Thousands of South Carolinians Will Lose Coverage in 2026 Due to Changes from the Reconciliation Bill
Signed into law on July 4, 2025, the Reconciliation Bill (HR.1) made major reductions in the Medicaid program and restrictive changes to the marketplace exchange.
The largest impact in SC to Medicaid (known locally as Healthy Connections) in the bill is the reduction in enhanced hospital Medicaid reimbursement. This change will start in 2028. Hospitals are projected to lose $150 million each year with a total loss over many years over $2 billion. Together with the potential increase in uninsured caused by exchange tax credit expiration, hospital finances will be weakened, particularly in rural areas. The bill does provide rural hospitals with some financial support, but it is only one-time and does not offset the loses that will occur long-term.
Critical services are at risk of being cut with these changes, including:
● Maternity health
● Behavioral health
● Pulmonology/lung health
● Burns and wounds unit
The potential expiration of expanded tax credits (financial assistance that dramatically cuts the cost of monthly premiums) on the marketplace exchange this year along with some new, restrictive changes to the enrollment process in the Reconciliation Bill could cause a projected 170,000 people in SC to lose their insurance over the next few years. This is because monthly premium could increase byan average 75% and be as high as 500% for those with the lowest incomes. (Kaiser Family Foundation)
There is a solution.
Potentially half of those that lose insurance could be covered if South Carolina expanded Medicaid today. (Urban Institute)
Closing the healthcare gap in South Carolina will be more important than ever.
Breaking Down the Impact of the Enhanced Premium Tax Credit Ending
Where We Are Now: Exchange enrollment has tripled in recent years, from just over 200,000 in 2022 to 632,000 in 2025. This is driven by enhanced premium subsidies that were put in place by Congress during the administration that made private insurance affordable to working families, especially those making less than 150% of the poverty level. (1 person – $23,475; 3 person family – $39,975)
What is at Stake This Year: Clients in the marketplace will find extremely high, unaffordable premiums along with tighter restrictions. Premiums may raise as much as 500% for individuals with the lowest incomes. It is projected that these changes will cause 170,000 South Carolinians to lose coverage. (Kaiser Family Foundation, August 2025)
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Over the past four years the number of working-age uninsured in South Carolina has dropped to historic lows due to enhanced federal tax credits that helped working families afford private insurance on the exchange. Those tax credits will may expire at the end of 2025, and along with other HR1 exchange provisions, threaten to reverse that progress and create serious ripple effects for our hard-working residents, hospitals and taxpayers. Medicaid Expansion is needed now more than ever in South Carolina.
What Has Changed and Has Not Changed Regarding Medicaid Expansion
What Has Changed with Medicaid Expansion
- Work requirements will be required beginning in 2027 for adults in the expansion category (100 to 138% federal poverty level)
- New provider taxes can’t be established to help pay for the cost of expansion
- New expansion states will have to phase down provider taxes, which helps pay for Medicaid, down to 3.5% over time.
- The bonus incentive for expanding Medicaid has been removed
Why Medicaid Expansion Remains Relevant
- New expansion states still are eligible for 90% federal match for newly-eligible people in the adult expansion group (up to 138% federal level)
- More people will be covered with Medicaid Expansion than if states remained uncovered the cost of uncompensated care would be less for hospitals
- The cost of uncompensated care would be less for hospitals with expansion
- Medicaid Expansion would cover a large majority of the people who lose ACA coverage due to the loss of the enhanced premium credits
- Medicaid Expansion would give this group low-to-zero monthly premium healthcare
The bottom line is despite the fiscal changes from the reconciliation bill, Medicaid Expansion remains the best way to provide accessible, affordable coverage to South Carolinians who have no other option.
The Other Major Gap in SC’s Healthcare
Almost 100,000 working age South Carolinians under 100% of federal poverty level ($26,650 for a family of 3) are in the ‘coverage gap.’ (Kaiser Family Foundation, 2023) Most people in this gap work, but are not offered insurance from their employer, or are unable to afford it. They also cannot afford insurance in the market exchange and earn too much to qualify for Medicaid.
With expiration of premium tax credits on the exchange, the number of South Carolinians in the coverage gap is expected to climb to almost 200,000 in the next few years.
Today, only parents earning less than $17,856 (family of 3, 67% of federal poverty level) qualify for Medicaid. This leaves many hard working South Carolinians with no health care coverage options.
Interested in getting involved with Cover SC and closing the Coverage Gap?