Hospitals face blow with lapse of Affordable Care Act subsidies

While many hospitals have enjoyed modest if unspectacular returns over the past year, some health systems are going to see more problems as millions lose health coverage under the Affordable Care Act.

The enhanced tax credits supporting the Affordable Care Act expired at the end of December, and analysts expect that millions are going to be dropping coverage. Without the subsidies, many Americans won’t be able to afford higher premiums that are expected to double, according to KFF.

Steve Wasson, chief data & intelligence officer for Strata Decision Technology, tells Chief Healthcare Executive® that it’s a safe bet that some of those who bought insurance on the Affordable Care Act marketplace are going to be without coverage.

“Those price increases are kind of playing out in the market, and my speculation is that there's a percentage of people that are just going to go uninsured, like they won't pay the premium or can't pay the up premium,” Wasson says. “So that moves people from an insured position to an uninsured position, which is never great for providers.”

It’s unclear precisely how many people would lose coverage and end up without any insurance. But Wasson says, “If it's a high percentage, that's going to have an impact to some of the organizations.”

(See part of our conversation in this video. The story continues below.)

Going without coverage

Drew Corrigan, KPMG’s U.S. Sector Leader for Healthcare, told Chief Healthcare Executive® earlier this month that the expiration of the subsidies figures to pose more problems for hospitals.

“It's not helpful to the health systems’ overall operating margins that are already under pressure,” Corrigan says.

Even some younger Americans who could afford to purchase insurance on the Affordable Care Act marketplace may decide they don’t want to absorb a big increase in insurance. KFF projects premiums will rise from an average of $888 in 2025 to $1,904 in 2026.

Corrigan suggests younger people who are healthy may see those higher premiums and decide to take their chances on going without insurance.

The loss of the Affordable Care Act tax credits will hit some hospitals harder than others, according to an analysis from Fitch Ratings released this week.

Fitch projects that hospitals in 12 states, mainly in the south and west, are more likely to see bigger increases in uninsured patients: Tennessee, Georgia, Alabama, South Carolina, Louisiana, Mississippi, Nevada, Kansas, Wyoming, Montana, South Dakota and West Virginia.

As many as 7.3 million Americans may lose coverage without the Affordable Care Act coverage, according to the Urban Institute. While a little more than 3 million may get coverage from their employers, more than 4 million are likely to end up without any insurance, the Urban Institute projects. Fitch said the impact will be seen later in the year when consumers get bills with higher premiums and more drop coverage later in the year.

Brad Ellis, a senior director and head of the North American health insurance sector for Fitch Ratings, said in a webinar earlier this month that the lapse of subsidies shouldn’t be underestimated in terms of its impact.

“These subsidies have played a significant role in keeping ACA coverage affordable and stable,” Ellis says. “Their non-renewal is causing meaningful disruptions, including enrollment churn, premium volatility, shifts in carrier participation, and it led to a lot of uncertainty leading into the 2026 pricing cycles.”

Delaying care

Jennifer DeCubellis, president and CEO of America’s Essential Hospitals, told Chief Healthcare Executive in a recent interview that she’s worried about how many Americans will opt out of insurance with the loss of the Affordable Care Act tax credits. She says an uptick in uninsured patients poses more headaches for safety net hospitals, which typically have modest margins.

“So the potential is, you see more people without insurance, they go into a self-pay bucket, and if they don't have the ability to pay again, they delay care,” DeCubellis says.

And if patients are postponing treatment due to the cost, they may wind up sicker when they get to the hospital, and could need longer stays. DeCubellis says it may not happen right away, but within months, hospitals will see an influx of insured patients needing care.

“You're going to start seeing the surge, like we saw post-covid when people had delayed access to care,” DeCubellis says. “You saw an increase in the chronicity, in the acuity coming in and hitting us at a higher cost.”

Earlier this month, the House of Representatives approved a bill that would extend the Affordable Care Act tax credits for three years. But the Senate still must sign off on the extension and the Senate shot down a similar measure last year.

Leah Binder, president and CEO of The Leapfrog Group, tells Chief Healthcare Executive that she’s worried about the upheaval with more uninsured patients coming to hospitals.

“It's fewer people able to pay for their care, I mean, as simple as that,” Binder says.

“And that is going to have an impact on all patients, not only those patients who can't afford it,” she says. “Because if a hospital is overcome with emergency room visits … and they just can't afford to deliver the level of care they were able to before because they're not getting paid as much, that is a major concern for all patients.”