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New Report Examines Effects of Affordable Care Act Repeal on Hospitals and Health Systems

December 08, 2016

The American Hospital Association (AHA) and the Federation of American Hospitals (FAH) recently released a report that quantifies the impact a potential repeal of the Affordable Care Act (ACA) would have on hospitals and health systems.

The report, which was prepared by the health economics and policy consulting firm Dobson DaVanzo, supports AHA’s position that any reconsideration of the ACA should be accompanied at the same time by provisions that guarantee similar coverage for those who would lose it. It also supports that, if Congress moves forward to reconsider the ACA without enacting a replacement, the legislation should prospectively restore key hospital reductions included in the ACA to offset the cost of providing coverage.

The report findings were included in letters to both President-elect Trump and Congressional leaders. The report found that under the most recent repeal-without-replacement bill—H.R. 3762, sponsored by Congressman Tom Price (R, GA-06), approved by Congress during late 2015, and vetoed by President Obama—hospitals would:

  • Face a negative impact of $165.8 billion from 2018 through 2026 due to the loss of insurance coverage, after accounting for the restoration of Medicaid disproportionate share hospital (DSH) cuts contemplated by H.R. 3762
  • Lose $289.5 billion in Medicare inflation updates if payment cuts in the ACA are not restored
  • Absorb Medicare and Medicaid DSH reductions of $102.9 billion if these cuts were retained

The AHA and FAH also released a second analysis that estimates the cumulative federal payment reductions to hospital services that have been imposed independent of the ACA. This analysis identifies payment reductions of another $148 billion from 2010 to 2026, which are on top of reductions included in the ACA.

Based on current law projections, Pennsylvania Medicare DSH cuts for the period 2016–2025 are scheduled to exceed $2 billion and Pennsylvania hospitals would lose an estimated $7.5 billion from 2016 through 2025 in Medicare inflation updates.

Preliminary estimates of the impact of the failure to restore the Medicaid DSH reductions are not yet available.

Under current law, the total impact of all legislative and regulatory cuts to Pennsylvania hospitals is estimated to be $17.1 billion for 2016 through 2025. HAP is in the process of updating the expected impact of projected cuts to Pennsylvania based on expectations of the impact of repealing the ACA and the resulting reduction in the number of insured individuals, shifts between insurance coverage, and lower utilization of needed services.

HAP and Pennsylvania hospitals leaders engaged federal lawmakers on this issue during recent advocacy meetings on Capitol Hill, articulating concerns about the repeal of the ACA without new policy offering the promise and security of comprehensive coverage and urging consideration of the profound impact of the payment cuts outlined in the AHA report.

As federal policymakers consider policy changes to the ACA, HAP will look to work with federal lawmakers to ensure appropriate insurance coverage for all Pennsylvanians through access to a robust, competitive delivery system, and continued progress in reducing health care costs and advancing health care transformation.

If you have any questions relating to report or impact of hospital payment cuts, please contact Judy Miller, HAP’s director, financial systems analysis, and questions pertaining to federal policy with respect to the ACA may be directed to Laura Stevens Kent, HAP’s vice president, federal legislative advocacy. 

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