasing, risk adjustment, Star Ratings, and Part D payment policy to help organizations prepare for the CY 2027 rate announcement.
For details about the finalized payment and policy rules,听contact our featured experts,鈥� and听.听
January 28, 2026
CMS Releases 2027 Advance Notice with Medicare Advantage and Part D Rates
Preparing for Change: A Look at Proposed State Fiscal 2027 Budgets
As of January 1, 2026, nine governors had released proposed budgets for state fiscal year (SFY) 2027. With the phase down of federal funding and substantial policy changes approved in the 2025 budget reconciliation act (P.L. 119-21, OBBBA), these proposals offer insights into how governors plan to manage mounting fiscal pressures, navigate new federal mandates, and position their programs for long-term sustainability.
Today, 红领巾瓜报 Information Services (红领巾瓜报IS) published its first preliminary review of proposed SFY 2027 budget proposals. The initial installment includes budgets from Alaska, Colorado, Florida, Mississippi, New Mexico, South Dakota, Utah, Virginia, and Wyoming, with the latter two proposals covering the fiscal 2026鈥�28 biennium.
红领巾瓜报IS will release periodic updates as additional governors publish their budget proposals鈥攖he same rolling approach we used in 2025 (here and here). Because 15 states enacted 2025鈥�27 biennial budgets last year, 红领巾瓜报IS also might review substantial mid-biennium health-related adjustments or supplemental funding.
The remainder of this article provides a snapshot of several notable themes and emerging trends detailed in the full report.
Implementation of New Federal Requirements
State leaders are preparing budgets for SFY 2027 at a time of heightened fiscal stress and structural uncertainty. Entering 2026, governors are facing reductions in federal funding, particularly in Medicaid and Supplemental Nutrition Assistance Program (SNAP) funding. In addition, they are preparing for new federal requirements that will begin to take effect later this year, including narrower flexibilities for financing and Medicaid community engagement policies and more frequent eligibility redeterminations.
Against this backdrop, governors are using FY 2027 budget proposals to comply with OBBBA鈥檚 mandates and to stabilize their safety net programs and realign state operations around stricter fiscal realities.
Medicaid Work Requirements. Virginia鈥檚 proposed budget includes funding to implement federal Medicaid community engagement requirements, including a recommendation to add nine new authorized positions in SFY 2027 and 12 more in fiscal year 2028 to meet workload demands. In addition, South Dakota鈥檚 governor proposed amending the state鈥檚 2026 budget to secure funding to implement these requirements.
Eligibility and Redetermination. Several governors are proposing investments to support heightened eligibility checks across Medicaid, SNAP, and Temporary Assistance for Needy Families (TANF). For example, Colorado Gov. Jared Polis鈥檚 budget proposes $19.1 million to improve the state鈥檚 eligibility system for programs such as Medicaid, SNAP, and TANF. Utah鈥檚 proposed budget includes a recommended allocation of nearly $16.5 million to the Department of Workforce Services for 鈥淗.R. 1 Medicaid Eligibility Administration,鈥� and nearly $10 million for the 鈥淗.R. 1 SNAP Administrative Services.鈥�
SNAP Changes. States are backfilling lost federal funding and investing in error reduction and system modernization. New Mexico Gov. Michelle Lujan Grisham鈥檚 proposed budget, for example, includes $37 million to replace the decrease in federal funding for SNAP administration ($4 million of which will support 150 new full-time positions), as well as $8.9 million for systems improvements to reduce payment errors in SNAP. South Dakota Gov. Larry Rhoden鈥檚 proposed budget includes $5.5 million to offset a reduction in SNAP federal funding.
Strategic Cost Containment
Considering OBBBA implementation and the effects that it will have on their budgets, our first review of governors鈥� budget proposals signals that states are taking an aggressive posture toward limiting expenditure growth in 2026 and 2027. Initial proposals include targeted reductions, tighter utilization management, and restrictions on benefits.
Since the 2025 legislative session, Colorado has taken multiple steps to prepare for declining federal revenue. For example, Governor Polis鈥檚 proposed budget accounts for multiple actions approved through an amended executive order that would reduce spending to brace for OBBBA鈥檚 impacts. Examples include:
- Reducing provider rates to 85 percent of the Medicare reimbursement rate听
- Establishing limits on Community First Choice services听
- Adjusting听the听home health nursing and therapy services payment听methodology听
- Introducing cost controls for Medicaid benefit categories that have shown disproportionate growth听
- Implementing听a听$3,000 annual cap on adult Medicaid dental benefits听and a听$750 annual cap on dental benefits for individuals in the Cover All Coloradans program听
- Changing听the听Cover All Coloradans behavioral health program from managed care to fee for service听
- Reviewing provider fees听in anticipation of听possible State听Directed Payment approval from the Centers for Medicare & Medicaid Services (CMS)听
Former Virginia Gov. Glenn Youngkin鈥檚 budget鈥攏ow inherited by Abilgail Spanberger following her inauguration January 17, 2026鈥攊ncludes multiple cost-containment proposals, such as:
- Anticipated adjustments to capitation rates after a review of Medicaid managed care organizations听
- A $2,000 annual limit on adult dental services Medicaid coverage听
- Elimination of听both听automatic rate increases for psychiatric residential treatment facilities and qualifying听addiction听and recovery treatment services providers听and听automatic biennial inflation increases for听medical听assistance听providers听
- Restrictions on听emergency听maternity services to Medicaid听enrollees听who听are ineligible听for Medicaid听because听of their citizenship status听
- Standardized听hourly limits across home and community-based听services听waivers听
- Actions听related to听鈥渆nsuring appropriate utilization鈥� of services,听such as听applied听behavioral听analysis and crisis services听
States are expected to include additional cost-containment tools throughout 2026 and beyond as OBBBA鈥檚 fiscal effects become clearer over the coming months and years.
What to Watch
The budget proposals indicate the resources that executive agencies need and preview governors鈥� policy agendas for the year ahead. Stakeholders should track program reductions and rate changes, eligibility system investments, and shifts in care models.
In addition, some of the announced budget proposals consider federal awards to states under the Rural Health Transformation Program (RHTP). For example, the Alaska Department of Health budget request addresses the state鈥檚 RHTP implementation plans, and Wyoming鈥檚 budget proposal outlines RHTP priorities. Many states are preparing RFP processes to operationalize their RHTP strategies and make progress on the goals of their initiatives.
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As federal funding uncertainties continue, states and other stakeholders will need to adapt their delivery systems, administrative structures, and financing models throughout OBBBA鈥檚 multiyear rollout. 红领巾瓜报 offers expertise, analytics, and strategic advisory services needed to navigate this evolving landscape. For details contact Andrea Maresca and Kathleen Nolan.
The full state of the states and governor budget report is available to 红领巾瓜报IS subscribers. In addition, 红领巾瓜报IS maintains a that incorporates details of each initiative and the first year award.
Outlook 2026: ACA Marketplace Trends鈥揂 Conversation with Michael Cohen and Zach Sherman
As the 2026 Affordable Care Act (ACA) Marketplace open enrollment period nears its close鈥攁nd with enhanced subsidies expiring, rates shifting, and consumer behavior evolving鈥攓uestions about enrollment stability, affordability, and operational readiness have rapidly moved to the forefront. Andrea Maresca, Senior Principal, at 红领巾瓜报, caught up with Zach Sherman, Managing Director for Coverage Policy and Program Design at 红领巾瓜报, and , PhD, who leads much of the federal policy analysis advanced by Wakely, an 红领巾瓜报 company, to unpack what they鈥檙e seeing so far.
Q: This year鈥檚 open enrollment period has been unusually complex. At the federal level, what stands out most so far?
Michael: The headline is that new enrollment is down sharply, while returning consumers have held steadier than expected. That reflects the reality that the enhanced subsidies are gone, premiums have risen, and consumers are facing higher net costs across nearly every market.
But nuance matters: The real question now is how many of these plan selections will effectuate鈥攎eaning consumers pay their first month premium, and how many will stay enrolled the entire year? Average effectuated enrollment throughout the year is what truly determines 2026 risk mix and market stability.
Q: Enrollment appears to vary considerably from state to state. What are you hearing from state partners?
Zach: It鈥檚 a tale of two markets. StateBased Exchanges (SBEs) are generally seeing less attrition and, in some cases, even modest increases in plan selections. The reason is simple: Many states are doing a lot of heavy lifting to offset the loss of federal support.
For example, SBEs perform earlier and have more customized outreach. We鈥檝e also seen some states step in and offer state-funded subsidies, which are cushioning the affordability loss in places like New Mexico, Maryland, and California.
While still early, the data suggest that states with heavy investment in awareness and enrollment assistance, operational support, and affordability are weathering the transition better because they have more tools to stabilize the consumer experience.
Q: There鈥檚 been a lot of speculation about how consumers are responding to the end of enhanced subsidies. What are the early signs?
Michael: Consumers appear to be buying leaner benefits or different metal tiers to manage premium increases.
Another underrecognized but incredibly important dynamic is that autoreenrolled consumers may not effectuate coverage once they see the final outofpocket premium. That dynamic won鈥檛 be fully understood until March, April, and even May.
Q: Idaho is a particularly interesting early case study. What are you learning from the first state to complete enrollment?
Zach: Your Health Idaho鈥檚 open enrollment finished on December 15, and while they saw a slight increase in plan selections, state officials are not celebrating as they expect a large wave of cancellations鈥攗p to 20,000鈥攄ue to the expiring subsidies.
That鈥檚 the clearest early indication that affordability is the defining issue of 2026. States are preparing for higher-than-usual enrollment attrition in quarters one and two (Q1 and Q2), and they鈥檙e thinking hard about customer service capacity as consumers navigate changing net premiums, increased deductibles and out-of-pocket costs, and nonpayment grace periods.
Q: Are there policy levers states can still pull to mitigate affordability challenges going forward?
Zach: We鈥檙e seeing states explore options for mitigating affordability gaps and enrollment losses, including through state subsidy programs and increased investment in existing reinsurance programs. SBEs are also leaning on their core competencies鈥攖ailored and specific education campaigns and enrollment and plan comparison tools鈥攖o help their customers cut through the noise and navigate to the best option within their budget.
These aren鈥檛 perfect or quick fixes and most states don鈥檛 have the resources necessary to backstop the expiring subsidies, but state leaders increasingly view doing something as necessary to stabilize their markets.
Q: What should health plans, exchanges, and policymakers watch most closely over the next three months?
Michael: Effectuation, effectuation, effectuation. The composition of the effectuated population will define 2026 risk.
Zach: Agree. In addition, future regulatory action on affordability, eligibility and enrollment processes, and program integrity. The federal government is expected to issue its annual payment notice, the proposed 2027 Notice of Benefits and Payment Parameters, in the near future.
You can find more insights on the initial enrollment patterns to date in this 红领巾瓜报-Wakely paper, and register for the 2027 ACA Considerations: Proposed NBPP and Other Key Changes and Trends.
January 21, 2026
Outlook 2026: ACA Marketplace Trends鈥揂 Conversation with Michael Cohen and Zach Sherman
Analysis of the Costs and Medicaid Payment Adequacy for Ground Ambulance Services in New York State
Survey data from fiscal year (FY) 2022 suggest that entities that provide ground ambulance services in the State of New York are experiencing reimbursement challenges. 红领巾瓜报, Inc. (红领巾瓜报), contracted with the United New York Ambulance Network (UNYAN) to conduct an independent study of the costs of delivering ground ambulance services in the state and the adequacy of payment for these critical services. The 红领巾瓜报-UNYAN survey data highlight the wide variation in costs within the ground ambulance industry in New York and the negative Medicaid margins the industry experiences. These data demonstrate that although ambulance entities of all sizes in New York have negative Medicaid margins, these margins worsen as entity size decreases and entities become more rural. Trends in negative margins appear to be linked to some degree to entities鈥� relative share of 鈥渞esponses without transport鈥� or uncompensated transports. This white paper poses important considerations for policymakers.
Outlook 2026: Rural Health Transformation Program
As we kick off the new year,听红领巾瓜报听(红领巾瓜报)听is launching a new series of brief,听insightful听interviews听with our policy experts听on issues听that will define听2026鈥攚hat鈥檚 changing, why it matters, and how federal, state, and industry decisions will shape what happens next.听Building on听our earlier analysis of听the Rural Health Transformation Program听((RHTP),听here听and听here), this week, we听start听with a听pointed听look at听the Centers for Medicare & Medicaid听Services鈥檚听(CMS)听first year of RHTP awards.听
Rural Health, Ready or Not: CMS Wants Results in 2026
An interview with Kathleen Nolan, Senior Advisor, 红领巾瓜报, and , Principal, Leavitt Partners, an 红领巾瓜报 Company.
Q: What do the new Rural Health Transformation Program awards tell us about US Department of Health and Human Services (HHS) and CMS priorities heading into 2026?
Kathleen Nolan: One of the clearest signals is that CMS expects visible progress in 2026. This is not a program that gives states months of planning runway. The application made it clear that CMS wants states to start doing the activities they proposed right away鈥攏ot just planning or propping up existing systems. CMS wants to see meaningful movement on implementation in 2026, especially in the areas of workforce, infrastructure, technology modernization, and care delivery redesign.
Sara Singleton: Exactly, and CMS is using this investment to reinforce some of the administration鈥檚 broader policy goals. Many state proposals leaned heavily into chronic disease prevention, chronic care management, and expanding supports that promote healthier lifestyles. That alignment isn鈥檛 accidental. The Administration is looking for real traction on these priorities, and RHTP gives states both the resources and the accountability framework to make progress. So, the message from CMS is clear: Move quickly, implement strategically, and show early gains in the areas that matter for long-term population health.
Q: Was anything in the awards themselves surprising?
Singleton: There was a lot of speculation about how wide the spread in funding levels might be, particularly for states鈥� discretionary initiatives. But the distribution was relatively tight; 32 states fell in the 鈥渁verage鈥� range of $190鈥�$230 million, with only four states above $230 million and 13 below $190 million. That suggests CMS isn鈥檛 signaling dramatic differences in expected performance or ambition.
Nolan: It reinforces that CMS is looking for consistent, measurable progress from every state. States that struggle to implement their plans could see less funding in about years.
Q: What should states keep top of mind heading into year one?
Nolan: Accountability. CMS has made it clear they will adjust budgets in later years if states don鈥檛 meet expectations on reporting and evaluation. That also means states need to know where the dollars are going and what they are getting for the investment. Year one performance really matters.
Singleton: And it鈥檚 not just CMS. Congress and the Office of Inspector General for HHS will also be watching how states use these funds.
Q: What rural health policy developments are you watching in early 2026?
Nolan: Decisions about the leadership for these initiatives and state legislatures. Federal investment can only go so far. States will need strong leaders and supportive policies to accelerate and sustain RHTP efforts in year one. What legislatures choose to prioritize will shape the impact of RHTP far beyond year one.
Tracking Medicaid鈥檚 Growth: FFY 2025 Spending and T-MSIS Data Provide Insights on Managed Care Spending
This week, our鈥�In Focus鈥痵ection highlights findings from a 红领巾瓜报 Information Services (红领巾瓜报IS) analysis of the Centers for Medicare & Medicaid Services (CMS) preliminary CMS-64 Medicaid expenditure report for federal fiscal year (FFY) 2025. The data show total medical services expenditures reached $971.4 billion across all states and territories, up 6.9 percent from FFY 2024.
This CMS-64 spending detail provides important context as states prepare for their upcoming legislative sessions and begin implementing changes required under the 2025 budget reconciliation act (P.L. 119-21, OBBBA). Early fiscal and operational pressures will stem from changes to the Supplemental Nutrition Assistance Program (SNAP) and preparations for community engagement requirements for Affordable Care Act (ACA) Medicaid expansion enrollees. In subsequent years, pressures will intensify because of major changes to provider tax financing and new federal limits on state directed payments in 2027 and early 2028.
In this article, we provide a deeper review of Medicaid spending, including the federal-state financing split. As Medicaid agencies prepare for upcoming spring sessions and anticipate potential program changes under OBBBA, it is notable that report an at least fifty percent likelihood of a Medicaid budget shortfall in FFY 2026.
Growth and Drivers in Medicaid Managed Care Spending
The 红领巾瓜报IS analysis looks at CMS-64 preliminary estimates of Medicaid spending by state for FFY 2025. CMS state expenditures through the automated Medicaid Budget and Expenditure System/State Children鈥檚 Health Insurance Budget and Expenditure System (MBES/CBES).
While enrollment decreased for most states following the COVID-19 public health emergency unwinding, states saw an uptick in expenditures due to increased state directed payments, greater utilization and sicker populations, higher drug costs, increased provider rates, and greater use of long-term services and supports and behavioral health.
Key findings from 红领巾瓜报IS鈥� analysis (see Table 1), include:
- Total Medicaid managed care spending (federal and state share听combined)听reached听$550.5听billion听in听FFY 2025,听up from听$517.5听billion听in听FFY 2024.听
- This听amount听represents听a听6.4听percent听year-over-year increase from听FFY 2024听to听FFY 2025.听
- Managed听care听accounted for 56.7听percent听of total Medicaid spending in听FFY 2025, down听0.3听percentage points听from the previous听year.听
- The听$33 billion听increase from FFY 2024 to FFY 2025 exceeds the听$9.4 billion听increase seen the year prior, reflecting renewed growth following the unwinding transition period.听
These figures include spending on comprehensive risk-based managed care organizations (MCOs), prepaid inpatient health plans (PIHPs), and prepaid ambulatory health plans (PAHPs). PIHPs and PAHPs refer to prepaid health plans that provide a subset of services, such as dental or behavioral health care. This total is exclusive of fee-based programs such as primary care case management models.
Table 1. Medicaid MCO Expenditures as a Percentage of Total Medicaid Expenditures, FFY 2020鈥�2025 (in millions)
Annual Medicaid managed care expenditures have grown consistently with total Medicaid expenditures. After slower growth in FFY 2024鈥攚hich aligned with the post-COVID-19 policy unwinding period when many states completed eligibility redeterminations鈥擣FY 2025 again experienced an uptick in managed care growth (see Figure 1).
Figure 1. Total and MCO Medicaid Expenditures, FFY 2020鈥�2025 ($M)
Federal versus State Share Spending
The preliminary FFY 2025 expenditure data provides a baseline before OBBBA鈥檚 changes are scheduled for implementation and as states continue to face Medicaid funding challenges. In FFY 2025, federal funding accounted for 64.2 percent of FFY 2025 spending, and non-federal matching funds accounted for 35.8 percent (see Table 2). Particularly later in 2027, 2028, and subsequent years, Medicaid expansion states stand to see disproportionally larger increases in their share of spending.
Table 2. Federal versus State Share of Medicaid Expenditures, FFY 2020鈥�2025 (in millions)
T-MSIS Data Adds Detail to CMS-64 MCO Spending
To complement CMS-64 macro-spending trends, 红领巾瓜报 developed a methodology allowing us to use Transformed Medicaid Statistical Information System (T-MSIS) data to approximate managed care spending by service category. Although T-MSIS enables more granular views (e.g., professional services, inpatient/outpatient hospital services, skilled nursing facilities (SNFs), HCBS, clinics, pharmaceuticals), the most recent dataset typically lags one to two years behind CMS-64 totals.
红领巾瓜报鈥檚 analysis of the T-MSIS data shows that while managed care remains the dominant delivery system model for Medicaid, spending by provider types helps contextualize the CMS-64 report. Notably, the CMS-64 reports FFY25 data and our report below on T-MSIS disaggregation uses 2023 data. Although the T-MSIS and CMS-64 data are for different years, it still highlights the main components of the largest spending component of the CMS-64 with more recent data.
The 2023 T-MSIS analysis shows the following:
- Professional fees are the lead spending category, with听nearly听30听percent听of spending directed听toward听payments to physicians and other practitioners (e.g., physician assistants, nurse practitioners). Given that T-MSIS data are built around billing codes, services that traditionally may be considered part of a bundled rate (i.e.,听a large portion听of physician services delivered in hospitals and clinics) are听essentially unbundled听and considered professional fees.听
- Hospital spending听(inpatient plus outpatient), SNF听costs, and professional fees听together听account for close to 75听percent of spending in听CY 2023.听
Figure 2. T-MSIS Medicaid Spending by Service Category 2023 (MCO disaggregated plus FFS)
What to Watch
Because Medicaid is such a big part of state government spending, outlays for Medicaid will always be a focus and challenge for states. Upcoming state legislative sessions and OBBBA driven changes will begin in 2026 with SNAP pressures and major operational preparations for community engagement requirements for expansion states. Preparations for new limits on provider taxes and state directed payments will likely begin immediately, but the true impacts will occur in 2027 and early 2028. States will need to tailor their programs under funding constraints.
Connect with Us
红领巾瓜报IS, a subscription-based tool that 红领巾瓜报 offers, provides state-by-state analysis of the CMS-64 data, Medicaid managed care enrollment trends, and state budget reporting. For more information about an 红领巾瓜报IS subscription, contact Andrea Maresca and Alona Nenko. For details on T-MSIS data, contact Matt Powers and Shreyas Ramani.