Providers Face $32B Revenue Loss Amid Stalemate on ACA Subsidies

The Urban Institute projects a $32.1 billion single-year revenue loss for providers if ACA subsidies expire, a threat magnified by a Congressional stalemate over government funding.

Providers face a significant drop-off in revenue if Congress allows enhanced Affordable Care Act (ACA) Marketplace tax credits to expire, according to a recent analysis from the Urban Institute and the Robert Wood Johnson Foundation.

Allowing enhanced subsidies to lapse would result in a $32.1 billion in lost revenue and a $7.7 billion increase in demand for uncompensated care in 2026 alone.

For revenue cycle leaders, these figures suggest high stakes in the government funding battle that is currently playing out in Congress, where the expiration of enhanced premium tax credits (PTCs) have become a major sticking point ahead of an upcoming shutdown deadline.

Insured Rates Go Down, Uncompensated Care Costs Go Up

The new analysis from the Urban Institute follows an earlier report that suggested providers would see a $1.03 trillion decline over 10 years due to the combined effects of Medicaid cuts included in the One Big Beautiful Bill Act and potential expiration of PTCs.

Expiration of the enhanced PTCs would make ACA Marketplace coverage less affordable, causing an estimated 7.3 million people to drop their subsidized plans, according to the Urban Institute. While some would shift to employer coverage, the net result would be a significant increase in the uninsured population.

With millions losing coverage, their use of medical care will decline. Hospitals would face a $14.2 billion revenue loss in 2026, while physician practices would lose $5.1 billion and prescription drug revenue would fall by $5.8 billion.

There would also be an increase in demand for uncompensated care. Hospitals would account for $2.2 billion in new uncompensated and physician practices would account for $1billion.

Non-Expansion States Disproportionately Affected

States that did not expand Medicaid would be hit the hardest. Ten of the 11 states projected to see the largest percentage declines in healthcare spending are non-expansion states, concentrated in the South. The most significant revenue losses are projected for providers in:

• Texas: $10.2 billion
• Florida: $6.7 billion
• Georgia: $3.7 billion

The report concludes that allowing the enhanced subsidies to expire would have "adverse consequences, particularly for already financially at-risk hospitals and the communities they serve."

For revenue cycle leaders, the outcome of this Congressional debate will be a critical factor in financial planning and forecasting for 2026 and beyond.

ACA Subsidies in the Government Funding Showdown

PTCs were established in 2021 to prevent patients from losing coverage during the COVID-19 crisis and then extended in 2022. However, with their expiration currently set for the end of this year, PTCs have been central to debate on a federal funding bill, which needs to be passed by Wednesdayto prevent a shutdown.

While some Republican legislators have signaled support for an extension of PTCs, Senate Majority Leader John Thune (R-South Dakota) and House Speaker Mike Johnson (R-Louisiana) have both indicated they would not consider an extension in the current funding bill.

Meanwhile, Democrats have indicated that they could withhold support for a government funding bill if PTCs are not included.

Revenue cycle leaders should be creating contingency plans for a future without the enhanced subsidies. The threat of a significant revenue shortfall means this funding showdown will have a significant impact on their organizations’ financial health.