The Domino Effect
- carbesman
- Sep 17
- 4 min read
Updated: Oct 7
How Shifts in Medicaid and Medicare Advantage Reshape Everyone’s Insurance
Paul Schrimpf, Christine Arbesman
When most Americans think of health insurance, they picture their employer plan or marketplace coverage. Yet behind the scenes, two massive public programs — Medicaid and Medicare Advantage — shape the foundation for how coverage works across the entire system.
As recent articles in The Journal of the American Medical Association (JAMA) and JAMA Health Forum show, when Medicaid changes how it finances care or Medicare Advantage trims benefits, commercial insurers usually follow. Public programs create the “floor” for benefits and prices, and private plans take their cues from that floor. That’s why the ripple effects of Medicaid redeterminations, Medicare Advantage benefit limits, and proposed financing reforms affect everyone, not just people enrolled in public coverage.
Medicaid: Coverage That Comes and Goes
A 2025 JAMA Health Forum study led by Dr. Laura Keohane of Vanderbilt University found that Medicaid “redeterminations” — the eligibility checks states conduct — have caused millions to lose coverage over the past year. Most didn’t lose coverage because they no longer qualified, but because of administrative hurdles like missed paperwork or outdated contact information.
The study highlighted that dual-eligible older adults — those who qualify for both Medicare and Medicaid — face the greatest risk. Even short lapses can cut them off from prescription subsidies, home health care, or nursing home support. As Keohane and colleagues concluded, “Administrative churn creates instability in access to care for some of the most medically complex and financially fragile patients.”
These disruptions ripple beyond Medicaid. When hospitals absorb the cost of treating uninsured patients, they often raise rates on commercial insurers to offset losses, driving up costs for everyone.
Medicare Advantage: Limited Benefits in a Growing Program
Medicare Advantage has grown rapidly, now enrolling more than half of all Medicare beneficiaries. Yet a 2025 JAMA Health Forum analysis by Dr. Amol Navathe of the University of Pennsylvania found major gaps in dental coverage: coverage caps as low as $1,000 per year, strict prior authorization requirements, and narrow provider networks.
That means seniors may face large out-of-pocket bills for procedures like root canals or dentures. Navathe and his co-authors warned that these restrictions contribute to unmet dental needs, which worsen chronic conditions like diabetes and heart disease. And the domino effect is clear: when Medicare Advantage normalizes leaner benefits, commercial insurers often mirror that model, making thin coverage the new baseline.
Pediatrics: Where Medicaid’s Fragility Hits Hardest
The Children’s Hospital Association reports that Medicaid covers nearly half of all U.S. children and accounts for more than 50% of patient revenue in many children’s hospitals. This reliance makes pediatric care especially vulnerable to financing disruptions. As Dr. Sara Bode, a pediatrician and policy advisor quoted in JAMA Pediatrics, explained: “Coverage instability in childhood has lifelong effects, increasing the risk of delayed diagnoses and worsening disease trajectories.”
When children lose Medicaid, pediatric hospitals typically absorb the costs rather than turn patients away. Over time, this strains critical services like neonatal intensive care and pediatric oncology. And as with adult hospitals, those costs don’t vanish, they’re shifted into higher charges that ripple into commercial insurance.
Financing Reform: Block Grants and Per-Capita Caps
Debates over how to structure Medicaid financing are also resurfacing. In a 2025 JAMA Health Forum editorial, Dr. Benjamin Sommers of Harvard examined proposals for block grants and per-capita caps. Both models would cap federal funding, either per state or per enrollee, replacing today’s open-ended structure.
Supporters argue these caps give states more control. But Sommers cautioned, “When financing is capped, states face a zero-sum choice between cutting eligibility, reducing benefits, or lowering provider payments. In all cases, beneficiaries bear the risk.” And when states lower provider payments, hospitals and doctors often shift costs to private insurers. That’s why capped Medicaid funding doesn’t just squeeze beneficiaries — it reshapes the economics of the entire insurance market.
The ACA’s Long Tail
Not every trend is negative. A JAMA study by Dr. Adrianna McIntyre and colleagues examined older adults who had gained coverage through the Affordable Care Act’s Medicaid expansion. Once those individuals aged into Medicare, they had slightly lower costs and better health outcomes.
As McIntyre explained: “Consistent coverage earlier in life reduces financial strain later, for both patients and the system.” But those gains depend on stability. If millions lose Medicaid coverage through redeterminations or capped financing, the long-term advantages disappear, leaving Medicare and commercial insurers to absorb higher costs later on.
Health care financing may sound like a technical budget issue, but it determines whether people can see a doctor, fill a prescription, or afford preventive care. As the JAMA articles emphasize, fragility in public programs doesn’t stay contained — it ripples outward. Medicaid churn, thin Medicare Advantage benefits, and capped funding models all drive costs across the system. That’s why premiums rise and networks shrink in commercial insurance. What begins in Medicaid and Medicare Advantage ultimately shapes everyone’s coverage.
The reality is straightforward: what starts in Medicaid and Medicare Advantage doesn’t stay there. These programs set the tone for pricing, benefits, and risk-sharing across the entire system. As JAMA’s recent authors remind us, when financing weakens at the foundation, every layer of insurance — public and private alike — begins to wobble.
Acknowledgements & Citations
This report draws insights and direct quotes from:
Keohane L. Medicaid Redeterminations and Dual-Eligible Older Adults. JAMA Health Forum. 2025.
Navathe A. Medicare Advantage Dental Benefit Coverage Restrictions. JAMA Health Forum. 2025.
Bode S. Coverage Instability and Pediatric Health Outcomes. JAMA Pediatrics. 2025.
Sommers B. Block Grants and Per-Capita Cap Proposals for Medicaid Financing. JAMA Health Forum. 2025.
McIntyre A. Medicare Costs Among Older Adults Exposed to ACA Medicaid Expansion. JAMA. 2024.
Children’s Hospital Association. Medicaid’s Role in Pediatric Care. 2024.