The Second Coverage Cut Arrives January 1

Health centers are heading into the end of the year with two problems that hit the same budget. Some patients lost Medicaid on October 1 and more will lose their marketplace subsidies on January 1, while the Community Health Center Fund, the largest source of federal health center grant money, expires on December 31.

The patients losing coverage are refugees, asylees, and other lawfully present immigrants who don't have green cards, and for many of them a subsidized marketplace plan was the only affordable option left. Open enrollment for 2027 starts November 1, which is when a lot of them will find out that the subsidy won't be there next year.

What changed October 1

Under the 2025 budget law, federal Medicaid and CHIP money now goes only to citizens, green card holders, and a couple of small groups like Cuban and Haitian entrants. Refugees, asylees, and trafficking survivors who haven't gotten a green card are no longer covered with federal dollars. States can keep covering them with their own money, but CMS made clear in its April guidance that they don't have to.

There are two exceptions to this: states that have chosen to cover children and pregnant women who are here lawfully can keep doing so with federal money, and Emergency Medicaid is still there for emergency care. KFF Health News counted more than 281,000 people losing coverage in nine states and DC, and that count only covers the states that have reported so far.

What changes January 1

On January 1, 2027, the same law applies that list to marketplace subsidies. Refugees, asylees, TPS holders, and visa holders can still buy a marketplace plan, but they'll pay full price for it. And since January 1, 2026, nobody below 100% of the poverty line has been able to get marketplace financial help at all.

That leaves a narrow window for some of these patients. In an expansion state, an adult earning between 100 and 138% of poverty who lost Medicaid in October should qualify for a special enrollment period and a subsidized plan through December 31, and then the subsidy is gone. Adults below 100% of poverty don't have a marketplace option in either year, so unless their state runs its own program, as California, New York, and Pennsylvania do for many of the people affected, they'll be relying on your sliding fee scale.

Why this lands on the health center's budget

These patients aren't going to stop coming to health centers, since that's what the sliding fee scale is for. What changes is who pays for the visit, and for many of them the answer is now the center itself.

Medicaid made up 46% of the $55.4 billion health centers brought in during 2025, according to KFF, and George Washington University's Geiger Gibson Program put the sector's operating margin that year at 1.1%. We don't think most centers can absorb a payer shift like this for very long on a margin that thin.

The timing makes it harder, because the stopgap funding bill runs out December 11 and the Community Health Center Fund, which provides about 70% of federal health center grant dollars, expires December 31. Those grants are what centers use to care for uninsured patients, so the uninsured caseload is growing at the same time the money for it is in question.

Every center should know its own number before then, and it isn't hard to get: pull the patients who went from Medicaid to self-pay after October 1 and what those visits brought in over the past year. A congressional office is going to pay more attention to that figure than to any national statistic.

What to ask for before December 11

Start with the state Medicaid agency, since it controls most of what happens to these patients. Ask in writing whether the state is still covering children and pregnant women who are here lawfully, and how it checked for prior refugee or asylee status before cutting off green card holders, who are still eligible. If your state funds its own program, ask how you're supposed to verify a patient's enrollment and bill for the visit.

With Congress, keep the ask narrow and focus on extending the Community Health Center Fund, which has a real chance of moving this year because the December 11 deadline gives Congress a natural place to attach it. Bring your delegation your own numbers on patients who moved to self-pay and what a lapse after December 31 would cut, and ask for a multiyear extension so you can actually budget for 2027.

The Well Group works with health centers on both of these conversations, with the state and with the delegation. If you want help putting your numbers together before December 11, contact us here.