A large health system says revenue could fall by at least $50 million if the ACA subsidies expire

With time running short to maintain enhanced subsidies for the Affordable Care Act (ACA) insurance marketplaces, health system leaders are trying to gauge the consequences of a potential mass disenrollment.

Universal Health Services (UHS), a for-profit system that operates more than 400 care sites, is one of the few healthcare organizations to have publicly released an assessment of what could happen if the ACA marketplace enhanced subsidies are allowed to expire going into 2026. The nationwide uninsured rate has been projected to rise by 2.2 million next year in a scenario where marketplace enrollees lose the higher subsidies.

UHS’s latest estimate puts the company’s 2026 revenue impact in the range of $50 million to $100 million, primarily in acute care, said Steve Filton, executive vice president and CFO. Marketplace enrollees constitute roughly 6% of UHS’s adjusted acute-care admissions.

The dollar projection indicates the stakes for large systems if Congress allows the subsidies to terminate. Republican majorities in both chambers have not ruled out renewing the subsidies but also have expressed concerns about the cost. Democrats are pressing for an extension to be part of an agreement to keep the federal government fully funded past Sept. 30.

“A lot of these enrollees are in [Medicaid] non-expansion states,” said Mike Marks, CFO of HCA Healthcare. “A lot of [them] are in Republican states. I think the legislators, the president, the administration appreciate that this is something that has to be considered.”

Patients with marketplace insurance make up about 8% of volume and 10% of revenue at HCA, a for-profit company and the nation’s largest health system by hospital count, with more than 220.

Filton and Marks spoke in early September during sessions at Wells Fargo’s annual healthcare conference.

Utilization outlook

If the subsidies expire, hospitals expect to see a drop in revenue but not as much in volume.

The marketplace population “tends to behave more like what I’ll call the Medicaid population than let’s say the Medicare or the commercial population,” Filton said. “Meaning they tend to use the acute hospitals mostly from an emergency room perspective and not use them terribly significantly for elective procedures, etc.”

If those patients lose insurance after the subsidies expire, their ED use would stay roughly the same, but the visits would be non-paying.

UHS likely won’t need to resort to the same retrenchment measures the organization used early on in the COVID-19 pandemic, when it reduced staff size, froze wages and trimmed some benefits such as 401(k) matching. But it will be prepared to take steps as needed, Filton said.

“What [that period] demonstrated is a flexibility and agility to react, to modify the cost structure, etc., the company, to fit the operating environment or the regulatory environment,” Filton said. “We certainly have that menu of options out there.”

Medicaid concerns

Other payer segments pose their own issues for hospitals and health systems.

Most notably, projected federal Medicaid spending is set to drop by nearly $1 trillion over 10 years as a result of provisions in the budget reconciliation bill known as the One Big Beautiful Bill Act.

Hospitals are hoping they can avoid potentially drastic cuts in the short term. They hope CMS will approve state-directed payment (SDP) preprints in time for payment arrangements to be certified at levels as high as the average commercial rate. Any SDP for which the completed preprint missed a July 4 cutoff point will immediately be limited to the Medicare rate in expansion states and 110% of Medicare in non-expansion states.

HCA was pleased to see approval recently granted for an SDP submitted by Texas’s Medicaid program. Marks was hoping for a similar outcome in Florida.

The Texas approval is “a good sign that CMS is reviewing these applications and [the process] seems to be in pretty normal order under the grandfathering rules,” he said.

UHS was eyeing the situation in those two states, along with the status of an SDP preprint submitted by the Washington, D.C., Medicaid program. Approval of all three would bring between $150 million and $200 million in revenue next year, Filton said, before a required phase-down to the Medicare-based limits begins in 2028.

Medicare stress

In the immediate term, hospital concerns involving the Medicare program center on CMS’s 2026 proposed rule for hospital outpatient care. The rule included higher-than-expected payment reductions related to budget neutrality. Another proposal would eliminate the inpatient-only list over the next three years.

“We don’t like [the rule], as you can imagine,” Marks said. “We are advocating that CMS reconsider those as they go from proposed to final.”

The FY26 final rule for inpatient care was more favorable, he said, and bodes well because 70% of HCA’s Medicare revenues come on the inpatient side.

Payer dealings

Commercial health plans remain the most lucrative payer segment throughout the healthcare industry. The large systems represented at the Wells Fargo conference likely have a better negotiating position than smaller organizations that have struggled in their payer relations.

UHS typically anticipates annual price increases of 4% to 5% from payers, Filton said. The number has increased over the last couple of years to account for wage inflation. Denials and administrative burdens have not been a major drag, with the organization focused on optimizing processes around coding, billing, prior authorization and denials management.

“It may well be that the payers have gotten somewhat more aggressive in the recent past, but I think we’ve probably countered that as well,” Filton said.

In HCA’s contracts for 2026 and 2027, “We’re still largely at our targeted level of reimbursement rate increases,” Marks said.

He added, “Our access to lives and the percent completion around our contracts and our marketplace is as good as it’s ever been. It’s a good sign overall of where we are with our payer partners.”