With the GOP in control of Congress and the White House, hospitals could face budget cuts and tighter oversight, after a period of benefiting from generous federal spending under President Biden. Much of it comes down to hospitals' reliance on government insurance programs like ACA exchanges and Medicaid that could be cut down to size by Republicans looking for ways to trim government spending and pay for tax cuts. Medicaid expansions, boosted subsidies for ACA plans and programs like state directed payments—which funnel Medicaid dollars to hospitals—poured billions into the system, benefiting insurers and providers serving these programs. States and the federal government typically pay insurers, who then pay providers like hospitals. In recent years, due to changes in regulations, states have been able to tap additional federal dollars to steer more payments directly to providers. Just in October, analysts at TD Cowen upgraded hospital stocks, citing an expansion of state directed payments in several states.
