Tightening Insurance Coverage Creates Revenue Risk for Life Sciences

Policy-driven Medicaid eligibility changes and expiring Health Insurance Marketplace subsidies are expected to increase the number of uninsured by ~10 million by 2034*. While commercial enrollment remains relatively stable, the continued shift toward high-deductible plans will expand the underinsured population. Together, these dynamics signal fewer covered lives, constrained demand for health care services and material downside risk to annual sales revenue.

Note: Revenue at risk percentages are based on Sg2 analysis of historical utilization changes in coverage and estimates based on portfolio modeling of major medtech firms. CRM = customer relationship management; EP = electrophysiology. Source: Sg2 Analysis, 2025.

The projected insurance coverage changes are highlighted in the Sg2 2026 update of the Insurance Coverage forecast.

Note: Medicaid enrollment does not include those dually enrolled in multiple types of coverage. Sources: See sources at end of newsletter.

Less Preventive Care, More High Acuity and Capacity Constraints

As affordability pressures rise, patients are likely to delay or forgo discretionary care such as preventive care, chronic disease management, prescriptions and elective procedures. Over time, deferred care is expected to translate into higher-acuity ED visits and avoidable hospitalizations, increasing strain on hospital capacity.

Financially, providers will face greater volatility in payer mix, higher levels of bad debt and charity care, and reduced reimbursement reliability—including among commercially insured patients with limited ability to pay. As financial strain on health systems intensifies and supply demand shifts, life sciences organizations should expect heightened cost scrutiny.

Strategic Moves for Life Sciences Firms

The impact of shifting insurance coverage will not be felt evenly across medtech, pharmacy, capital and diagnostic companies. The effect will vary significantly by market—potentially ranging from an 8% to 14% revenue reduction in high-risk markets (see Table 1)—and will depend on the timing of policy-driven utilization changes. Company-specific portfolio modeling for select $10 billion medtech firms suggests potential revenue exposure in the range of $300M to $600M under a medium-impact scenario. Now is the time to evaluate your portfolio and align strategy with anticipated market shifts.

Note: ACA = Affordable Care Act; IDN = integrated delivery network; RWE = real-world evidence. Source: Sg2 Analysis, 2025.

Sg2 Life Sciences has localized impact of policy changes by geography, IDN and clinical services—reach out to us for further insights.

Download the Sg2 Life Sciences Q1 2026 Newsletter to gain more data-driven insights that can help strengthen customer engagement and guide your strategic decisions. Contact us to learn more about Sg2’s Life Sciences offerings.