Healthcare Providers Face Over $770B Revenue Loss Under House Bill, Potentially Exceeding $1 Trillion with ACA Credit Expiration, Report Warns

What You Should Know: 

– A new analysis from the Urban Institute, supported by the Robert Wood Johnson Foundation, projects that U.S. healthcare providers could lose more than $770B in revenue over the next decade if a budget reconciliation bill recently passed by the House of Representatives becomes law. 

– The financial blow would stem from an estimated 11 million people losing health coverage through Medicaid and the Affordable Care Act (ACA) marketplaces. The report further warns that if enhanced ACA tax credits are also allowed to expire at the end of 2025, the total revenue loss for providers could surpass $1 trillion, with nearly 16 million people becoming uninsured.

Massive Revenue Hit Projected from Reconciliation Bill Alone

The Urban Institute’s analysis indicates that the House-passed spending bill, on its own, would have severe financial repercussions for the healthcare sector. Hospitals are projected to face the largest hit, with an estimated $306B reduction in revenue over the next decade.

In addition to lost revenue, the spending bill is projected to significantly increase the demand for uncompensated care—services that hospitals and other providers are legally or ethically obligated to provide without reimbursement—by $278B between 2025 and 2034. Hospitals would bear the largest portion of this increase, facing an estimated $102B in additional uncompensated care costs.

Compounded Crisis: The Impact of Expiring ACA Tax Credits

The financial strain on providers would be further exacerbated if Congress also allows the enhanced tax credits, which currently reduce healthcare premiums for millions of Americans, to expire at the end of 2025. Under this combined scenario, the Urban Institute researchers find that provider revenues would plummet by more than $1 trillion over the 2025-2034 period. This is attributed to nearly 16 million people losing Medicaid coverage, which would cause the uninsured rate to rise by more than 50%.

The breakdown of this potential $1 trillion+ revenue loss includes:

• Hospitals absorbing approximately $408B (also cited as $400B elsewhere in the source material).
• Office-based physicians losing $118B.
• Other healthcare providers, such as dentists and home healthcare providers, facing a $272B loss.
• A reduction of $234B in spending on prescription drugs.

Devastating Consequences for Patients, Providers, and Communities

Experts warn that the magnitude of these potential funding cuts and coverage losses would have far-reaching and detrimental effects. “The magnitude of the proposed federal funding cuts to Medicaid will devastate patients in need of care and the hospitals and clinics that serve them,” said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. “These cuts would inevitably lead to hospitals and clinics closing, especially in rural areas—hurting local economies and reducing access to care for everyone, including people with private insurance and Medicare”.

Fredric Blavin, senior fellow at the Urban Institute, echoed these concerns. “The coverage losses associated with these legislative actions will have detrimental consequences for both consumers and providers,” he stated. “Lower spending on healthcare services means lower revenue for healthcare providers and fewer services rendered. The resulting decline in revenue could have significant adverse consequences—particularly for already financially at-risk hospitals and the communities they serve”.

The researchers conclude that the proposed federal funding cuts to Medicaid and the potential expiration of ACA subsidies represent a significant threat to the financial stability of healthcare providers and the accessibility of care for millions of Americans. The full analysis, “Reconciliation Bill and End of Enhanced Marketplace Subsidies Would Cut Health Care Provider Revenue and Spike Uncompensated Care,” is available from the Urban Institute.