Insurance Coverage Volatility Requires Localized Strategy

Health system leaders are facing a new kind of coverage risk. Insurance instability is no longer a background variable in planning—it is a defining feature of the operating environment. Policy changes, rising costs and benefit redesign are reshaping who is insured, how well they are insured and how reliably coverage supports comprehensive care. The result is a growing uncertainty for access, utilization and financial performance.

The key shift is not just an increase in the number of uninsured, it is a broader erosion of coverage effectiveness. Medicaid and Health Insurance Marketplace enrollments are expected to decline as administrative hurdles rise and affordability worsens, and many individuals leaving these programs have few viable alternatives. At the same time, commercial coverage remains largely intact in size but is increasingly dominated by high-deductible health plans. High-deductible plan growth can reduce affordability at the point of care and drive patients to defer care, while also resulting in greater bad debt exposure for health systems. Medicare continues to grow with aging population, but Medicare Advantage performance is becoming more uneven across markets.

Note: Numbers may not add to shown total value due to rounding. Sources: Sg2 Insurance Coverage Estimates, 2026; Claritas Demographics, 2026; Sg2 Analysis, 2026. See full source list below.

These changes matter now because their impact shows up quickly. Coverage churn disrupts continuity of care, and higher out-of-pocket exposure shifts utilization toward later, more acute episodes. Revenue becomes harder to predict as payer mix and patient financial responsibility fluctuate. For leaders already managing thin margins, this volatility compounds existing operational strain.

The strategic challenge is less about tracking enrollment totals and more about understanding how coverage behaves in practice. Where is underinsurance most likely to affect demand? Which markets face the greatest exposure to uninsured growth? These questions shape decisions about capacity, partnerships and long-term sustainability, and Sg2 Insurance Coverage Estimates provide hyperlocalized, market-level insights to help health systems find answers.

The takeaway is straightforward. Coverage will be less stable and less protective in the years ahead. Systems that plan for this reality—grounded in local insight rather than national averages—will be better positioned to protect access and financial performance. The organizations that adapt early will be those that recognize coverage volatility as a strategic issue, not just a policy outcome.

Sg2 members are invited to join us for our annual kickoff webinar, Three Years Forward: Forecasting the Forces Shaping Health Care. Not a member? Reach out to learnmore@sg2.com for information on the expert intelligence, data-driven insights and strategic perspective Sg2 offers to health system C-Suites.

Sources: Claritas Pop-Facts®, 2026; Sg2 National Consumer Survey, 2025; CMS. MA state/county penetration. Accessed October 2025; CMS. 2025 Marketplace Open Enrollment Period Public Use Files. Modified May 12, 2025; CMS. 2019 Marketplace Open Enrollment Period Public Use Files. Modified May 12, 2025; CMS State Medicaid and CHIP applications, eligibility determinations, and enrollment data. Accessed October 2025; KFF. 2025 Employer Health Benefits Survey. October 2025; KFF. Health insurance coverage of the total population. November 2025; KFF. Marketplace enrollment. November 2025; KFF. Medicaid and CHIP income eligibility limits for children as a percent of the federal poverty level. November 2025; US Census Bureau. American Community Survey tables for health insurance coverage, table HI-05. Accessed November 2025; Burns A et al. How will the 2025 reconciliation law affect the uninsured rate in each state? KFF. August 20, 2025; Congressional Budget Office. Distribution effects of Public Law 119-21, estimate of annual changes in the number of people without health insurance. Accessed October 2025; Manatt Health. The effects of House budget bill on Medicaid enrollment and expenditures. June 2, 2025; CMS. MA monthly enrollment by contract/plan/state/county. Accessed December 2025; CMS. MA plan crosswalks. Accessed December 2025; US Census Bureau. American Community Survey 2024 1-year data estimates: selected economic characteristics, mean household retirement income. Accessed December 2025; Map boundaries provided by Claritas, 2026; Sg2 Analysis, 2025.