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.

*Sources: US Congressional Budget Office. Distribution effects of Public Law 119-21. August 11, 2025; Sg2 Analysis, 2026.

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 this blog.

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.

Note: Medicaid enrollment does not include those dually enrolled in multiple types of coverage. Sources: US Congressional Budget Office (CBO). Distribution effects of Public Law 119-21. August 11, 2025; 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 and 2025 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; Claritas Demographics, 2026; Impact of Change®, 2025; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP) 2021. Agency for Healthcare Research and Quality, Rockville, MD; Proprietary Sg2 All-Payer Claims Data Set, 2023; The following 2023 CMS Limited Data Sets (LDS): Carrier, Denominator, Home Health Agency, Hospice, Outpatient, Skilled Nursing Facility; Claritas Pop-Facts®, 2025; Sg2 Analysis, 2025.