Jakob Emerson on Payer Industry Turmoil and the Fallout from Medicaid Cuts

Summary

Becker’s Healthcare Podcast Summary

Episode: Jakob Emerson on Payer Industry Turmoil and the Fallout from Medicaid Cuts
Release Date: July 3, 2025
Host: Scott Becker
Guest: Jakob Emerson, Head of Payer Coverage at Becker's Healthcare

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Introduction

In this insightful episode of the Becker’s Healthcare Podcast, host Scott Becker engages in a comprehensive discussion with Jakob Emerson, a distinguished journalist and the leader of payer coverage at Becker's Healthcare. The conversation delves into the current turbulence within the payer industry, primarily focusing on the ramifications of recent Medicaid cuts and the GOP's reconciliation package.

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Key Topics Discussed

1. GOP's Reconciliation Package and Its Impacts

   • Passing of the Package:
     Jakob highlights the recent passage of the GOP's reconciliation package in the Senate, emphasizing its significant influence on the healthcare industry. "It sucked all the air out of the room in terms of what the healthcare industry is watching and talking about this week" (01:09).
   • Effects on Hospitals and Rural Facilities:
     The package is expected to negatively impact hospital reimbursements and patient volumes, especially in rural areas. Trade associations have voiced strong opposition, forecasting substantial challenges for both hospitals and payers.
   • Payers' Response:
     Payers are already strategizing to mitigate the effects, with major insurers like Centene and UnitedHealthcare adjusting their earnings forecasts. "Centene pulled its earnings guidance for 2025... it's the first sign that this is going to be a tough few years moving forward" (01:55).

2. Industry Outlook and Financial Implications

   • Stock Market Reactions:
     The announcement led to significant stock market movements, with Centene's stock dropping by approximately 28% early in the morning (03:53).
   • Deficit Concerns:
     The Congressional Budget Office (CBO) projects that the package will increase the deficit by $3 trillion over the next decade, raising concerns about long-term fiscal sustainability. "The CBO has said it will increase the deficit by $3 trillion over that decade time span" (11:04).

3. Medicaid Coverage Cuts and ACA Premium Tax Credits

   • Projected Uninsured Increase:
     The package is set to cut $930 billion from Medicaid, Medicare, and ACA spending over ten years, potentially leaving an additional 12 million people uninsured. "We're going to see a major gutting of, of ACA enrollment" (04:44; 06:48).
   • Premium Tax Credits Expiry:
     Without the extension of ACA premium tax credits, many individuals will find premiums unaffordable, leading to decreased enrollment in marketplace plans.
   • Administrative Burdens and Work Requirements:
     Introduction of nationwide work requirements for Medicaid recipients is expected to create significant administrative challenges. Jakob explains, "It's going to be an administrative mess over to administer this kind of thing" (07:25).

4. Political Ramifications and Legislative Stability

   • Republican Cohesion:
     The reconciliation bill's narrow passage raises questions about the Republican Party's ability to maintain cohesion. Jakob expresses skepticism about the party's stability, noting the political vulnerability of House members opposing the bill. "House members, Republicans that don't vote for this are going to be very, very politically vulnerable" (04:44).
   • Long-term Legislative Effects:
     Future administrations may seek to mitigate some of the package's impacts, but the initial changes will leave lasting effects on the healthcare system.

5. Demographic Implications of Medicaid Cuts

   • Impact on Specific Populations:
     Half of Medicaid enrollees are children, and a significant portion are elderly or disabled individuals who rely on Medicare. "Half the people enrolled in Medicaid in this country are children... a big chunk of people on Medicaid are elderly people who are also receiving Medicare benefits" (11:04).
   • Corporate Involvement:
     Mark Cuban's commentary was referenced, suggesting that targeting companies with many full-time employees who still qualify for Medicaid could be a strategy to reduce costs. "The best way to reduce the cost of Medicaid is to name and shame the companies who have a lot of full time employees that still qualify for Medicaid benefits" (12:53).

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Notable Quotes

• Jakob Emerson on Payer Challenges:
  "The entire industry has been downgraded by analysts saying that the loss of Medicaid members and the loss of the ACA premium tax credits is really going to affect the entire industry" (01:09).

• Scott Becker on Historical Context:
  "It really brings you back to right before the ACA when we had 20% of the population not insured... Now this will creep us back up to probably 15% or so" (06:48).

• Jakob Emerson on Work Requirements:
  "It's going to be an administrative mess over to administer this kind of thing" (07:25).

• Scott Becker on Legislative Outcomes:
  "These things do play out over a long period of time. I think what's probably disappointing or challenging is there are plenty of people and the Republican side that might be able to live with some of this if it was also reducing the deficit" (09:33).

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Conclusion

The episode provides a thorough examination of the current upheaval in the payer sector, driven largely by legislative changes and their projected impact on Medicaid and the broader healthcare landscape. Both Scott Becker and Jakob Emerson convey a sense of urgency and concern regarding the long-term consequences of the reconciliation package, highlighting the intricate interplay between politics, economics, and healthcare policy. For stakeholders in the healthcare industry, this discussion underscores the critical need to navigate the evolving challenges with strategic foresight and adaptability.

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Note:
For a deeper understanding and more nuanced insights, listening to the full episode is highly recommended.

Transcript

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[Scott Becker]

This is Scott Becker with the Becker's Healthcare Podcast. We're talking today with Jacob Emerson. Jacob leads up payer coverage at Becker's Healthcare. Absolutely brilliant journalist. It is an interesting time in the payer universe. I am watching a whole lot of stories past the newsline, whether it's Centene or UnitedHealthcare or others, or of course this big Medicaid bill or the big bill that will cut Medicaid. Jacob, let me turn it to you. What are a couple of the key stories that you're watching currently in the payer world?

[Jacob Emerson]

Yeah, hey Scott, it's great to talk with you and you stole the show for me. That's actually the three things I did want to talk with you about today is the GOP's reconciliation package, how we're already seeing payers respond to this and how we think the wider industry will be affected by that, including Centene this morning and then a few little updates at UnitedHealth under their new CEO. So, so in terms of the reconciliation package, as you know, it was passed yesterday by the Senate with Vice President Vance breaking the tie there. And I think it's definitely sucked all the air out of the room in terms of what the healthcare industry is watching and talking about this week. And certainly here at Becker's in the editorial team, we've really been focused on how that's going to be affecting hospitals, especially rural facilities, and what a lot of the trade associations are telling us. You know, it's going to be impactful and in a negative way when it comes to reimbursement and patient volumes. But on the other side of the things, payers have really begun to ramp up how it's going to affect the wider industry there. And what I think's really interesting, Scott, is that it almost suggests to me that the lobbying groups on behalf of both of these industries have lost, at least this time around, a lot of influence in Washington and among lawmakers because this is going to negatively affect both industries and on the payer side of things. We know that, you know, the entire industry has been downgraded by analysts saying that the loss of Medicaid members and the loss of the ACA premium tax credits is really going to affect the entire industry, which I believe every major insurer with the exception of Humana operates in, or I mean, Humana has a Medicaid business, but not aca. And so, you know, we're just, we're hearing a lot from CEOs in terms of how they're preparing for this, how they're preparing different sets of rate notices in the individual states as they go into next year. And then of course this morning you touched on it a bit, Scott, but Centene pulled its earnings guidance for 2025. United already did that earlier this year. And it's not necessarily directly related to what's going on in Washington, but it's the first sign that this is going to be a tough few years moving forward for these companies, at least for Centene, which they're businesses, Medicaid and the aca. And so, you know, they're pulling their guidance already. And we know as, as the tax credits almost are certain to expire at the end of this year, that it's just going to get tougher and tougher for them as an enterprise.

[Scott Becker]

It fully accelerated and exploded over the years. Now today, news out again that they were pulling back guidance and literally saw the stock at least early this morning, down about 28%.

[Jacob Emerson]

Right.

[Scott Becker]

Talk about sort of the odds on we just had on the podcast Sister Mary Haddad, who's president and CEO of the Catholic Health association. You know, and I asked her a question which is inappropriate to ask a sister, which is to gamble on the outcome of the reconciliation bill. Will the Republicans be able to hold this together? Because they barely pass in the Senate, barely pass in the House. Now it's going to be reconciled in the House they passed by one vote. The Senate they were 50, 50 plus. J.D. vance hit the tie breaking vote. Can they hold it together or so much political damage to a Republican who votes against it that they will be able to hold together. How does this look?

[Jacob Emerson]

I mean, I think that's the million dollar question. But I think at the end of the day, the, you know, House members, Republicans that don't vote for this are going to be very, very politically vulnerable moving forward. You know, if they're primaried or, or if the president comes out against them publicly, whatever it is, I don't think a lot of House members are going to want to be publicly on the record voting against this bill, even if it is more scrupulous the Senate version compared to what the House originally passed. But in terms of what's in it, Scott, I mean, we're seeing that there's going to be $930 billion cut from Medicaid, Medicare and ACA spending over the next 10 years. And that'll leave 12 million people, additional people uninsured. And we've seen estimates all over the place from anywhere from 12 to 20 million people. Regardless, it's going to be a lot of that will lose coverage over the next decade. And that all comes back to the organizations that we talk to all day long, either through membership for the insurers or through patient volumes for the hospital systems. And you know, ahip, aha, ama, the alliance of Community Health Plans, which is the hospital owned health plans, they've all come out against it, decrying how much it's going to negatively affect their patients and their revenues. And, and when we've also seen some of the, you know, the, the data breakdowns on, on exact numbers because there hasn't been an extension of the ACA premium tax credits, which basically subsidizes ACA coverage for low and middle income people. We were expecting marketplace enrollment to decline by around half. It's about, it's at about 25 million people right now. And like I said that, that all comes back down to centene to, to insurers like Oscar. UnitedHealthcare has a massive ACA business. So they're, they're definitely concerned. And it doesn't help with the fact that we've been talking about all the Medicare Advantage woes and the utilization there. It just, it seems like problems keep compounding for this industry.

[Scott Becker]

No, it is really fascinating when you look at 10 to 12 million people going back off of insurance and not being insured. It really brings you back to right before the ACA when we had 20% of the population not insured, we were down about 10%. Now this will creep us back up to probably 15% or so. But it almost feels like without repealing the ACA for all practical purposes, this will defund the ACA to a great extent. So it'll have the same effect that President Trump was having an administration ago when they were trying to gut the aca. And this will, rather than repeal it, we actually just sort of got it, won't it?

[Jacob Emerson]

Yeah, yeah. And I mean, it's basically, it's just, it's, it's no longer subsidizing what, what is very expensive premiums. So if people can no longer afford those premiums without these tax credits, they'll either, you know, drop coverage altogether or they might move to Medicaid or whatever it is. Yeah, we're going to see a major gutting of, of ACA enrollment. And on the Medicaid side of things, you know, it's, it's not like tomorrow people will necessarily wake up without Medicaid coverage, but it's the administrative burdens and hurdles that are being put into place that are really going to be leading to a lot of coverage losses over the next decade. And I think that's the thing too, is that it's not going to be immediate. It's going to happen over years and that'll make it so that it, you know, it's, it's more difficult to attach to any one political move or party. Even though we know what's happening right now. You know, this is going to be a slow process. And because of the introduction of work requirements for the first time nationwide, you know, that's going to be a big lift for, for all the state Medicaid programs who just went through redeterminations. It's going to be a big lift for the payers themselves and of course for people on the ground who, it's just, it's always, you know, getting that information out there and having people fill out the forms and all the stuff that goes along with work require, which we've seen on the state level in individual states that have done this, don't really work. It's just, it's going to be an administrative mess over to administer this kind of thing.

[Scott Becker]

It, it, it is fascinating because they, they don't work. They're politically very popular amongst a certain class that just believes that people should be at least trying to work if they're getting Medicaid and government help. And it's fascinating. It's like as a parent, you, you'll, you'll find in about whatever amount of years when your kids are in their 20s, you expect them to work or at least try to work if they want to keep on being fed and house and stuff like that. But it is, it is a. And I know I'm, I'm extrapolating in a very broad way, but the point that you made about, like this, this, this, what helps with these things is because it's projected at 900 billion over 10 years. So 90 billion a year spread out amongst a lot of different places.

[Jacob Emerson]

Yeah.

[Scott Becker]

And so what happens on these things is you've got this one hand, very much people proclaiming on one side of the aisle or the other that the sky is falling. And on the other hand, what happens is some of these changes filter out over so long a period of time that it ends up making it harder for people to understand the ultimate consequences. Like we talked to so many CEOs that basically say, I got to figure out a way to do business as usual. We're very nervous about this, we're anxious about this, but we've got to figure out a way to do business as usual as much as possible in the meantime, because we don't know how this will really play out. And that's part of the challenge of it. These things do play out over a long period of time. I think what's probably disappointing or challenging is there are plenty of people and the Republican side that might be able to live with some of this if it was also reducing the deficit. But I think from a at least traditional conservative perspective, it's not there's incredible annoyance that you're sort of gutting programs without actually having the impact of the thing that many people are most concerned about, or at least many people with the right are most concerned about, which is the deficit. So it's really, I mean, that I think people find incredibly frustrating that we're going to gut things that people would prefer not to be gutted and we're not even going to get the financial advantage out of it of cutting the deficit, which I think many would like to see us at least get those in order.

[Jacob Emerson]

Right. Which the CBO has said it will increase the deficit by $3 trillion over, over that decade time span. And I think just to respond to what you're saying too of the timeline here, I mean, some of these changes could come to or the effects of this legislation could come to roost under a Democratic administration in the future. So, you know, I think a lot of this could be nebulous in the future in terms of what future administrations do to mitigate some of the impact maybe one day. But I also one thing that I do want to say that I think gets lost in this conversation, Scott, is that, you know, the half the people enrolled in Medicaid in this country are children. So those, you know, those would not be working. A majority of people on Medicaid in this country are working. They just don't make enough to or what they make from their full time employment doesn't allows them to still qualify for Medicaid because they're making so little and then a lot and then A big chunk of people on Medicaid are elderly people who are also receiving Medicare benefits or who are disabled. So you're really targeting a very small chunk of people and certainly a minority enrolled in the Medicaid program nationwide who are actually capable of working that 80 hours a week. And then of course they oftentimes already are working. So now this is just introducing this big administrative structure to, to have them prove that. But again most of the time they already were. And and I we saw some interesting commentary from from Mark Cuban late last week talking about the, the best way to reduce the cost of Medicaid is to name and shame the companies who have a lot of full time employees that still qualify for Medicaid benefits, which there are a lot of corporations that that that applies to. So I think that's you know, a big important part of this conversation as well. In terms of the Medicaid demographics.

[Scott Becker]

Yeah, no, I think incredibly a mess and a challenging situation. I, I saw Mark Cuban's comments. I see Elon Musk comments. Of course I agree with some, I don't agree with others but I do think it is absolutely fascinating and I guess we'll see now if this passes the House and they get this reconciled. But what, what a fascic situation. It just is, it is just fascinating. I, I would, I would say so disappointed in our legislatures. But I don't want to politicize more than I have to so I'll avoid making my own personal comments on it. I mean if you're going to guts, which I'm not a fan of, we ought to at least cut deficits, which I am a fan of cutting deficits. But it is what it is. Jacob is always fantastic to visit with you. I always learn something. Thank you for joining us today on the Beckers healthcare podcast. Thank you.

[Jacob Emerson]

Thank you Scott.