Historic Medicaid cuts in Republicans’ “One Big Beautiful Bill,” signed into law earlier this month, are unlikely to have a negative impact on laboratory testing volumes in the near term, executives at Labcorp and Quest Diagnostics reassured investors last week.
Labcorp CEO Adam Schechter, answering an analyst’s question on potential fallout from the legislation, described the impact as manageable. While lab testing is an essential tool used in almost every healthcare decision, it accounts for a “very small fraction” of U.S. healthcare spending, the CEO said.
The new tax and domestic policy law overhauls Medicaid and the Affordable Care Act to align with Republican priorities, including funding cuts, Medicaid work requirements and stricter eligibility verification for the safety net insurance program and the healthcare exchange. The legislation decreases federal healthcare spending by $1.1 trillion over the next decade and is expected to cause 10 million Americans to lose health insurance.
Schechter said he doesn’t foresee an impact on Medicaid until 2028, “and the key is going to be, do people find insurance through other ways, through states or spouses that might have insurance?”
If a large group of people become uninsured, Schechter said he would be concerned, but he doesn’t expect that to happen. “I don’t think it’s very likely in the United States that you’ll have a very big group of people automatically become uninsured in a specific period of time,” he said.
On the healthcare exchange, the expiration of tax credits could have a negative impact for Labcorp of as high as 30 basis points, Schechter said.
The legislation will be harder on Labcorp’s hospital customers, he said, which could accelerate deals for outreach businesses and running hospital laboratories.
Quest Diagnostics CEO Jim Davis said the cuts to Medicaid would have no impact next year and “very little” impact in 2027 because states will have time to react to the changes. In addition, no more than 4% to 5% of Quest’s revenue comes from the healthcare exchange.
CFO Sam Samad said the company expects an impact of about 30 basis points on Quest’s testing volumes in 2026 if exchange subsidies are not renewed at the end of this year.
Davis said people who buy their insurance on the exchange may be able to pay higher premiums to keep their coverage or could switch to their employers‘ health insurance.
Both Quest and Labcorp raised their revenue forecasts for 2025.
William Blair analyst Andrew Brackmann, in a note to clients Friday, said Labcorp investors are likely to remain focused on potential impacts from Washington. However, “looking to the second half of the year and into 2026, expectations appear appropriately set.”
