Brief Hospitals, Physicians, and Other Stakeholders Face Billions of Dollars in Uncompensated Care Costs and Lost Revenue if Enhanced ACA Tax Credits Expire
Results by State and Substate Region
Fredric Blavin, Michael Simpson, Jessica Banthin, Matthew Buettgens
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Congress passed enhanced premium tax credits (PTCs) in March 2021 as part of the American Rescue Plan Act and extended them through 2025 by the Inflation Reduction Act of 2022. These enhanced PTCs helped spur record enrollment in the Affordable Care Act Marketplaces by substantially increasing the subsidies available to buy insurance, making coverage more affordable for eligible people. Enhanced PTCs are set to expire at the end of 2025 and Congress will soon decide whether to extend them again, make them permanent, or let them expire.

This brief focuses on the implications of allowing the enhanced PTCs to expire for providers by providing estimates on the projected reduction in revenue and increase in uncompensated care costs. We also estimate the change in spending associated with the expiration of the enhanced PTCs at the state and sub-state levels.

Why This Matters

Because lower spending on health care services means lower revenue for health care providers and fewer services rendered, the resulting decline in revenue for providers in these communities could have adverse consequences for providers, particularly hospitals that are already financially at-risk.

What We Found

  • If Congress doesn’t extend enhanced PTCs after 2025, 4.0 million people would become uninsured, resulting in health care spending declines of $8.2 billion on hospital services, $3.1 on office-based physician services, $5.6 on other health care services, and $4.0 billion on prescription drugs.
  • Declines in health care spending would be more pronounced in states that have not expanded Medicaid, communities in the South, and rural communities.
  • The expiration of the enhanced PTCs would also result in a $6.3 billion increase in uncompensated care sought by the uninsured.

How We Did It

We simulated health insurance coverage, provider revenue, and uncompensated care costs using the Urban Institute’s Health Insurance Policy Simulation Model.

Additional Materials

Separate Appendix Tables include projections of total health care and hospital spending with and without enhanced PTCs at the sub-state level.
Research and Evidence Health Policy Technology and Data
Expertise Health Care Coverage, Access, and Affordability Federal and State Health Care Reform Microsimulation Modeling
Tags Affordable Care Act Federal health care reform Health insurance Health care spending and costs Health care delivery and payment Hospitals and physicians Health Insurance Policy Simulation Model (HIPSM)
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