A new analysis estimates that hospitals could suffer a net loss of $165.8 billion between 2018 and 2026 if the Affordable Care Act (ACA) is repealed without an adequate replacement.

The American Hospital Association (AHA) and the Federation of American Hospitals (FAH) commissioned Dobson DaVanzo & Associates to estimate the financial impact of such a repeal. The firm used H.R. 3762—the bill Congress passed under budget reconciliation rules and President Obama then vetoed—as a model of what the repeal might look like. 

That bill would have repealed the ACA’s individual and employer mandates, premium tax credits, cost-sharing subsidies, Medicaid expansion, the transition reinsurance program and various taxes. It would have restored Medicaid Disproportionate Share Hospitals (DSH) payments. Before the ACA was enacted, DSH payments were used to support hospitals that serve vulnerable populations. The payments were cut under the ACA because of expanded insurance coverage for these populations.

The analysis assumes that with repeal of the ACA, health insurance coverage would return to levels close to those before the legislation was enacted. 

According to the findings, a repeal would result in a reduction of approximately $399.8 billion in hospital revenues by 2026, but as people lose coverage, lower utilization of services would reduce hospital revenue by approximately $139.4 billion. Restored Medicaid DSH payments would further offset the impact by $45 billion, and if Medicare DSH payments were also restored, that would offset the impact by another $49.5 billion. That still would leave a net loss in revenue of $165.8 billion.

“Losses of this magnitude cannot be sustained and will adversely impact patients' access to care, decimate hospitals’ and health systems’ ability to provide services, weaken local economies that hospitals help sustain and grow, and result in massive job losses,” AHA President and CEO Rick Pollack and FAH President and CEO Chip Kahn said in a letter to President-elect Donald Trump.

Our Take: It will be interesting to see what “repeal and replace” will look like when Trump takes office. We’ve already given our opinion of what’s likely to happen.

It’s big news that Toby Cosgrove was asked to sit on Trump’s business advisory board (see below). As CEO of Cleveland Clinic, he’s one of the most respected voices in the industry and his opinions should carry weight. We don’t know for sure what those opinions are, but he has said recently that the Affordable Care Act is “part of the fabric of the United States” and that repealing it would be “politically untenable.”

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