Hospital executives optimistic that marketplace subsidies and Medicaid supplements will endure

Financial concerns of hospital executives following the recent federal election’s outcomes centered on the fate of expiring individual market subsidies and Medicaid supplemental payments.

However, executives were optimistic that both types of financial support for health systems would endure.

At a post-election finance conference, Michael Marks, CFO and executive vice president of HCA Healthcare — like other healthcare executives speaking after the election — was optimistic both funding streams would be preserved, despite Republicans’ interest in reducing federal healthcare spending.

“It’s important to note that the majorities in the House and Senate are going to be tight,” Marks said. “That’s part of the understanding of what can get done.”

Two other factors giving executives hope that the two programs will continue is the expectation members of Congress will not want to disrupt either voters’ coverage or their local hospitals’ financial stability leading up to the 2026 midterm election.

Marketplace subsidies

An estimated $98 billion in additional premium subsidies for enrollees in the Affordable Care Act (ACA) marketplaces were offered by Congress as an emergency response during the COVID-19 pandemic. Those additional subsidies nearly doubled enrollment from 11 million before the pandemic. They are set to expire at the end of 2025 and 2.2 million were expected to drop the coverage and become uninsured, according to projections of the Congressional Budget Office (CBO).

Permanently extending the additional subsidies would cost $383 billion over the next 10 years, according to CBO projections.

If subsidies were extended, enrollments were expected to increase by 3 million, according to the CBO.

HCA expected an 8%-10% increase in patient volumes among ACA marketplace enrollees in 2025, which is enough to increase the health system’s overall projected volume increase a percentage point to as high as 4%.

“Our focus is on working through, getting the enhanced premium tax credits on the exchange extended or continued in any way possible; working with coalition of payers and providers to advocate for that,” Marks said. “These are voters who I don’t think would appreciate seeing a tax increase right before the midyear election.”

Community Health System (CHS) said about 6% of its patient volumes are Marketplace enrollees.

“The exchanges have survived this administration’s previous four years,” Kevin Hammons, president and CFO of CHS, said at a post-election conference. “We’re likely to see maybe some rebranding and some movement on the margins around the programs, but I don’t anticipate us seeing any big changes.”

Marty Bonick, president and CEO of Ardent Health, was similarly optimistic.

“I can see Trump doing something in a Republican surrogate way that he can claim, ‘Look at how I made exchange better,’ and doing something maybe absent subsidies but doing something else to increase access and allowing people to afford to stay on those programs,” Bonick said.

Alternatively, he noted previous projections about increases in the uninsured from the unwinding of pandemic-era Medicaid enrollments largely failed to materialize as most patients found other coverage. That made him optimistic no similar uninsured rate surge would occur, even if the enhanced subsidies expired.

Medicaid supplements

Bonick also was confident Medicaid supplemental payments would endure.

“These subsidies or [state-directed payment (SDP)] programs are helping to cover that group of people and give them access to services and hospital systems, like ours, are benefitting. But non-profits also are benefitting,” Bonick said. “And you still have roughly one-third of hospitals across the U.S. that are losing money, so if these programs were to have any significant change, you’re really threatening the healthcare safety net across America. … We think the programs are durable.”

Some Republican policy advisers have proposed ways to cut Medicaid growth by targeting SDPs. Those payments reached $110 billion in 2024.

Marks of HCA said Congress would have a hard time passing changes to SDPs or other Medicaid financing, such as cuts to the overall federal funding match rate.

“Getting legislation of that size and complexity through really thin margins in the House and Senate is going to be complicated,” Marks said.

He noted Republican-led states have been among the largest beneficiaries of SDPs and they appreciate that hospitals help fund the state share for them through provider taxes.

“That’s the other thing that Republican states have appreciated, that the base funding comes from the provider community to participate, so it also speaks to the durability,” Marks said.

SDPs, specifically, started to get approved by CMS in 2017 under the first Trump administration and are now used by 44 states.

Site-neutral payment

Hospital executives also are watching for the possibility Congress will advance site-neutral payment proposals, especially as a way to fund other priorities.

“It’s clearly a topic being discussed,” Marks said.

HCA plans to join not-for-profit health systems and academic medical centers in opposing any site-neutral proposals, he said.

Bonick noted that the highest profile site-neutral legislative proposals — so far — have been “somewhat muted,” in terms of their financial impact on his health system.

M&A changes

Changes to the membership of the Federal Trade Commission (FTC) by the incoming administration were expected to reduce some of the scrutiny of hospital mergers and acquisitions (M&A).

Hammons of CHS said the FTC under Biden was “difficult,” as the system sold about a dozen hospitals over last year as part of $1 billion divestiture.

That pressure resulted in many more deals involving health systems buying hospitals in other states, which reduces the likelihood of FTC scrutiny.

Under a Trump-appointed majority, “the FTC environment changes and probably makes getting deals done a little bit easier,” Hammons said. “Having said that, there hasn’t been a shortage of buyers. It’s just over the last several years it’s been a different group.”

Saum Sutaria, MD, CEO of Tenet Healthcare, agreed.

“On the acute care side, on the margin, there are probably opportunities that get less scrutiny going forward,” he said.

Other policies

The Trump administration is expected to launch a massive deportation push of the estimated 8 million undocumented immigrants that entered the country under Biden.

Hospital executives said they do not hire undocumented workers, however, the loss of them by other industries could add pressure for wage increases among healthcare organizations’ lower-level employees.

“It’s an area we put a lot of time energy and effort into our ability to recruit, and retain that workforce,” Marks of HCA said. “I feel like we’re a good employer with good benefits for that workforce. So, it’s not on the top of my list of worries right now.”

Trump also has proposed a broad expansion of tariffs, which could increase costs from industries that source material from overseas.

However, executives said their systems have fairly small exposure to overseas supplies, including drugs, following a push to onshore sourcing after pandemic-era supply chain disruptions.

“Downstream, could some of our domestic suppliers be sourcing raw materials from overseas? That’s a possibility,” said Hammons of CHS said. But “there’s limited [direct] exposure there for us.”