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When Josh Fleig, Louisiana’s chief innovation officer, learned his state had set aside $20 million a year, for five years, to invest in startup rural health companies, his reaction was not surprising: “Wow!”

In rural America, where people are often reported to be sicker with poor access to healthcare, the cash influx is a relief. In the economic development space where Fleig operates, it’s an opportunity.

“Look, that’s a lot of money for what we do,” said Fleig, whose state-funded economic development office invests in corporate launches, ranging from software startups to shipbuilders.

Josh Fleig, chief innovation officer for the Louisiana Economic Development agency, says he’s excited to help fund startup technology companies that could improve the health of rural residents in the state. (Margot McNeely/Louisiana Innovation)

Louisiana and a handful of other states set aside money from their share of the $50 billion federal Rural Health Transformation Program to quickly invest in new technologies, mirroring private industry moves. Lawmakers added the rural health program to offset more than $900 billion in reduced Medicaid spending expected over 10 years from Republicans’ sweeping 2025 tax and spending law.

But rather than filling the budget hole, the rural program’s assignment is to find new approaches for revitalizing rural communities where doctors are in short supply and hospitals have been downsizing and closing for decades. The federal government doled out the first-year rural health program awards to states this year, with pots ranging from $147 million in New Jersey to $281 million in Texas.

Modernizing technology infrastructure is a key pillar of the federal rural health program, and the catalyst money epitomizes the administration’s strategy to move fast and experiment with untested technology — much like the “move fast and break things” mantra during the heyday of Silicon Valley.

Instead of breaking things, though, the goal is to “move fast, fast-fail, innovate quickly, and move to sustainability,” said Aaron Bujnowski, a managing director with the healthcare industry group at the consultancy Alvarez & Marsal. “This is a transformation that is still meant to serve the people.”

Rigorous Rules and Tight Deadlines

Beyond Louisiana, Timothy Foster, a spokesperson for the Centers for Medicare & Medicaid Services, confirmed that Delaware, Georgia, Massachusetts, Nebraska, South Carolina, Virginia, and West Virginia are also creating rural health tech catalyst funds.

Every year, states must compete for rural funding in the five-year federal program. Federal regulators will take money away from states that do not meet the goals promised in their applications, including whether they designated money to companies for tech innovations.

CMS, which is overseeing the program, released a seven-step guidance document for states to follow when creating the tech catalyst operations. No more than 10% of each state’s award can be spent on a rural tech catalyst fund.

States’ initial annual progress reports for the rural fund were due at the end of August. CMS has declined to publicly post those reports; it plans to publish an annual report on state progress. States must show that first-year funds will be obligated — but not necessarily spent — by Oct. 30, according to the CMS guidance document.

Daniel X. O’Neil, a technology consultant who advocates for open data and open government, created a state tracker and parsed the original state applications to find dozens that mention catalyst awards and technology funds.

O’Neil said he is “looking forward to the clawbacks and the craziness of October because, you know, that’s serious stuff.”

For the rural health catalyst funds, CMS requires states to submit the list of finalists “at least 15 business days” before announcing winners, along with “sufficient information” for the agency to “assess each proposed project,” according to the guidance document.

The document outlines intellectual property and federal rights but does not provide guidance or standards for patient rights or protections. CMS spokesperson Foster stated in an email that the technology investments must comply with federal “privacy, security, interoperability, and patient safety” requirements.

Protecting Patients

Maya Sandalow, director of the health program at the Bipartisan Policy Center and one of the leading analysts watching the rural fund, said the catalyst funds are “public dollars” and has called for more transparency in the overall rural health program. The center is a nonprofit think tank in Washington, D.C.

Accurate and timely reporting must be done to ensure “the necessary guardrails are in place” to protect patients, she said, adding that the innovation needs to be “tested in a way that’s safe for the patients that they are going to be used on.”

To apply, startups must be less than 10 years old and have raised less than $50 million in early funding. Companies that win a portion of state catalyst funds must meet predetermined milestones before being paid — and federal officials will make “targeted reviews as needed,” according to the guidance document.

Louisiana officials announced the state’s tech catalyst fund with an event in rural Natchitoches, known as the filming location of the 1989 film Steel Magnolias. The fund quickly drew more than 200 companies competing for between $250,000 and $3 million in seed money.

Tiny startup Greens Health was invited to the event. The 2-year-old company analyzes Medicare claims to identify patients with chronic diseases, such as diabetes, and works with local home health nurses and senior facilities to improve care.

“We’ve been looking for a way to launch in Louisiana,” said Kehlin Swain, co-founder and chief executive of Greens Health. The company serves about 100 patients across Texas, Alabama, and Florida and hopes to get a $250,000 investment from Louisiana.

Louisiana’s Fleig said his state is “at a really interesting turning point.” The state secured $208.4 million for the first year of the rural health program and quickly created its catalyst fund using the state’s already established innovation department.

At the same time, nearly 1.1 million people live in Louisiana’s rural parishes and the state ranks as the “least healthy” in the nation, according to its own application. State rates of diabetes, obesity, and cardiovascular disease are among the highest in the nation.

Fleig believes Louisiana is an ideal place to test technology solutions. So, while Silicon Valley has “not needed much of what Louisiana has had to offer” for much of its existence, it does now, he said.

Caret Health is one of those companies. Co-founders Riya Pulicharam, who is a physician-researcher, and Kevin Zhao, an engineer, met in Silicon Valley. Together, they created a technology platform that identifies patients who need help getting to their appointments, having scans done, or picking up prescriptions. That technology flags a human, who then contacts the patient with a call or text.

Zhao said Caret had successful pilots at large health systems, but those places also had other vendors and “it was a pretty big uphill battle” to get in and scale. Then, in 2024, the company began paying attention to rural places.

“There wasn’t a lot of existing infrastructure. And that was really good for us because we were able to come in very quickly,” Zhao said. “A lot of the hospitals really needed this kind of service.”

Fast-forward to 2026: Caret Health is about 4 years old and has contracted with about 60 hospitals in 16 states. Pulicharam and Zhao hope to win $3 million to expand into Louisiana.

Louisiana’s Fleig said the state will take an equity stake in each company it invests in. “The dream” is that selected startup companies will also help the state make money to reinvest. If some companies fail — or fail fast — that’s to be expected, but the state should still make money because of “the law of averages,” he said.

“If we are good, we’ll make more money than we spent,” Fleig said. “Either way, it’s going to go back into improving healthcare outcomes.”

Rural Tech-Catalyst Funds: Fast-Moving, High-Pressure

First-year progress reports were due at the end of August. Using the annual report, federal officials will recalculate and potentially claw back money from underperforming states, according to reporting requirements created by the Centers for Medicare & Medicaid Services, which oversees the program.

States will be scored on a multitude of initiatives and plans, plus whether they earmark their first-year spending by Oct. 30. Year 2 funding will be determined by the end of October.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

This article first appeared on KFF Health News and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Taya Hailstone has been in remission from childhood Hodgkin lymphoma for five years. But the cancer’s lasting damage to her organs and nerves can make basic tasks, like loading a dishwasher, hard.

Still, Montana’s health department decided last year that Hailstone is no longer eligible for low-cost disability health coverage through Medicaid. The department switched her coverage to the state’s Children’s Health Insurance Program, another Medicaid program — three months before she aged out.

Before making the decision, the state didn’t seek records from the medical team treating Hailstone, according to letters from those doctors reviewed by KFF Health News. Rather, the administrative ruling came after state officials learned the now-19-year-old had stopped receiving Social Security disability payments. She said she did that because she hoped to get healthy enough to work and save some money — beyond what’s allowed under the strict income caps tethered to those payments. But her health changes day to day, and she said for now she’s still too sick to consistently work.

Hailstone, who lives with her mom, has been able to keep Medicaid coverage while they appeal the case. She said that without Medicaid she can’t afford the treatment to manage the aftermath of her cancer.

“It feels like this process was made to make you give up,” Hailstone said.

Patients with disabilities have long struggled with administrative hoops, blunders, and confusion when trying to qualify for federally subsidized health coverage because of their illness. Now, new federal Medicaid work requirements mean states face the additional task of deciding who qualifies for a medical exemption. That means reviewing medical cases for an even larger swath of Medicaid enrollees.

Attorneys, researchers, and advocates who specialize in public aid said disability cases like Hailstone’s — though separate from the incoming work requirements — are an indication that states aren’t ready. As a result, they said, more people will be denied coverage in an opaque process.

“This will be the story of millions of people,” said Anthony Wright, who heads Families USA, a national nonprofit that advocates for ways to make healthcare more accessible.

Jon Ebelt, a spokesperson with the Montana Department of Public Health and Human Services, said the state doesn’t comment on individual Medicaid cases.

An estimated 18.5 million people will have to meet the new rules requiring them to prove they’re working, going to school, or volunteering to keep their Medicaid coverage, according to the Congressional Budget Office. More than 40% of those enrollees live with a chronic health condition, according to KFF. Some will be excused from those rules if they can prove they’re too sick to work.

More than 5 million people are expected to lose Medicaid coverage by 2034 because of the work requirements, according to the CBO.

Work Requirements Become Law

Many Republican policymakers and the Trump administration have touted Medicaid work requirements to preserve coverage for the neediest. Congress made that national policy through last year’s One Big Beautiful Bill Act and gave states until January 2027 to implement work-for-coverage rules.

Some states are starting those checks early. Montana began in July. Nebraska initiated work requirements in May.

In the federal law creating the work requirements, Congress allowed states to exempt people who have an illness that qualifies them as “medically frail.” Many states created plans for those judgment calls, only to be surprised when federal officials released rules for the requirements that went beyond what Congress outlined, by also requiring enrollees to prove their illness makes it too hard to work.

Families USA and other organizations have argued the new rules force states to set up a patchwork of systems that, together, would be larger and more complicated than the Social Security Administration’s own disability review system. Last year, that federal program cost more than $5 billion to administer to roughly 7 million people nationally. For comparison, Wright said, the federal law provided $200 million for states to share as they implement the work requirements. States are paying contractors millions of dollars to prepare often already flawed public aid systems to meet the new standards.

In June, 25 states sued the Trump administration over the medical frailty rules, arguing they’re too hard for patients to meet and for states to assess. That case is ongoing.

Hailstone was diagnosed with blood cancer at age 10. Her intestines tore, which led to their partial removal. As a result, her body struggles to process food and she can face severe dehydration. She said lingering side effects from her cancer treatment can leave her mind foggy and cause her hands and feet to swell enough that it’s hard to grip a fork or walk across a room.

Cancer dominated nearly half her life. It left mental scars, too.

“Some days you feel fine and then you suddenly crash,” Hailstone said.

Hailstone during her treatment for Hodgkin lymphoma. Though she has been in remission for five years, she deals with lasting effects from the disease. Now she is trying to convince the state of Montana that she should still qualify for Medicaid’s disability coverage. (Kyla Hailstone)

Hailstone and her mom live in Roundup, a central Montana town of roughly 2,000 people. They regularly make the nearly two-hour round-trip drive to Billings for specialized care. She typically has three medical appointments a week to see her physical and occupational therapists and a mental health counselor.

Hailstone said she’s lucky she has her mother’s help navigating Medicaid. Her mom, Kyla Hailstone, said that the state hasn’t clearly defined how it determined her daughter’s disability status and that its appeal process has been slow and dysfunctional.

Taya Hailstone would qualify for Medicaid based on her income if she can’t prove her eligibility for disability coverage. But that would mean proving she’s too sick to meet the work requirement — putting her in the same position of having to rely on a state review of her illness.

“If I lose this, this is life-changing,” Hailstone said.

‘Things Fall Through the Cracks’

Hailstone qualified as disabled through the federal government as recently as 2024, about a year before the state said it was dropping her coverage. State officials can do their own medical review to determine whether someone meets the federal definition of a disability to access Medicaid.

“Whether that happens is always a bit of a crapshoot just based on state capacity,” said Megan Dishong, deputy director of the Montana Legal Services Association, which helps low-income people navigate public programs. “Things fall through the cracks.”

Ebelt said the state health department accepts disability decisions from the Social Security Administration. The state agency can conduct an internal disability determination if a person doesn’t have one from the SSA, but Ebelt said it doesn’t have to if a person qualifies for coverage another way.

“We are committed to treating every client with respect and helping those who are eligible receive appropriate Medicaid coverage,” Ebelt said.

Montana instituted a three-month grace period for the work requirements. State officials won’t begin disenrolling people for noncompliance until October.

Pamela Herd, a University of Michigan social policy professor who has studied bureaucratic obstacles to public benefits, said convoluted disability cases are common enough for attorneys to specialize in accessing aid.

“When we’ve designed public programs in ways that people can’t figure out whether they’re eligible without consulting lawyers, we’ve done something wrong,” Herd said. “That has huge, huge implications for what’s to come.”

Montana officials have said they’ll automatically review medical records that could help patients qualify for an exemption. Even so, the federal guidelines released in June mean patients will probably still face additional steps to guarantee an exemption.

Meanwhile, already overstretched doctors worry they’ll face the burden of judging whether someone’s illness qualifies them for a work exemption.

Dishong said that between now and October, Montana officials could offer more clarity on how the process will work. She said she’s worried the state will end up “with a slow-roll mess” instead.

“This is a problem that’s just starting,” Dishong said.

As for Hailstone, she’s now reapplying for Social Security disability payments. That aid would limit how much she can work. But it would also guarantee access to Medicaid.

Have you tried to prove your eligibility for Medicaid under new rules that require people to show they are working, going to school, or participating in another qualifying activity? Click here to contact KFF Health News.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

This article first appeared on KFF Health News and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Employer-sponsored health insurance covers more than 165 million Americans. It can entice someone to work at one company over another, or be a set of golden handcuffs that keeps them locked into a job they may not enjoy.

But rising costs are straining that system like never before. As premiums balloon, employers have started to pass on more costs to their workers, and the percentage of small businesses offering employees health insurance has dropped significantly.

Stat reporter Bob Herman has been covering this in his series “Out of Pocket, Out of Reach.” An Arm and a Leg host Dan Weissmann and Herman break down how businesses big and small handle the skyrocketing cost of providing health insurance and what it means for workers.

Dan Weissmann @danweissmann @danweissmann.bsky.social Host and producer of "An Arm and a Leg." Previously, Dan was a staff reporter for Marketplace and Chicago's WBEZ. His work also appears on "All Things Considered," Marketplace, the BBC, "99% Invisible," and "Reveal," from the Center for Investigative Reporting. Credits Emily Pisacreta Producer Claire Davenport Producer Adam Raymonda Audio wizard Ellen Weiss Editor Click to open the Transcript Transcript: System meltdown: employer-sponsored health insurance

Note: “An Arm and a Leg” uses speech-recognition software to generate transcripts, which may contain errors. Please use the transcript as a tool but check the corresponding audio before quoting the podcast.

Dan: Hey there. Rachel Bernier-Green runs Thrive-O Financial Advisory on Chicago’s South Side. She describes herself as a fractional CFO for small businesses, offering strategic financial advice along with accounting services. And she says employee health insurance was part of her business plan from the beginning.

Before she even had employees, she built extra money into her prices, and at first, she put that extra money into a rainy day fund. But by late 2024, she thought the time had come. 

Rachel Bernier-Green: I’d been in business for a while. I had a few team members, and things were moving along. 

Dan: She wanted to keep those team members around, and she knew health insurance would help do that

Rachel Bernier-Green: And so that’s when I actually started to think, “How do we actually get this in place?”

Dan: She says she moved quickly– and by January 2025, her six-person team had health insurance.  Then things got wobbly.

Early in the year, a major client left. Income took a hit, and by spring she could see big trouble coming toward her. Insurance for 2026 was going to be way more expensive. And she could tell because some of her clients were already seeing rate hikes from their health insurance companies.

They had policies that renewed early in the year, . And these were much steeper increases than they’d been expecting, so they came to Rachel, their fractional CFO, to help them figure out how to adjust, and Rachel knew she would have to do the same.

Rachel Bernier-Green: It was almost like standing on a train tracks and you’re just kind of staring down the impending doom because you know you’re going to be in the exact same situation in a couple of months.

Dan: She says she shared the bad tidings with her team as data came in right from the start, and she said she makes a practice of sharing the company’s finances, details and all, with her colleagues. She calls it open book accounting.

Rachel Bernier-Green: We have regular team meetings where we’re discussing these things and we could all look at the numbers and the writing was on the wall. So when we kind of got to the end of the road, it wasn’t me saying, “Surprise, here’s what’s going on with the health insurance.” It was more, okay, we’ve reached the point where we have to make a decision and call it.

Dan: They made the call at a regular team meeting, which doesn’t mean the meeting was routine.

Rachel Bernier-Green: My heart was just in my stomach. Um, Because like I knew what we needed to do and I just didn’t want to, want to do it. 

Dan: But they’d gotten their renewal notice for 2026. Health insurance was gonna go up by more than 10%. Rachel says everybody agreed the business couldn’t afford it. 

Rachel Bernier-Green: The numbers were pretty clear in black and white. the entire team was on the same page that what was most important was that the business continues to survive so that we could bring back those benefits in the future. 

The thing I remember the most is that another team member who relied on the insurance reassuring me that that was the right thing to do.

Dan: Even with that kind of consensus, and even with a plan in place to bring back those benefits for 2027, Rachel describes the whole episode as devastating. She’s gone on a plan from her husband’s employer. Some other colleagues have done the same, one has left the firm, and two are uninsured. Rachel and her colleagues aren’t alone.

They’re a case study. A reporter named Bob Herman featured them recently in a story for STAT — a news outlet dedicated to health and medicine.  The headline for Bob’s story: America’s Small Businesses are Giving Up on Health Insurance. And the crisis Bob is reporting on goes beyond small employers. That story kicked off an eight-part series called Out of Pocket, Out of Reach, with a subtitle that tells you how big and how deep this crisis goes.

It’s “How America’s Employer-Based Healthcare System Continues to Crumble in Slow Motion,” which sounds scary and absolutely sucks, but it’s the kind of big picture look we really need, and Bob is exactly the person to break it down. He’s the Business of Healthcare Reporter at Stat. He has done the most comprehensive reporting on the giant UnitedHealth Group.

And for years, he’s published a list of the top paid CEOs in healthcare. These compensation packages go to the hundreds of millions of dollars a year in some cases. It’s completely wild. And he knows how to bring a huge story down to earth. He’s coming right up. This is An Arm and a Leg, a show about why healthcare costs so freaking much and what we can maybe do about it.

I’m Dan Weissmann, I’m a reporter. I like a challenge, so the job we’ve chosen here is to take one of the most enraging, terrifying, depressing parts of American life and bring you something entertaining, empowering, and useful. Bob Herman joined me from a closet. One of his kids had a friend over, it was the quietest place in his house.

He was sitting on the floor. I should’ve been recording the whole time. But we did have the recorder on when I asked him, “How did you come to the conclusion that employer health insurance doesn’t just suck, it’s crumbling?”

Bob Herman: Well, here, maybe it’ll help if I explain kind of the origins of why we even started it. Um, so I’d gotten back from parental leave last year around November. My wife and I just had our second kid, and literally the first thing I have to do, both of us, we both have to do when we get back, is we have to figure out what health insurance plans we’re gonna enroll for the next year, which, as I’m sure you and every one of your listeners knows, is a miserable experience. Um, and I… And we cover healthcare, and it’s still miserable. It’s tedious but also it’s, it, it is high stakes. And at that time, we had seen all the headlines that employer-sponsored health insurance was experiencing double-digit increases ac- everywhere. It is one of the primary ways that Americans are covered, and we’re all getting slammed in the face with historically high premium increases. It turned into, like, this needs to be a project at Stat. Let’s go after it. Let’s figure out what’s going on. And I think it just became very clear that employer-sponsored health insurance is not, you know, the robust product that I think a lot of people think it is.

Dan: And your conclusion here is, like, there’s a structural problem here, starting with how fast the cost of employer-sponsored insurance is going up. 

There’s a, there’s a really big number in your story where you kind of compare how much more health insurance costs now than it did 40 years ago comparing it to the rate of inflation. And basically, health insurance prices have risen almost four times as much as inflation in general. 

Bob: ?Right. And like, you know, we’re talking over the past several decades, almost 1,000% increase versus wages that were much, much lower than that., 

Dan:  So, one takeaway there is:  This huge increase amounts to something like a hidden pay cut for all of us. 

Bob Herman: Hopefully that’s one thing that this series can accomplish is for all workers out there, when you enroll in your health plan every year, how your employer’s paying for it, how much is getting taken out of your own paycheck. These are things that ultimately affect how someone can pay for their day-to-day things, like groceries feel expensive, rent feels expensive. Why? I think part of it is because your employer health plan, it’s become such a financial burden for everybody

Dan: Yeah. Yeah. That is, I, yes. I mean, you, you’ve said to me, I, I think about all the time, which is like, even if your employer covers your health insurance, , like every dollar that your employer is putting toward health insurance is a dollar they could be paying you. It’s a dollar that’s on the budget line for your position

Bob Herman: It’s exactly right, Dan, and this is like, you know, it’s like an iceberg. I think a lot of people see, like, what’s, what gets taken out of their paycheck every month. Like, okay, I’m paying, you know, a couple hundred dollars toward my health- health insurance premium. That is only, like, 20 to 25% of what your actual premium is.

Your employer’s paying most of it. You just don’t see it. But, like, there is so, like, this big block of compensation that you get, a big and growing chunk of it is for the h- for your health plan, and it’s so hidden, and I think that’s what kind of makes the whole p- the, the whole thing so difficult, uh, for Americans to afford.

Dan: I mean the amounts are really striking. The average employer plan for a family now costs 27 thousand dollars a year. That’s average, not the most expensive. And that’s like? It’s a new car, right? These days it’s y- and not, I mean, not a top-of-the-line car, but a Toyota Corolla is, you know, a car yeah 

Bob Herman: Yeah, it, it’s that new, it’s that new car every year, but the employer’s paying the tens of thousands that makes up most of the car. That’s the part that is hidden and that’s what, you know, I think makes the healthcare system, you know, really take advantage of everything

Dan: And, um, you know I notice you’re saying that the fact that it’s hidden helps the health care SYSTEM take advantage of everything.  Not just the health insurance companies. Because they make profits, band they’re the conduit through which everyone else also gets paid.

Bob: You’re right, like it is the health, the health insurance company often takes some for itself, yes, but majority of that money is, it goes out the door to hospitals, to drug companies, to doctors, to device makers, drug distributors, whoever else. Like, all those different companies know that the employer-sponsored system is like their golden goose. 

Dan: So that wild inflation in health insurance premiums — it’s driven by how much more everything in health care costs. How much prices keep going up.  You’ve said — I mean, everybody knows — we pay more for health care in the US than anywhere in the world. Knee replacement, MRI, any meds you can name, we pay a lot more. And I hear you saying: The fact that some of these costs are hidden — they’re bundled into employer health plans — that actually creates opportunities for price gouging, for all kinds of gaming the system. 

Bob Herman: there’s all this money that employers are dumping into these, you know, health insurance premiums for their workers, and it is, it’s like a feeding frenzy. Uh, you know, years ago I remember going to JP, the JP Morgan conference, uh, out in San Francisco. It’s just like the confab where all the big healthcare industry players, you know, gush about how much money they’re making. And commercial insurance, the employer-based insurance is their golden goose, and they know it. And, I, I went around talking to people, and it’s not like they were dismissing that idea. They know that the commercial insurance market, the, what we get, what we all pay for and through our employers, that’s where they make hay. They could charge whatever they want, they being hospitals, doctors, drugs, doesn’t matter. They know that there’s that massive pool of money there. It is, you know, just imagine, like, Scrooge McDuck, right, where there’s this massive pile of coins, and he’s kinda swimming through it. And

Dan: That image has come up before on this show. 

Bob Herman: Yeah, it, it’s just that is, that is the employer market. And, you know, it’s, it’s a lot easier to make money when, you know, the people who are paying into it don’t understand how much they’re paying into it

Dan: Yeah. So you came into this project ’cause you cover the whole business of healthcare. You were already thinking like, “This is a huge story people need to know about. It’s a hidden pay cut. It keeps making insurance and healthcare more expensive every year. Keeps getting worse.” But it, it sounds like you didn’t realize at first the kind of trouble that small businesses were in

Bob Herman: As I was just doing research and talking with people and reading up, you know, there was a KFF employer health benefits survey, I and just buried deep th- within this, very detailed report, there was this chart showing for companies with 200 or fewer employees, you know, a little bit less than 60% of these small companies were offering health insurance now. Historic low, it’s the lowest it, it had ever been . And I was like, And I was like, oh my God, like, that is a shift. It’s this idea that small companies are giving up on this grand American idea of offering health insurance. It’s actually unraveling right now. 

Dan: and so, you concluded small businesses are giving up on health insurance what does that mean they’re actually doing?

Bob Herman: Yeah. I think when we think about employer-sponsored health insurance, companies do it because it’s a retention tool. And , it could be a deciding factor for an employee to come work for you, right?

Like, “Oh, my gosh,” like, “this health plan looks pretty good. Sign me up.” but if, if it’s actually eating into your bottom line, especially as a small business where you don’t have a whole lot of margin to begin with, like that is, that is huge.

 Small companies, they already kind of live on the bleeding edge, right? They just, you know, if you’re at a Fortune 100 company, you have more money than you know what to do with. If you’re a small company, just by your nature, you don’t, you know, your business is small. And it means that the cost of health insurance eat into your expenses so much more.

 And, you know, if you’re just a company of like, for example, 25 people, and you have one really big medical claim, your insurance company can, could come back to you next year and say, “We gotta raise rates 20% because of that one medical claim.”  and, and you know what the crazy thing is? It’s like a 20% is a, a g- gigantic amount, and it’s not, like, that uncommon for a small business to get slapped with that. Like, I, I spoke with, a business in Pennsylvania, and they were staring down the barrel of, like, a 50% increase.

 It’s not uncommon for premiums to, like, double, which, what are you gonna do then? You have to look for other options.

Dan: A-and what you knew when you started was things are getting bad, like rates have been going up even faster than we’re used to, right?

Bob Herman: And the, the past two years in particular have been really bad because, you know, insurers, like they endured a lot of losses. Not a lot of losses, but like they, this … The, the losses were more than they had expected over the past couple years, and so they’re making up for it now. They made up for it in 2026, and they’re making up for it again in 2027, and that’s exactly what you and others are feeling right now

Dan: C- I mean, they’re the house. It’s a casino and they set the odds, and the house never loses. Like, it’s, it’s made that way. Like, you can’t… Like, the, the bookmaker never loses. Like, , they employ a lot of actuaries, and actuaries are just bookmakers, right?

Bob Herman: Yeah. The actuaries, they are the, the very smart people that analyze, like, how much care everyone’s getting and how much they can predict that that will go up next year. , and they’re pretty good at it. And, you know, obviously the past couple years they were less good at it, but They know if there is a bad year, they can easily adjust the premiums to make up for that bad year. There is no, there’s no multiple years of losing money in health insurance. That, that just doesn’t happen

Dan: Unlike, unlike the rest of us. Yeah. So, if you’re really big, you’re spreading the risk out across a whole bunch of people, and you have reserves, and you have long-term plans.

 And if you’re a tiny little business you don’t have all of the tools to kind of sock money away for something or pull money out of your budget someplace else. Is that, is that basically the, the deal?

Bob Herman: I thi- yeah, I think you have it spot on. If you’re a big company, you can weather these things better.The more people you have, the more money you have to pay out when someone does have to file some kind of claim.

Dan: So but so what did your reporting show you about what small businesses are doing instead and what workers are doing instead?

Bob Herman: Yeah. I mean, none of it is ideal, right? ‘Cause, like, m- a lot of small businesses, they… The ones that I spoke with, and I think this is generally true, like, they wanna offer health insurance. And when they can’t do that, some are just saying, like, “You’re just gonna have to figure it out yourself,” which is, like, it’s a great way to lose an employee, right? Like, “Oh my God, I don’t have the safety net anymore.”

Others are doing, you know, maybe giving their employees extra cash that they can say, “Hey, go buy a health plan on the ACA marketplace.” And you know, it’s not ideal because if you think, you know, when, if you have a employer plan, usually it’s, you know, there’s a, a pretty big network or there’s, like, lower out-of-pocket costs, and when you go to the exchanges, it is a world of difference.

 Like, your doctor may or may not be in-network. Out-of-pocket costs and deductibles are generally much higher, and it’s just, it’s a completely different product. 

Dan: It’s worse. That what you find on the exchanges as an individual is worse than what you’d

Bob Herman: It is. 

Dan: I, I have, I, I, I know this firsthand. Like, the first episode of our podcast, I’m shopping on the exchange. I’m like, “This is bad.”

Bob Herman: Yeah, and like, don’t get me wrong, the ACA provided some kind of baseline level of protection for people who would otherwise be uninsurable. Like b- like, it’s crazy to think about 20 years ago, if you had some kind of preexisting condition, you just couldn’t get insurance. Like, sorry. And, um, but, uh, like the ACA plans are, they’re rough.

Like, it, like it’s, it almost… Like, if you have a $9,000 deductible, is that even insurance at that point? I think that’s a fair question to ask

Dan: And, a- and just to zoom out from there, like that chart you found, the one that showed smaller employers are down to just like 60% offering health insurance, it, it also showed that for larger employers, that number hasn’t changed much, right? It’s like still like 97%.

Bob Herman: Yeah, it’s, um, I think this question’s important because, um, it, it does kind of help explain the economy in terms of haves and have-nots, right? Where the biggest companies are always gonna be able to offer health insurance if they really want to. They just, they have the money to do it. Small businesses, like, we’re living in the shift right now where small businesses are not thriving anymore in terms of offering health insurance, . Well, guess what? Like, I don’t s- foresee this reversing course anytime soon. Ask any small business, and more of them are gonna be like, “You know, my time is, like, up.”

 And, you know, is it, does this, does this spur companies to shut down? I don’t know. Like, it’s totally plausible. Um, it’s not good. It’s not good for the economy, and it, there was even a recent survey that shows that it’s not good for workers either. Like, a lot of people just stick in their jobs, jobs that they hate, because they’re just doing it for the health insurance.

 Like, what kind of economy is that where you’re doing something, you’re collecting a paycheck really to just also get health insurance? It’s not, doesn’t feel particularly productive. So, like, these are all problems that are happening right now

Dan: The, I, I saw that survey and you wrote about it. Like twenty four percent of people in that survey said, “I would leave my job except for the health insurance.” A quarter of people

Bob Herman: Yeah. And what a term, right? Job lock. Like it’s, it’s this well-known economic term, job lock. Like you’re s- you’re locked into your job not because you want to, because, but because you feel like you need to. It’s, 

Dan: And you dug into some of those numbers. You were like, “Yeah, and job lock does not hit all people equally,” right? That people are… Who’s, who’s more vulnerable to job lock?

Bob Herman: It’s, it’s oftentimes it’s people who have more chronic health conditions, right? It’s like, “Oh my God, I know I’m going to be a user of my health insurance.” So like, that makes more s- like especially women because, um, you know, especially if, if you’re planning on having a baby or if you just have any kind of chronic condition, it’s like you are… If you know you’re gonna be using your health plan, you can’t afford to leave your job even if you think it sucks

Dan: , you said at the top of our conversation that, you know, this system is collapsing and that, that health insurance isn’t, employer health insurance is not the kind of robust product we thought it was. And not just for small businesses, even though it’s more obvious for them. But you did report this spring briefly on a survey that said, like, some large number of CFOs were like, “Yeah, we didn’t hire people,” or, “We raised our prices,” uh, because of the cost of health insurance, right?

Bob Herman: Yeah, this is still affecting larger businesses, and it’s happening in all the usual ways that we’ve seen over the past, you know, two decades. It’s making deductibles higher for employees. It’s making them contribute more from their paychecks. It’s changing the health plans. And, you know, I, I just spoke with someone the other day. They said that their out-of-pocket max, it’s the term like after you reach this amount, you don’t have to pay any more for the rest of the year, like it doubled. Like that is a health benefit design change where it actually functions like a wage cut too, right? So th- big companies will always be able to do it, but they have been making changes, and most of the times it just means that the worker and their dependents are taking it on the chin somehow.

Dan: Making health insurance worse. So, I mean, there’s a big story that’s just coming out right now: Did you see the story that Disney is saying, “Actually, your spouse can’t be on your plan anymore if they have an offer from their employer”?

Bob Herman: Yeah, , Disney’s basically saying if your spouse has an offer of insurance through their own employer, they have to take that. They can’t join the Disney plan, which is just, honestly, it’s batshit crazy.

For a company that is, like, supposed to be very family-friendly, this is a very anti-family-friendly thing that they’re doing

Dan: The analysis that I saw was like, look, uh, who chooses our insurance when they have an offer from their insurance? It’s somebody who thinks our insurance is better and is, and thinks they’re likely to use it.

Bob Herman: Right. 

Dan: We think we’re gonna be paying out claims. 

Bob Herman: Right. Yeah, I mean, if you think about it, um, if, if you are sick and you know you’re gonna use insurance, you’re gonna choose the plan that, uh, that offers you more protection. Um, so I mean, like actuarily, like it makes sense. Like they’re, they, they have data showing that like when people join or when dependents join the plan, it is costing them more money, and now they’re going to actively stop it. Like if, if the entire social fabric of employer-based insurance is you, if you have a job, you can get an offer of insurance and your, you and your family can join it, even that is starting to unravel. Like what happens if every other employer did this?

Dan: Yeah, it sounds like the idea you started with — that big employers will keep offering health insurance — they’re not gonna walk away but it sounds like you’re reconsidering this?

Bob Herman: I am kind of reconsidering, and honestly, it’s the GLP-1s that have really started making me reconsider this. Like, Pepsi just this week said, “We’re not offering GLP-1 coverage for weight loss anymore for our employees.” Like, it’s not to say, like, that big… I still think big companies are always gonna offer health insurance, but e- but something like GLP-1 coverage, where it is o- so much money and so many people are using it, 

[00:29:46] Even for that, they’re saying, “No, we can’t do it anymore.” they’re still gonna offer coverage that will, that will try to attract people that they wanna attract. But stuff like this shows that, and, like, it is very clear the employer-sponsored health insurance system is unraveling more than perhaps I’ve ever seen.

Dan:  And yet: The experts Bob talked to all said, they don’t expect this system to change anytime soon.  And Bob ended up with some pretty clear ideas about just why that is. That’s coming right up.

This episode of An Arm and a Leg is a co-production of Public Road Productions and KFF Health News. That’s a nonprofit newsroom covering health issues in America. It’s a newsroom full of superstar reporters; we are honored to work with them.. 

Dan: The sense I got, you know, from your reporting is it, like, big employers aren’t happy about it. They’re, they’re mad. Um, they’re unhappy, but that this system is not likely to go away, So, if everybody’s like, “This sucks,” why doesn’t somebody do something? And you had, like, you had a kind of analysis of like, who’s getting things out of it. Who’s benefiting from, from the way things are?And who would get hurt if, if things changed?

Bob Herman: Getting rid of the employer sponsored health insurance system is just vehemently opposed by big business. They know, especially the largest businesses, if they offer an attractive health plan, they could get anybody they want.And then going back to the job lock, those people could also stay with them for a long time because they know that they have the health plan. Um, and the, the largest tax break in the entire code is employer sponsored health insurance, so it’s great for, you know, middle and upper class p- you know, people. It’s great for the businesses. They don’t… Like, nobody pays any taxes on it. 

Dan: I was really struck by the note that it’s the biggest, it’s the biggest tax break in the entire tax code, , we’re talking hundreds of billions of dollars that otherwise would go into the federal kitty that don’t. Um, so businesses, they see all of these, things that are beneficial to them, and even though it costs them so much money, it is not worth giving that up. like, “We, we still have way too many advantages from it, even though it costs us an arm and a leg.” You had a specific example, but like the Affordable Care Act was, part of its design was like super suped up, workplace health plans would incur a tax, and that this did 

Bob Herman: Yes. I, I don’t know if you remember that debate, Dan, but it wa- it was called the Cadillac tax, and it was this idea that, you know, if it’s a really, really super generous plan, we’re gonna start to tax a little bit. Everyone lost their minds about it, and it was across the board. It was businesses, it was unions, who obviously fight very hard to, you know, to, to negotiate for their health plans. It was just universally reviled. But the idea was we need to start taxing these. It went terribly. It got killed, and that w- it was honestly, it was a pretty modest change, and look at, look what happened there

Dan: A- and so I think what, what that example shows is there are people with something to lose, and then of course there’s all the people who, uh, you know, make money in healthcare, not just insurance companies, right? 

Bob Herman: Yeah. The healthcare industry is very powerful. If you look at like, like lobbying dollars, like healthcare companies and their trade groups are always at the top. And like, yeah, they want inertia. As they, you know, vacuum up another, you know, $6 trillion this year and exponentially more next yearIt is a feeding frenzy. And again, this was, this is money that otherwise would be in your paycheck.

Dan: Yeah. I mean, it’s just one of the things I think about of like, we become aware of how much things cost, a lot of us, when, like, we get a giant bill, or people we know, and we’re like, “That’s wild.” But as what you’re reporting is showing, like, no, all of this wildness is paid by all of us , a lot of us get insurance from our jobs, that’s money that could be our wages. We’re paying it there. Um, in places where the government pays for healthcare and it, we are paying that through our taxes. Um, and that is a part that I don’t think, I get to enough on this show, is that like, we’re vulnerable individually, but we’re also each of us individually paying a collective price.

Bob Herman: I remember years ago I was interviewing Don Berwick. He used to be the CMS administrator, uh, during President Obama’s term for a short while, and he made the good point that was like, workers pay for every dime of healthcare in this country, either through your wages or through what is owed to you through compensation or through taxes. Um, and I think if you, if your listeners just think of it that way, it’s actually pretty simple. Like, we’re all paying for this. It just doesn’t, it might not seem like it, but that is the reality

Dan: Um, this is a little bit risky, uh, just for our emotional health, but like, as a parent, as you report on these things, do you think about your kids as adults navigating an economy that’s another 20 and change years along this path?

Bob Herman: It’s, oh yeah. I mean, I’ve, uh, I, I don’t know. Maybe a lot of parents are worriers. I’m one of them. , I think about, like, my kids when they eventually have to go off our health insurance, right? When they have to find their own, and, you know, maybe they have their own healthcare needs at that point and they have to find something. Like, is it gonna be affordable for them? Are they gonna be one of those people who gets job locked, where they’re, they find a job but they absolutely hate every minute of it because they’re just doing it for the health insurance? Um, yeah. I, I mean, 20 years from now is a long time. Like, costs aren’t going down, and how will it affect their, you know, basic, uh, standards of living?

I have no idea. I, I mean, it’s hard not to think about it. Um, but it is far in the future, and I think that’s what also prevents people from changing things. Like, we know it’s bad, it’s gonna get worse, but, like, you know, when it’s that far in the future you can’t really address it right now. But I think that’s the perfect time to address, is before it gets so bad that our own kids can’t even, you know, afford their rent or their groceries or whatever else

Dan: I’m, I’m reminded, right, of the saying like, “The best time to plant a tree is 30 years ago, and the second best time to plant a tree is today.”

Bob Herman: Today. Exactly right 

 

Rachel Bernier-Green: I’m a little anxious about what we’ll be paying, but it, you know, it’s not keeping me up at night.

Dan: Back on the South Side of Chicago, Rachel Bernier-Green tells me she’s on track to bring insurance back for her team in 2027. She says changes they made to their business strategy last year have been paying off, so she’s got the money lined up

Rachel Bernier-Green: I mean, we hope that there are not, you know, more sky-high increases because yes, they do drastically, impact, um, our ability to operate the business But, ?I know that we’ll be well positioned to absorb the cost

Dan: as I, I’m preparing for today’s reporting, I’m like, “Oh yeah, this would be a good time for me to email our insurance broker and be like, ‘Hey Kurt, so what are we looking at for next year? Uh, I think it’s gonna be bad.’” And he’s like, “It’s gonna be bad.” He thinks for the plan that we’re on, which because of our needs for networks and stuff, is we don’t have a whole lot of choices. He’s like, “Yeah, you’re looking at like 14 to 18%, I think, for the next year.” 

Rachel Bernier-Green: Yeah. Yep Yeah. And, and the crazy thing is, like, I’m… Which sounds obscene, but I’m thinking is between 20 and 25%, um, that we need to be prepared for jumps of that magnitude. And I hope that that is not the case, but that’s what we are building into our, um, our models moving forward

Dan: And are you advising clients the same way?

Rachel Bernier-Green: Yeah. Yeah

Dan: I’m curious about, um, what it was like reading Bob’s story. What was it like, I mean, whether it was surprising or not, like what was it like seeing all of that kind of put together?

Rachel Bernier-Green: Oh, I was, um, just like silently cheering, um, because those are the, uh, exact conclusions that I, you know, I can’t inform the conclusions that he reaches, but that is exactly where, um, where I am. That the system is fundamentally broken and it is harming people in re- irreparable ways and that we need a significant overhaul,

Dan: Amen to that. Which is the thing about a story like this. On the one hand, it’s full of terrible news. On the other hand: Most of us — maybe all of us — are already experiencing the effects of all this terrible news. And I think it’s helpful, it’s good, to see it all tied together. To know:  We’re not alone. We’re not imagining things.  The whole system truly is completely broken — and as bob says, continuing to actually crumble.  

Even if we don’t have a *solution*, it’s good to know what we’re up against, to peel back the curtain.  

Next time on An Arm and a Leg, we take another look at Medicare Advantage. And, um… it’s more broken than we thought. 

News anchor: Many health insurance providers are dropping their Medicare Advantage plans.

Female voice: I heard that — I was just in tears.

Female voice 2: I don’t know any way to describe it other than total chaos. 

Dan: I’m hoping that you’re right here with me when I say:  It is so much better to know.  We do not want to get taken by surprise.

This episode of An Arm and a Leg was produced me, Dan Weissmann, with help from Emily Pisacreta — and edited by Ellen Weiss. 

Adam Raymonda is our audio wizard.

Our music is by Dave Weiner and Blue Dot Sessions. 

Claire Davenport is our engagement producer.

Amanda Boyd is our Operations Manager. Bea Bosco is our consulting director of operations. 

An Arm and a Leg is produced in partnership with KFF Health News. That’s a national newsroom producing in-depth journalism about health issues in America and a core program at KFF, an independent source of health policy research, polling, and journalism.

 Zach Dyer is senior audio producer at KFF Health News. He’s editorial liaison to this show.

An Arm and a Leg is distributed by KUOW, Seattle’s NPR news station.

And thanks to the Institute for Nonprofit News for serving as our fiscal sponsor.

They allow us to accept tax-exempt donations. You can learn more about INN at INN.org.

Finally, thank you to everybody who supports this show financially.

You can join in any time at arm and a leg show, dot com, slash: support.

An Arm and a Leg is a co-production of KFF Health News and Public Road Productions.

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KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

This article first appeared on KFF Health News and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

WAIANAE, Hawai‘i — Native Hawaiians will need to comply with new work requirements to qualify for Medicaid after being excluded from exemptions carved out for other Indigenous groups, an omission that clinicians fear will exacerbate the challenges the marginalized population already faces in getting healthcare.

In 43 states and the District of Columbia, President Donald Trump’s signature One Big Beautiful Bill Act will require most adults to work, go to school or enter a training program, or volunteer for at least 80 hours a month. Native Americans and Alaska Natives are exempt from the mandates, which take effect in January.

Of the nearly 700,000 Native Hawaiians in the U.S., around 47% live in Hawai‘i. Within the contiguous United States, California, Washington, Nevada, Texas, and Oregon have the largest populations of Native Hawaiians.

Hawaiʻi’s Medicaid administrator, Meredith Nichols, said the Centers for Medicare & Medicaid Services didn’t respond to the state’s request to include an exemption for Native Hawaiians but said she believes the decision came down to the population’s lack of recognition as a tribal nation. Hawai‘i has about 390,000 Medicaid enrollees, 15% of whom identify as Native Hawaiian, Nichols said.

“We know that when we’ve asked similar questions in the past, it all comes down to federal recognition,” she said.

Hawaiʻi health administrators met with Trump administration officials in June. Some unsuccessfully pushed to add an exemption to the new law, which would need congressional approval.

White House spokesperson Kush Desai did not respond to requests for comment. In a statement, CMS spokesperson Timothy Foster confirmed that the agency met with 16 health centers in Hawai‘i about Medicaid changes but didn’t respond to other questions.

Barriers to Care

Native Hawaiians face many of the same health disparities as Native Americans and Alaska Natives, including higher risks during pregnancy, higher infant mortality rates, and higher rates of being uninsured than the white population. And in Hawaiʻi, Native Hawaiians have the second-lowest life expectancy among ethnic groups after other Pacific Islanders.

Kapono Chong-Hanssen is the medical director of Ho‘ōla Lāhui, the Native Hawaiian healthcare system on Kaua‘i that also serves the privately owned island of Ni‘ihau, whose 170 full-time residents are predominantly Native Hawaiian. Chong-Hanssen said he anticipates many of his patients will no longer receive the care they need once the new work requirements take effect.

Chong-Hanssen says new Medicaid work requirements will erode the trust healthcare providers worked hard to build among Native Hawaiian patients. (Ashley Mizuo/KFF Health News) Ho‘ōla Lāhui, the Native Hawaiian healthcare system on Kaua‘i, operates out of multiple locations, including its clinic in Waimea on the west side of the island. Kaua‘i and Ni‘ihau were impacted by Hurricane Lowell this week, forcing Ho‘ōla Lāhui to temporarily close facilities. (Ashley Mizuo/KFF Health News)

The new requirements will erode the trust healthcare providers worked hard to build among Native Hawaiian patients, who, in response to historical disenfranchisement, are more likely to disengage and “throw the whole system out” when they run into barriers, Chong-Hanssen said. “It just flies in the face of everything that we’re trying to do.”

Beyond medical services, Medicaid covers transportation expenses when patients travel between islands for care. A round-trip ticket between Kaua‘i and O‘ahu, for example, can cost hundreds of dollars.

Congress placed over 200,000 acres of land in a trust for Hawaiian homesteads in 1921 to bring Hawaiians back to their native lands after the U.S. backed the 1893 illegal overthrow of the Hawaiian kingdom. Nearly 30,000 Native Hawaiians are still waiting for land, while, as of the 2020 census, more than 34,000 people lived on Hawaiian homelands. The homesteads are often far from Honolulu, where most health services are located.

Waianae Coast Comprehensive Health Center primarily serves the west side of O‘ahu, which is home to the island’s largest Native Hawaiian population, near four Hawaiian homesteads.

Waianae Coast Comprehensive Health Center CEO Rich Bettini (right) and Vice President Leinaala Kanana demonstrate how to use pods throughout the campus that connect patients via phone to an employee who will help them submit needed information and applications to the state’s Medicaid program. (Ashley Mizuo/KFF Health News)

The center’s vice president, Leinaala Kanana, said that many of its patients are geographically isolated and that few jobs are available in the area. Patients also have trouble securing transportation to get to work or finding affordable childcare.

The center’s CEO, Rich Bettini, said Hawai‘i’s high living costs and depressed wages have pushed many people into homelessness, creating another barrier to complying with the new Medicaid requirements. Native Hawaiian and Pacific Islanders make up about 60% of O‘ahu’s homeless population. The center estimated about 2,800 of its patients may be affected by the requirements, half of whom are Native Hawaiian.

The annual “cost of living for a family of four in Hawaiʻi on O‘ahu is $100,000-plus. The average income of our patients is under $30,000 a year,” he said. “That is an enormous gap.”

‘Bigger Fish To Fry’

Native Hawaiians face obstacles to being granted the same exemptions as other Indigenous groups. While several federal laws refer to Native Hawaiians as an Indigenous group, they are not among the 575 tribes recognized by the federal government. Federal recognition can be granted either by Congress or administratively through a process established by the Department of the Interior. Native Hawaiians remain divided about whether they would even want federal recognition, with some fearing it would jeopardize their ability to restore Hawaiian independence.

Laws governing Medicaid also don’t acknowledge Native Hawaiians, aside from the 2021 American Rescue Plan Act, signed by former President Joe Biden. In the covid-era law, the federal government fully reimbursed Native Hawaiian health centers for Medicaid services for two years. However, all the qualifying Native Hawaiian health centers were in Hawai‘i, where fewer than half of Native Hawaiians in the country now live.

The federal government fully reimburses Indian Health Service and tribal facilities for healthcare services provided to Native Americans and Alaska Natives. Native Hawaiian healthcare systems instead receive the same reimbursement rate as in the rest of Hawaiʻi.

Waianae Coast Comprehensive Health Center CEO Rich Bettini said Hawai‘i’s high cost of living and depressed wages have pushed many people into homelessness, creating another barrier for Native Hawaiians to comply with new Medicaid requirements. (Ashley Mizuo/KFF Health News)

Keolamaikalani Dean, the CEO of the King Lunalilo Trust, which provides services for Native Hawaiian elders, pointed to the new Medicaid requirements as just one of many federal policies limiting Native Hawaiians’ healthcare.

“It’s horrible as a policy, but there are bigger fish to fry,” he said.

Dean said he’d rather advocate for giving Native Hawaiian healthcare systems the same full Medicaid reimbursement that the Indian Health Service receives. The change would have greater impact on patients seeking care, he said.

Native Hawaiian advocates said they have been overextended as they work to guard against an onslaught of threats to revoke other federal funding by the Trump administration.

In Trump’s proposed 2027 budget, cuts to Native Hawaiian programs cited the group’s lack of federal recognition as a “tribal nation.” The proposed cuts coincide with lawsuits from conservative groups challenging Native Hawaiian education programs and long-standing legislation that provides homestead land to some Native Hawaiians at almost no cost, alleging the programs racially discriminate against other groups.

Papa Ola Lōkahi, a nonprofit that oversees the Native Hawaiian healthcare systems in the state, declined to comment for this article. The group is involved in a lawsuit filed by a conservative group aiming to stop a university scholarship for Native Hawaiians pursuing healthcare careers.

U.S. Rep. Jill Tokuda (D-Hawaiʻi) viewed the exclusion of Native Hawaiians from the exemptions to Medicaid work requirements as an attempt to further erode Native Hawaiians’ Indigenous status, pointing to recent challenges by the Trump administration and lawsuits.

“These are not one-offs,” Tokuda said. “This is a targeted, coordinated attack to undercut the Indigenous status of Native Hawaiians.”

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

This article first appeared on KFF Health News and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

TROY, N.Y. — Like many residents of this aging industrial city on the Hudson River, Starletta Washington was stunned when she heard Troy’s last remaining hospital planned to close its birthing center.

“It was devastating,” said Washington, who heads the local YWCA. Washington was born at the hospital and had her children there. She couldn’t believe families would now have to get to a hospital half an hour away or face the prospect of an emergency delivery.

“Nobody else was going to be born in the city of Troy unless they were born on a city bus, in the back of a cab, or, disgustingly, on the side of the street?” Washington said. “Blew my mind.”

Troy wasn’t the first community to face this prospect. Since 2010, hospitals have closed hundreds of maternity units as cities and towns shrink and hospitals consolidate into larger systems.

Troy found a more hopeful ending.

Elected officials from both major parties joined patient advocates, mothers, midwives, doulas, and community leaders like Washington to challenge Trinity Health, the large Catholic health system that owns Troy’s hospital and birthing center. The campaign even united Planned Parenthood and the Catholic diocese.

“Whether you were Republican or Democrat, or if you didn’t vote, it literally brought everyone together,” said Carmella Mantello, the city’s Republican mayor. “Everyone just said, ‘We can’t let this happen.’”

Carmella Mantello, the Republican mayor of Troy, New York, says even nonprofit hospitals seem to have become more corporate. “The whole hospital scene has changed,” she says. (Hannah Norman/KFF Health News) Starletta Washington, who heads the YWCA in Troy, was born at the hospital where Burdett Birth Center is located. Like many in the community, she says she was blindsided by Trinity Health’s plan to close the center. (Hannah Norman/KFF Health News)

Throughout the country, healthcare remains a flash point as politicians square off ahead of November’s elections. But in many places, Americans are also quietly finding common ground.

In this small city, residents were brought together by frustration over large, corporate health systems that can seem to put profits over patients. And they resolved to work together to keep critical medical services in their community.

A Community Institution

Babies have been delivered at Samaritan Hospital on a hill above Troy since this city’s once bustling factories produced most of America’s shirt collars a century ago.

More recently, Samaritan’s Burdett Birth Center had become a model for patient-focused care. Midwives and doulas work alongside OB-GYNs and support mothers who want to avoid a delivery by cesarean section unless necessary.

Patient safety advocates have pushed for years to reduce surgical deliveries, which can lead to complications. At Burdett, only about a quarter of newborns are delivered by C-section, compared with about a third statewide, according to 2025 hospital data. Burdett also had fewer preterm births and fewer babies with low birth weights.

“I wouldn’t go anywhere else,” said Lidia Zambrano-Madera, who gave birth to both her children at Burdett with the help of a midwife.

Lidia Zambrano-Madera, a Troy resident, gave birth to both her children at the Burdett Birth Center with the help of a midwife. “I wouldn’t go anywhere else,” she says. (Jayana Espinoza)

For Zambrano-Madera, who recently opened a children’s play center in Troy, Burdett offered another advantage: It was just five minutes from home.

But three years ago, Trinity Health, a multibillion-dollar Michigan-based hospital system, said the birth center was losing money and would close. Families from Troy and surrounding Rensselaer County would have to deliver at another Trinity hospital in Albany, up to a half-hour’s drive away. The hospitals are branded under St. Peter’s Health Partners in the Albany region.

“We’ve been frantic about trying not to cut the care at the bedside,” said Steven Hanks, a physician who oversees Trinity hospitals in New York and New England. “But, you know, you get to a point where you can only consolidate so much. You can only spread people so thin, and then you have to start taking harder looks at your actual services.”

Corporate Backlash

Trinity’s plans — news of which broke in a local newspaper — came without warning, surprising the obstetrical staff and community leaders. They set off a firestorm.

Within days, midwives, mothers, community leaders, and politicians held a rally at the YWCA in downtown Troy. Others would follow. Volunteers led by doulas and midwives made T-shirts and handed out pink “Save Burdett” signs at the local farmers market.

Activists were outraged that the hospital hadn’t adequately assessed the impact of the closure, particularly on low-income families. They conducted a community survey that found 1 in 4 Troy residents didn’t have access to a car and would have trouble getting to Albany.

The campaign drew on deep connections that many residents had to Burdett. “They realized what a gem Burdett is, and what a great community service they provide,” said Jessica Hayek, a doula and birth educator who helped lead the campaign.

Jessica Hayek, a doula and birth educator, helped lead the campaign to stop Trinity Health from closing the Burdett Birth Center. She says Michigan-based Trinity didn’t appreciate how important the center was to the Troy community. (Hannah Norman/KFF Health News)

Hayek and others also tapped into deep-seated frustration with Trinity, a healthcare behemoth that operates 91 hospitals and last year recorded more than $25 billion in revenue and a healthy operating margin that topped 5%.

“Trinity Health is in the Midwest, and they are not in the community,” Hayek said. “So when you’re looking at just the numbers from an office in the Midwest somewhere, they’re not looking at the benefit that this place has on the community.”

Hayek describes herself as a liberal Democrat. But Trinity’s focus on its bottom line also irked many Republicans, including Mantello, who was the City Council president at the time.

“The whole hospital scene has changed,” Mantello said. “It was very personable. You had nurses and doctors who were able to give more care and spend more time with patients.” Now, by contrast, many hospitals have what she described as a “more corporate type of atmosphere.”

Even the Catholic bishop decried the planned closure of the birthing center as out of step with the values of his faith and the hospital system’s.

“Nothing is more central to the Catholic healthcare mission than supporting life and all those who bring it into the world,” Bishop Edward Scharfenberger said after Trinity announced the closure plan. Scharfenberger has since retired.

A Bipartisan Solution

Despite the backlash, Trinity Health executives for months insisted they had no choice. The system even sued the state to push through the closure.

Ultimately, though, powerful state officials, including New York Attorney General Letitia James, a Democrat, joined the fight to save the birthing center, launching an investigation into the proposed closure and hosting a daylong hearing in Troy.

State Assembly member John T. McDonald III, a Democrat who represents Troy, worked with Republican elected officials, including the county executive and the state senator representing Troy, to secure $5 million in state funding to help keep Burdett open.

 “You had a Democrat and a bunch of Republicans all working together on the same issue,” McDonald said, “because, at the end of the day, our job is to listen to what the public has to say.”

Community leaders, politicians, midwives, doulas, and families from Troy rallied for months to stop the Burdett Birth Center from closing, including at the state Capitol in Albany. (Katherine Bruno/Upper Hudson Planned Parenthood) Community volunteers in Troy celebrated the success of their campaign to save the Burdett Birth Center by adding a yellow tag to the pink protest signs. (Hannah Norman/KFF Health News)

Nearly a year after announcing the closure, Trinity reversed itself and said Burdett would remain open.

Lois Uttley, a New York City-based researcher and activist who has worked with communities facing hospital consolidation, said Troy’s success reflects a growing bipartisan suspicion of corporate healthcare organizations.

“The executives of these health systems will tell the community that joining a big health system will be good, that the quality of care will improve, that efficiencies will mean they can keep the costs low,” Uttley said. “But what I have seen over the last 30 years of work is that those promises often are broken.”

As hospitals close or downsize, she said, communities are catching on. “They’re becoming more skeptical.”

There’s another, more hopeful lesson in Troy’s success, said McDonald, the state lawmaker.

“If we take down our swords,” he said, “and put out our arms, maybe we can get something done.”

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

This article first appeared on KFF Health News and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

AUSTIN, Texas — Musician Zack Morgan jokes that when he lost his corporate job in 2015, it was like being pushed off a cliff. For years, he said, he’d been playing both sides of the Austin coin: tech worker by day, funk keyboardist by night.

“Maybe this is my sign to try the full-time music thing,” Morgan recalled thinking. “Step one in that was: Get health insurance again.”

Austin bills itself as “the Live Music Capital of the World,” but it can be unaffordable for the artists who provide the city with its cultural cachet — and help drive its tourism revenue.

Morgan has supported himself by patching together gigs with a number of bands. To help pay for health insurance, he turned to a local nonprofit, the Health Alliance for Austin Musicians, or HAAM.

“That’s part of being able to make this whole thing work,” Morgan said.

HAAM subsidizes the monthly insurance premiums of local musicians who purchase plans through the Affordable Care Act marketplace. To fund the roughly $4 million program, it works with Central Health, a public agency that provides healthcare resources for low-income residents of Austin and surrounding Travis County. Many of the performing artists pay $0 toward monthly premiums.

After more than a decade, including through the coronavirus pandemic, the assistance program has become an established and reliable financial support for Austin’s musician community.

This year, after Congress failed to extend pandemic-era subsidies, premiums skyrocketed for many ACA plans. A recent report found that 5 million people nationwide had dropped the coverage. HAAM helped blunt the impact for its members. It has emerged as a potential model for other cities hoping to make healthcare more affordable for key populations and industries.

Morgan plays keyboard with pop singer Ruthie Craft at the Saxon Pub in Austin on July 27. (Ysa Mendoza/KUT News)

A Growing Idea

Texas had the highest uninsured rate among states, with 19% of people age 64 and under uninsured, as of 2024.

Even before the launch of the ACA marketplace in 2014, HAAM had spent a decade connecting musicians with free and low-cost care at clinics and hospitals in and around Austin. But roughly 85% of HAAM members remained uninsured, leaving them exposed when traveling to gigs in other cities and states.

“When the Affordable Care Act came out, and we knew it was here to stay, it really made sense for us to start getting our musicians fully insured,” said Rachel Blair, HAAM’s chief strategy officer.

Similar nonprofits in other U.S. cities with strong live music cultures, such as Seattle, New Orleans, and Nashville, Tennessee, help musicians get medical care. With the advent of the ACA, some of these organizations began helping musicians navigate the sometimes complex enrollment process for the online marketplaces, though they stopped short of pitching in on premiums.

But the team at HAAM recognized that without direct support to help pay premiums, many of their members would still struggle to retain coverage.

“When you think about the average HAAM member making about $30,000 a year, there’s no way that they would be able to spend a third of their income on healthcare,” Blair said.

The organization’s membership has grown by 77% to more than 3,300 people since HAAM began offering premium assistance, and more than 90% of members are now insured.

To help subsidize costs for members, HAAM partnered with Central Health, which is Travis County’s public hospital district — a type of health agency in Texas charged with using tax dollars to fund safety net healthcare for low-income residents. Central Health also operates the nonprofit Sendero Health Plans, which offers marketplace insurance to Travis County residents.

To qualify, HAAM members must enroll in one of Sendero’s silver-level, or benchmark, plans. If their income is between one and two times the federal poverty level, Central Health pays the balance of their monthly premium after federal tax credits are applied. For members who fall above that income range, HAAM offers a more limited subsidy, covering 50% of their premium balances.

Each year, the Health Alliance for Austin Musicians hosts the HAAM Day Music Festival, its annual event to raise money to help local musicians afford insurance premiums and other healthcare services. Bands play in common spaces across the city, from grocery stores to the Texas Capitol steps. (Shunya Carroll/KUT News)

In 2017, HAAM helped set up a similar program in Denton, a college town north of Dallas that has served as a testing ground for successful musicians, from Meat Loaf to Norah Jones.

The Denton Music and Arts Collaborative works differently: It connects members with an independent insurance agent who helps them find the best health plan for their needs. The nonprofit then offers members a monthly subsidy of $100.

The subsidies are a way of keeping Denton’s culture of jazz and “weird art rock” alive, said the collaborative’s president, Jennifer Kapinos.

“More and more people were maybe graduating college and leaving and going to find better opportunities in other places,” Kapinos said. “People who had lived here a long time suddenly were finding it harder and harder to afford to be here.”

In Austin, other sectors have been watching HAAM’s work. In 2025, Good Work Austin, a nonprofit that advocates for restaurant workers, launched a small pilot program with Central Health to help local food workers enroll in Sendero plans and cover their premiums.

Kit Abney Spelce, vice president of operations for Central Health, said partnering with an advocacy group focused on a particular workforce is key because simply announcing “free insurance for you” doesn’t mean people will sign up.

“We are very much dependent on our partner entity to go out and connect with the community, to have that relationship and that trust,” she said.

Navigating Federal Headwinds

Though premium payments often increase year over year, the 2026 plan year was particularly expensive, increasing by 58% on average.

Citing medical and pharmacy costs, Sendero raised rates by an average of 16% for its enrollees. At the same time, Congress allowed the pandemic-era enhanced premium tax credits to expire, reducing the federal subsidies that many marketplace customers relied on.

“Our premiums for our members went up 60% from one year to the next,” Blair said.

HAAM stepped up its fundraising into 2026, but it wasn’t enough to cover everyone who requested assistance. They had to turn away hundreds of qualified people. Still, they were able to buffer existing members, said Spelce with Central Health.

“We’re going to make sure their monthly premium is paid every month,” she said.

Austin-based Latin-folk singer Gina Chavez plays on the steps of the Texas Capitol in 2025 for the HAAM Day Music Festival, an annual fundraiser for the Health Alliance for Austin Musicians. (Shunya Carroll/KUT News)

A Viable, if Limited, Model

Beyond the eligible musicians they turned away in 2026, another population remains out of HAAM’s coverage reach for premium assistance: Austin’s poorest residents.

Under the ACA, the marketplace plans that HAAM helps subsidize are for low- and middle-income earners, but the people with the very lowest incomes — below 100% of the federal poverty level, set at about $15,000 — are supposed to be covered by expanded Medicaid.

But Texas is one of 10 states that chose not to expand Medicaid after the ACA became law, so many of the poorest Texans remain uncovered.

With no federal subsidies available for that group, HAAM and Central Health have tried to develop separate solutions for this subpopulation. Central Health has its Medical Access Program, an alternative to health insurance that gives low-income, uninsured people access to a network of local care providers. HAAM has also established relationships with primary care providers to serve its uninsured members — but Blair acknowledges it’s not an equivalent benefit to what Medicaid expansion would offer.

“It’s not a very sustainable solution, especially when there’s a really good alternative,” Blair said.

This article is from a partnership that includes KUT, NPR, and KFF Health News.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

This article first appeared on KFF Health News and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

A group of Democratic lawmakers is calling for the Trump administration to suspend a new surveillance program it quietly launched to collect the personal and identifiable health data of Americans who visit emergency rooms.

KFF Health News first reported that the Consumer Product Safety Commission — a federal agency tasked with monitoring injuries from household items — was pressuring hospitals to provide a private company with personally identifiable health information for analysis. The rollout of the program has inspired broad pushback from hospitals and privacy advocates.

The CPSC’s goal is to obtain millions of Americans’ medical records from emergency rooms for most injuries, even when a consumer product is not involved, internal emails and documents reviewed by KFF Health News revealed. The agency instructed hospitals to share detailed patient information for more than 10,000 types of injuries or conditions, such as vaccine reactions, suicide attempts, or stingray stabs.

The scope of data CPSC is collecting far exceeds the agency’s mission and should be immediately suspended, Massachusetts Sen. Ed Markey, who sits on the Senate Health, Education, Labor, and Pensions Committee, and other House and Senate Democrats wrote in a letter to CPSC acting Chairman Peter Feldman.

“This unprecedented and sweeping effort to collect identifiable patient data is untethered from the Commission’s statutory mission and authority, and is ripe for misuse by an administration that has repeatedly sought access to Americans’ most personal information,” the letter stated. “Americans should be able to seek medical care without fear that their personal health information will be swept into a federal database and repurposed for political ends.”

Among other Democrats signing the letter were Sen. Richard Blumenthal of Connecticut, Rep. Jan Schakowsky of Illinois, and Sen. Ron Wyden of Oregon, the ranking member of the Senate Finance Committee.

CPSC spokesperson Steve Roney did not answer several questions about the program and the call for it to be suspended.

“We received the letter, and will respond directly, through the appropriate channels,” he said in a statement.

The CPSC is one of several agencies that have launched broad acquisitions of Americans’ sensitive medical records during Trump’s second term. The Office of Personnel Management has requested federal workers’ sensitive health information. Health and Human Services Secretary Robert F. Kennedy Jr. deputized at least one private organization to collect more medical records for his studies on vaccines and autism.

The CPSC has operated a voluntary program for decades that enables trained hospital workers based in about 70 hospitals nationwide to report injuries involving consumer products, called the National Electronic Injury Surveillance System, or NEISS. Compared with the current initiative, the agency’s data collection has historically been far narrower, and previously requested patients’ identifiable information, generally for follow-up, in fewer than 1% of cases.

Without public notice, CPSC staffers overhauled the program early this year — rebranding it as NEISS-R — and told hospital executives that participation is mandatory, requiring they report far more identifiable patient details from more injuries to a private company called Konza Health. The Kansas-based company won a five-year contract last year worth up to $15.9 million with the CPSC.

In emails and contract language reviewed by KFF Health News, Konza representatives described hospital participation as “mandatory” or “required.” Emails sent this year by CPSC chief data officer Elizabeth Puchek said hospitals would need to apply for an exemption from participation or face penalties. Those penalties, for what’s called unlawful “information blocking,” were established in a federal data-sharing regulation designed to make sure patients could access their medical records. The agency’s website reiterated that threat, claiming information-blocking regulations require hospitals “to make electronic health information (EHI) available to public health authorities, such as CPSC, upon request, unless a specific exception applies.”

The power play inspired widespread resistance. The American Hospital Association sent a letter in August asking for modifications to the program, citing “confusion and concern about the scope of patient information” demanded by the agency.

Now the agency is backtracking, removing in recent weeks mentions of “information blocking” penalties from its public page.

The CPSC’s Feldman, a Trump appointee, said in an interview last month with Nextgov/FCW that the new program would “remain a voluntary” one.

The Democrats highlighted these discrepancies and changes, also noting that the agency has bypassed regulations and failed to publicly lay out any detailed plan for its data collection, as required by law.

“The Commission has since quietly removed the information blocking rationale from its public NEISS webpage, without any public correction or acknowledgment that the claim it spent months promoting was without basis,” the letter said. “This reversal does not undo the coercion hospitals experienced, but rather raises the question of whether the Commission’s purported legal justifications were ever more than post-hoc cover for an agenda that had little to do with its statutory authority.” The Democrats’ letter asks CPSC to respond by Sept. 18.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

This article first appeared on KFF Health News and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.