Hospitals Say They Face Billions in Cuts if GOP Repeals Obamacare

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By Sara Hansard

Dec. 6 — Hospitals stand to lose $165.8 billion due to coverage losses as well as $289.5 billion in Medicare inflation updates if Republicans pass legislation to roll back Obamacare, hospital groups said Dec. 6.

President-elect Donald Trump and Republican leaders of Congress have pledged to act quickly to repeal major provisions of the Affordable Care Act early in 2017. The ACA also contained funding cuts to hospitals, and the trade associations said the Republicans’ plan wouldn’t restore funding, leaving them with more uninsured patients but lower funding at the same time.

“A decent portion of their earnings could be at risk here” if Congress repeals the ACA without enacting a replacement plan, Bloomberg Intelligence senior health-care analyst Jason McGorman told Bloomberg BNA. In addition to having to treat more patients without health insurance, hospitals in the 31 states that have expanded Medicaid (including the District of Columbia) have faced increased admissions, and hospitals would likely face reduced Medicaid funding if the law is repealed, he said.

Hospitals Community Health, Tenet Most Exposed

Hospital companies Community Health Systems Inc. and Tenet Healthcare Corp. are the most exposed to the ACA, according to a Nov. 9 analysis by Bloomberg Intelligence.

According to a study released by the Federation of American Hospitals (FAH) and the American Hospital Association (AHA), any repeal bill that doesn’t “replace coverage also should reverse hospital payment reductions, particularly those for the Medicare and Medicaid DSH [disproportionate share hospitals] programs as well as those in the inflation updates.”

Congressional Republicans are drawing up plans to pass legislation that is likely to be similar to the Restoring Americans’ Healthcare Freedom Reconciliation Act ( H.R. 3762), which was passed by the House and Senate in late 2015 but vetoed by President Barack Obama. That budget legislation would have cut funding for major portions of the ACA and would have delayed the effect of many of the provisions for two years.

Letters Sent to Trump, Congress

The FAH and the AHA sent letters Dec. 6 to the president-elect and to congressional leaders urging them to include in the legislation “the prospective repeal of funding reductions for Medicare and Medicaid hospital services for patient care that were included in the ACA for purposes of helping fund coverage for the insured.” Restoring the hospital payments “is absolutely essential to enable hospitals and health systems to provide the care that the patients and communities we serve both expect and deserve,” the letter said.

The Republican repeal plan would likely repeal the ACA’s Medicaid expansion, subsidies for people to buy health insurance and the penalties on individuals who don’t have insurance and the penalties on employers not offering sufficient coverage. Those provisions “were the primary drivers of the reduction in the number of uninsured,” which is projected by the Congressional Budget Office to be 24 million people by 2026, the hospital study said.

“If those provisions are repealed, we assume that health insurance coverage would return to near pre-ACA levels, resulting in a loss of coverage for a large number of individuals who had only recently gained coverage under ACA implementation,” the study said.

The study, conducted by health-care economics firm Dobson DaVanzo & Associates LLC, found that the loss of coverage would reduce hospital payments by a total of $165.8 billion between 2018 and 2026 if Medicaid DSH reductions are restored. If the ACA Medicare reductions are maintained, hospitals will suffer additional losses of $289.5 billion from reductions in their inflation updates during that time period, it said. Full restoration of Medicare and Medicaid DSH payment reductions would result in losses to hospitals of $102.9 billion during the time period, it said.

The letter to Trump and congressional leaders included a second Dobson DaVanzo analysis of payment policy. The analysis estimates that cumulative federal payment reductions to hospitals that have been imposed through congressional and executive branch actions subsequent to and independent of the ACA totaled another $148 billion from 2010-2026 on top of the ACA reductions.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

For More Information

The Federation of American Hospitals-American Hospital Association study is at http://fah.org/upload/documents/Estimating_the_Impact_of_Repealing_the_Affordable_Care_Act_on_Hospitals.pdf. Information on the Restoring Americans’ Healthcare Freedom Reconciliation Act (H.R. 3762) is at https://www.congress.gov/bill/114th-congress/house-bill/3762. The letter to President-elect Trump is at http://fah.org/upload/documents/FAH_and_AHA_letter_to_President-elect_Trump_on_ACA.pdf and the letter to congressional leaders is at http://fah.org/upload/documents/FAH_and_AHA_letter_to_Congress_on_ACA.pdf. The second Dobson DaVanzo analysis is at http://fah.org/upload/documents/Estimate_of_Federal_Payment_Reductions_to_Hospitals_Following_the_ACA_2010-2026.pdf.

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