Hospital advocates optimistic Congress will extend ACA subsidies

Despite the doubts of many policy watchers, hospital advocates remain optimistic Congress will choose to extend extra individual marketplace subsidies.

In response to the COVID-19 pandemic, in 2021, Congress passed additional subsidies for the Affordable Care Act (ACA) marketplace enrollees for two years and then extended them until the end of 2025. But Republican congressional leaders have indicated they do not plan to extend them.

Extending the subsidies would cost $23 billion next year and $335 billion for the next 10 years, according to Congressional Budget Office (CBO) projections. CBO estimated 2.2 million of the current 25 million enrollees could lose their health insurance in 2026 if the subsidies expire and go as high as 3.8 million without insurance in later years.

As ACA marketplace enrollment surged after the additional subsidies were offered, some health systems reported those enrollees provide up to 7% of their revenue.

Republican leaders’ general opposition to extending the extra subsidies has led many to assume they would expire at the end of the year. For instance, Fitch Ratings said when it recently lowered the outlook for the U.S. health insurance sector to “deteriorating” from “neutral” it partially stemmed from “an increasingly unlikely extension” of the subsidies.

But that’s not how hospital advocates see it.

“We’re very hopeful and optimistic based on the fact that there are members on both sides of the aisle who have recognized that they would like to find a way to extend those subsidies into the future,” Stacey Hughes, executive vice president for government relations and public policy for the American Hospital Association (AHA), said in an interview.

The key to Congress approving them will be finding a larger legislative package with broad support that will help get them through Congress, she said.

“We’re very optimistic” on subsidies, Paulo Pontemayor, senior director of government relations at the Catholic Health Association (CHA), said in an interview.

That hopeful view was based on conversations with Republican congressional staff, who expressed interest in discussing options after Congress finished considering the reconciliation bill. That law, called the One Big Beautiful Bill Act (OBBBA), was enacted July 4.

“Now, with Congress always doing their work against a deadline, they now see a new deadline and are actually wanting to act on it,” Pontemayor said.

That has been reflected in recent public comments from Republican Sens. Lisa Murkowski (Alaska) and Thom Tillis (N.C.) and Speaker Mike Johnson that Congress should act on the subsidies.

Republicans may be spurred to act over concerns that the lost subsidies will drive increases in uninsured ahead of the 2026 mid-term elections, said Matthew Fiedler, a senior fellow at The Brookings Institution.

“That does create a certain amount of political exposure for Republicans,” Fiedler said. “So, it is conceivable that they will decide that they want to cut a deal here to avoid that political pain.”

Any extension of the subsidies will likely be limited to lower income enrollees, said Benedic Ippolito, a senior fellow at the American Enterprise Institute. The subsidies currently include enrollees earning more than 400% of the federal poverty level.

On the radar

Hospital advocates are also eyeing several other pieces of legislation this year with potentially large financial ramifications. Key issues expected to come up include:

• Scheduled $8 billion in Medicaid disproportionate share hospital (DSH) cuts
• Unknown amount of Medicare site-neutral payment cuts
• Annual Medicare payment extenders package
• Another reconciliation bill

Congress has begun to discuss a second reconciliation bill for FY26, which starts Oct. 1. The recently enacted OBBBA was a reconciliation bill for the current fiscal year.

Although details of a second reconciliation package have not yet emerged, CHA “is watching that very closely to see if there is an appetite, especially as it relates to Medicaid or Medicare, to make changes to those programs, which would disproportionately impact a lot of the members that we represent — not just hospitals but also nursing homes and long-term care,” Pontemayor said.

Both the Biden administration and the first Trump administration enacted two reconciliation bills in their first two years.

Bipartisan package

The House leadership is pushing to pass a second reconciliation bill this year, while the Senate is focused on a bipartisan healthcare policy package, similar to one that stalled late in the last Congress, Pontemayor said.

That 2023 package included site-neutral payment for drug administration starting in 2025 for most hospital outpatient departments (HOPDs).

Site-neutral payment cuts are most likely to appear in a bipartisan healthcare package, Pontemayor said, since they would provide federal savings needed to offset any spending increases in such a bill.

Fiedler was doubtful Congress would aim to undertake any larger site-neutral payments this year, given hospital opposition, but he expected CMS to push much harder on those. A recently issued a proposed rule would cut drug administration services furnished in off-campus HOPDs to the physician payment rate, starting in 2026.