President Donald Trump’s tax legislation will make a series of changes to Medicaid and Obamacare. One likely result: Some people will lose access to health insurance starting largely in 2027. These changes will impact Hawaiʻi’s hospitals and health centers, and some are already starting to prepare.
Trump’s megabill — or HR1 — will change health care access in three main ways in the coming years.
One adds work requirements for Medicaid eligibility. Another increases paperwork filing requirements for Medicaid eligibility from once to twice a year. And the third restricts automatic re-enrollment for Obamacare and limits subsidies for enrollees, which will likely mean higher premiums.
While most of these changes go into place starting in 2027 — many of the Obamacare subsidies are going to expire in 2026 — premiums are expected to rise about 75% on average next year.
Rough estimates by the Healthcare Association of Hawaii show that in Hawaiʻi, about 10,000 people on Obamacare and about 30,000 on Medicaid could lose their coverage due to the changes. That would double the number of uninsured people in the state, which is currently just 3% of the population – one of the lowest rates in the country.
Increases in uninsured patients will hit hospitals financially
Association President Hilton Raethel explained that it could have significant impacts on the state’s hospitals because uninsured people put off seeking care until it is an emergency.
“What we do know is that people who are uninsured, they tend to seek care less often because they do not have insurance. By definition, they're low-end income individuals. There's a good chance they won't have the money to pay for their health care, so they do get sick. They may put off seeing a doctor,” he said.
“If they get really sick, they may end up going to the emergency room. And hospitals by federal law are required to see any patient that shows up in their hospital and stabilize them. ... So the hospital has to take care of them, but they may not have insurance, which means that the hospital doesn't get paid for taking care of these individuals, whether they're in the emergency room or if they end up having to be admitted."
Hawaii Medical Association President Dr. Elizabeth Ignacio explained that neighbor island and rural hospitals are likely to be hit hardest.
“Those Medicaid dollars are extremely important to neighbor island hospitals. We don't want to see any of our critical access hospitals closed, but a lot of them have already been running in the red, and this will surely be extremely difficult for them to continue all of their services in the face of these cuts,” she said.
“The areas that will suffer are the ones in the small communities, the care that happens in the small communities, because our physicians and our health care workforce will only be able to sustain their practice in a more populated area.”
HR1 also limits the federal student loans for higher education — like medical school — to just $50,000 a year. Ignacio was concerned that it could exacerbate the state’s physician shortage.
“How do we help our young people who want to go into health care that come from underrepresented and minority communities, and they're willing to do the hard work, they're willing to do the training for the medical work, but we can't support them,” she said.
“I don't know how people are going to get a good nursing and medical education if they have limits like that. And we need diverse students who can be compassionate and caring. … We’re all bracing for the hit.”
Massachusetts Sen. Ed Markey compiled a list of rural hospitals most in jeopardy because they are a top 10% Medicaid provider or have had three years of negative margins.
Six hospitals were identified in Hawaiʻi — all are on the neighbor islands, including Molokai General Hospital, which is part of The Queen’s Health Systems.
“While our rural hospitals may be impacted, it is important to note that many of our services which help care for the State’s most vulnerable populations are based at our Punchbowl campus,” said Queen’s Health Systems Chief Operating Officer Darlena Chadwick in a written statement.
“We are working with our state and federal partners to understand the extent of the cuts resulting from the bill, while working to ensure our community continues to receive the high quality care they have come to expect from us.”
Raethel added that many rural hospitals belong to the Hawai‘i Health Systems Corporation, which is already subsidized by the state, but if there are many people losing coverage, the state may have to put up more money.
“That comes from tax dollars, so that's a further burden that goes on the state,” he said.
“If the Legislature is putting more money into the HHSC system, then there's less money available for education, there's less money available for roads, for harbors — all the other things that we need to keep Hawaiʻi intact.”
The measure attempts to fill in the gaps
A $50 billion rural health fund in HR1 could help diminish the impacts on hospitals.
However, the state won’t know how exactly the funds can be used until the Centers for Medicare & Medicaid Services within the U.S. Department of Health and Human Services comes out with its rules.
“We don't know what qualifies as a rural hospital or rural area. We would anticipate that the neighbor islands would qualify and maybe parts of Oʻahu, but we don't know for sure,” Raethel said.
“What they can be used for, whether it's for construction, whether it's for workforce, whether it's for broadband access for telehealth, those decisions are yet to be determined.”
However, $50 billion is expected to cover only about a third of the losses of federal Medicaid funding in rural areas.
Hawaiʻi U.S. Rep. Jill Tokuda does not think it will be enough to offset the significant losses hospitals will face.
“The bottom line is that's not going to keep doors open. That's not going to keep people covered when you even think about just the level of uncompensated care that all of our hospitals throughout the states, big and small, are going to feel,” she said.
“While I do think Republicans did that to try to save face and go home, quite frankly, it will do nothing to really help just the disaster that has been created as a result of the kind of Medicaid cuts that we've seen.”
Health centers are beginning to prepare
Some rural clinics like Waianae Coast Comprehensive Health Center — where two-thirds of their patients are on Medicaid — have already started preparing.
WCCHC President and CEO Rich Bettini explained that they are working on digital training to help people fulfill the work requirements to be eligible for Medicaid.
“The idea is to come up with some ideas, field test them, and maybe put this into a plan with our partners at the state level, that shows hope that we can respond to the intent of this legislation and maybe give us an extra year or two to get it done,” he said.
Another idea Bettini has been working on is getting emergency medical technician training out in Waiʻanae to alleviate the EMT and ambulance shortage.
Bettini hopes to bring more job training to the Waiʻanae Coast so that people don't have to commute into Honolulu for that education, which can be a barrier for many people. The health center, as one of the largest employers in the area, is also working on raising funds to support job training.
“There's a lot of people out there that are gonna be gaining a lot of benefit from these tax cuts,” Bettini said. “They would make wonderful donors to a new foundation that would help us develop funds to support workforce training.”
In the meantime, Bettini and the state Department of Human Services urge people to continue to go to the doctor as there are no immediate changes. However, they caution people to watch for any communication about their health coverage — and to respond as needed.
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