Vitals
- ACA enrollment drops to 23M — down 1M+ as enhanced subsidies expire and premiums surge
- PBM reform signed into law — delinking compensation from Part D list prices and rebates
- UnitedHealth & Elevance expect ACA margins to improve in 2026 despite enrollment turbulence
- Health system AI adoption at 27% — payers lagging at 14%1
- VA reorganization announced — shifting healthcare workforce to high-growth veteran population hubs
Peaks
Congress Finally Moves on PBM Reform
After a decade of advocacy, the House passed substantial PBM reform as part of the Consolidated Appropriations Act — and President Trump signed it into law. The legislation "delinks" PBM compensation from Medicare Part D list prices and rebates, mandates price transparency, and gives CMS authority to define and enforce "reasonable and relevant" contract terms.2
Why it matters: PBMs have operated as powerful middlemen with minimal oversight. This is the most significant PBM accountability legislation in a generation. States like Massachusetts are also moving, with PBM licensing and rebate reporting taking effect this year.3
Payers Accelerate AI Deployment
After years of cautious testing, health insurers are moving fast on AI in 2026. "2025 was a lot of payers dipping their toes into AI technologies," noted Ben Baenen of West Monroe. "That cautious use casing is going to start to accelerate in 2026."4
Why it matters: Payers have been the slowest healthcare sector to adopt AI (14% vs. 27% for health systems). Rapid deployment means AI-driven prior auth, claims processing, and member engagement are coming — with implications for providers and patients alike.
Hospital M&A Pipeline Heats Up
Major consolidation continues. Northwell Health completed its merger with Nuvance Health, creating a $22.6B system with 28 hospitals and 100,000+ employees.5 RWJBarnabas signed a definitive agreement to acquire Englewood Hospital — one of New Jersey's last independents.6
Why it matters: Scale is becoming survival strategy. Independents face mounting pressure, and PE firms are pivoting toward software/services platforms rather than direct care delivery exposure.
Troughs
ACA Enrollment Slides Backward
Affordable Care Act enrollment fell to 23 million in 2026 — down more than 1 million from the prior year. The culprit: expiring COVID-era enhanced subsidies and resulting premium increases.7
Why it matters: This reverses years of enrollment gains and signals potential coverage gaps for lower-income populations. Insurers are pricing for a sicker risk pool, which could create a negative cycle.
CFO Confidence Remains Low
Over 80% of healthcare CFOs view business conditions as their primary concern heading into 2026. Organizations anticipate little relief from financial constraints, with 84% of administrative leaders reporting persistent pressure.8
Why it matters: Cautious finance leadership means slower investment in innovation, tighter operating margins, and continued workforce stress. Don't expect bold moves from most health systems this year.
Independent Hospitals Continue to Disappear
Englewood Hospital's planned acquisition by RWJBarnabas marks another independent falling to consolidation. Three years after a failed merger with Hackensack Meridian, the hospital is joining a major chain.9
Why it matters: The independent hospital model is increasingly untenable. Workforce protections (like union successor clauses) soften the blow for employees, but community governance and local control are vanishing.
Trends
AI Reimbursement Battles Begin
The question dominating 2026: Who pays for clinical AI? Health systems are deploying AI assistants, but reimbursement models haven't caught up. Expect friction between providers seeking payment for AI-augmented care and payers questioning the value.10
Why it matters: This will determine whether AI in healthcare becomes a cost center or profit driver — and who captures the value.
States Lead on AI Regulation
The Colorado AI Act now mandates disclosure and opt-out mechanisms for AI use in healthcare. More states are following, creating a patchwork of patient protection requirements.11
Why it matters: National AI policy remains stalled, so states are filling the void. Healthcare organizations operating across state lines face growing compliance complexity.
Health Systems Building Their Own MA Plans
Major health systems are increasingly creating their own Medicare Advantage plans to control reimbursement and member experience. This follows the Kaiser model and builds on direct contracting experiments.12
Why it matters: Systems with 10,000+ attributed lives can potentially cut out payer friction entirely. Watch for more announcements as systems seek to own the full patient relationship.
So What?
The throughline this week: the middle is getting squeezed.
PBM reform targets middlemen in drug pricing. Hospital consolidation eliminates independent middle-tier facilities. AI reimbursement battles pit providers against payer intermediaries. Even ACA enrollment decline reflects middle-income Americans caught between subsidy eligibility and affordability.
For healthcare leaders, the strategic question is positioning: Are you building direct relationships (with patients, employers, regulators) or depending on intermediaries whose power is eroding?
The organizations thriving in 2026 won't be the biggest — they'll be the ones with the shortest distance between value creation and value capture.
On the Calendar
- HIMSS 2026 — March 3-6, Las Vegas
- HLTH 2026 — October, Las Vegas