2026: A Perfect Storm for Health System Revenue and Bad Debt

Shawn Fitzgibbon, Managing Director, BDC Advisors

2026 is shaping up to be one of the most financially volatile years health systems have faced in over a decade.

A convergence of policy changes, enrollment disruption, and rising employer-sponsored insurance costs is poised to materially increase revenue risk, bad debt, and patient affordability challenges — often faster than organizations can react.

For health system leaders, the question is no longer whether these pressures will arrive, but whether your organization is prepared when they do.

BDC Advisors’ Payer–Provider Practice collaborates with health systems to assess payer portfolio risk, anticipate enrollment shifts, and develop strategies tailored to the market and mission.

What’s Driving the Storm

ACA Subsidy Expiration

If enhanced ACA subsidies expire, approximately 22 million individuals could see monthly premiums increase by more than 100% on average. Many middle-income households may find coverage unaffordable, increasing the risk of coverage lapses and self-pay exposure — particularly for emergency and episodic care.

Medicaid Eligibility Shifts

Medicaid redeterminations and evolving eligibility requirements will continue to vary by state, introducing:

• More frequent eligibility churn

• Shorter renewal cycles

• Increased administrative friction

  
  

For providers, this translates into greater uncertainty at the point of service and higher downstream bad-debt risk.

Employer-Sponsored Insurance Pressure

Employer-sponsored insurance costs are projected to rise 6.7%–9%, driven by specialty drugs, labor inflation, and policy uncertainty. Employers are responding with:

• Higher employee contributions

• Increased deductibles and copays

• Narrower networks and site-of-care steering

  
  

The result: more insured patients with unaffordable out-of-pocket exposure.

Why This Matters for Health System Leaders

Revenue Volatility Will Increase

As coverage becomes less stable and cost-sharing rises, health systems should expect:

• Higher self-pay balances

• Increased bad debt and charity care

• Greater variability in yield by payer and product

Decisions Will Need to Be Made Earlier — Not Later

Organizations that wait to respond until enrollment shifts are fully visible may find their options limited. Leaders will need a forward-looking understanding of:

• Population risk by payer and segment

• Contract exposure by product and notice period

• Anticipated enrollment and affordability trends in 1Q–2Q 2026

What Proactive Leaders Are Doing Now

• Reassessing service area dynamics

  Evaluating population demographics, employer stability, payer market share, and enrollment trends by segment.

  
  

• Engaging payers, brokers, and employers earlier

  Using targeted outreach and communication to support coverage continuity and affordability in the community.

  
  

• Advocating for patients while protecting the enterprise

  Aligning self-pay policies, eligibility workflows, and collections strategies to manage growing out-of-pocket exposure.

  
  

• Reviewing payer portfolios with a long-term lens

  Understanding renewal timing, notice provisions, and which payers and products align with the organization’s future financial sustainability.

The Bottom Line

2026 will reward health systems that act early and penalize those that react late. A long-term, strategic approach to revenue and bad debt management — grounded in data, governance, and market realities — will be essential to protecting both financial performance and patient access.

To discuss how these dynamics may affect your organization in 2026, please contact Shawn Fitzgibbon, Managing Director, BDC Advisors, at (332) 373-5546 or shawn.fitzgibbon@bdcadvisors.com.