Budget bill would lead to substantial hospital revenue loss

A new analysis of the budget reconciliation bill passed by the House of Representatives finds health care providers could lose more than $770 billion in revenue over the next decade as a result of more than 11 million people losing health coverage through Medicaid and the Affordable Care Act marketplaces. Prepared by researchers at the Urban Institute with support from the Robert Wood Johnson Foundation, the analysis shows hospitals would face a $306 billion revenue hit over the next decade, the largest among provider groups.

The analysis shows the spending bill would also increase uncompensated care sought by those without insurance—services hospitals and other providers are required to provide without any reimbursement—by $198 billion, with hospitals facing a projected $61 billion increase in uncompensated care sought by the uninsured.

Researchers project additional provider revenue losses if Congress also allows enhanced tax credits that reduce millions of people’s healthcare premiums to expire at the end of 2025. Under this scenario, researchers find provider revenues would decrease by more than $1 trillion between 2025-2034, as nearly 16 million additional people would become uninsured. Hospitals would absorb the largest portion of this revenue loss ($408 billion); office-based physicians would lose $118 billion; other healthcare providers, including dentists and home healthcare providers, would lose $272 billion; and $234 billion less would be spent on prescription drugs over this 10-year period.

Decline in Healthcare Provider Revenues from Reconciliation Bill & Expiration of Affordable Care Act Tax Credits, 2025-2034:

Increase in Uncompensated Care Demand from Reconciliation Bill & Expiration of Affordable Care Act Tax Credits, 2025-2034: 

“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.”

“The coverage losses associated with these legislative actions will have detrimental consequences for both consumers and providers,” said Fredric Blavin, senior fellow at the Urban Institute. “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.”

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Read the full analysis “Reconciliation Bill and End of Enhanced Marketplace Subsidies Would Cut Health Care Provider Revenue and Spike Uncompensated Care.”