The Impact on Health Care Providers of Partial ACA Repeal through Reconciliation

Brief

The Impact on Health Care Providers of Partial ACA Repeal through Reconciliation

Abstract

Health care providers stand to lose considerable revenue if Congress moves forward with partial repeal of the ACA through the budget reconciliation process. If the reconciliation bill is modeled on the one President Obama vetoed in January 2016, then we estimate that about 30 million more people could be uninsured by 2019. As a result, health care spending by insurers (public and private) and households would decrease by billions of dollars every year.

Not only that, but the larger number of uninsured people would seek more uncompensated care than federal and state governments are expected to provide, meaning that health care providers would be left to carry additional financial burdens, and the uninsured would likely experience even greater unmet health care needs than uninsured people currently experience.

Scope of health care spending reductions and additional uncompensated care

If partial repeal is modeled on the reconciliation bill passed by Congress in January 2016 and vetoed by President Obama, it would eliminate the Medicaid expansion, the individual and employer mandates, and the Marketplace premium tax credits and cost-sharing reductions, but the ACA’s insurance market reforms (e.g., guaranteed issue, modified community rating, essential health benefit requirements, prohibitions on pre-existing condition exclusions) would remain.  As a result, the private nongroup market would rapidly unravel, leaving more people without health coverage than if the ACA had never happened. We estimate that an additional 29.8 million people would become uninsured because of the anticipated reconciliation bill. Uninsured people use less medical care than they would if they had health insurance.  Studies show that they are much more likely to delay health care because of costs, have trouble paying medical bills, and have greater unmet health care needs, compared with those with health coverage. But though overall use of care declines when people become uninsured and unmet health care needs increase, many uninsured people do use some health care.

Any healthcare delivered to the uninsured that was not paid for by them is called uncompensated care. This uncompensated care is financed in different ways: some is financed by the federal government, some by state and local governments, and the rest delivered as free or reduced-price care by providers.

This paper estimates the reduction in spending on health care services by insurers (public and private) and households and the increase in uncompensated care that the uninsured would seek as a result of partial repeal of the ACA. 

Our estimates include the following:

  • The reconciliation bill would result in spending by insurers (public and private) and households on healthcare decreasing by $145.8 billion in 2019 and $1.7 trillion lower between 2019 and 2028.
  • In 2019, insurer and household spending on hospital and physician care would be $59.1 billion and $20 billion lower, respectively. From 2019-2028, insurer and household spending on hospitals, physicians, other services and pharmaceuticals would be $596.4 billion, $217.7 billion, $416.4 billion and $428.6 billion, respectively.
  • In 2019, 29.8 million newly uninsured people would seek an additional $88 billion in uncompensated care.
  • From 2019-2028, the uninsured would seek an additional $1.1 trillion in uncompensated care
  • Federal funding for uncompensated care would increase no more than $3.2 billion (through the Medicaid DSH program) in 2019 and by $35 billion from 2019-2018. This funding would constitute less than four percent of the increase in uncompensated care sought by the newly uninsured.

The uncompensated care buck would likely be passed to providers and to the uninsured themselves

Given that Congress is expected to seek cuts in federal spending and that it would be difficult for state and local governments to increase uncompensated care funding without raising taxes, there is no guarantee that additional funds for uncompensated care will be provided. Because the increase in uncompensated care that would be sought under reconciliation is more than four times the value of current uncompensated care offered by governments today--$85 billion in 2019 alone--it is not feasible to expect that providers could absorb the full amount and remain financially viable.

Thus, the additional financial burden of uncompensated care is likely to fall hardest on health care providers. Partial ACA repeal could lead to a fourfold increase in the amount of uncompensated care providers finance themselves compared to current levels. As a result there would likely be a substantial increase in unmet health care need for the uninsured.

Research Area: 

Centers

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