<p>President Donald Trump's plan to let the Affordable Care Act's premium tax credits expire will significantly cost healthcare providers, according to a new <a target="_blank" href="https://www.rwjf.org/en/insights/our-research/2025/09/how-expiration-of-aca-tax-credits-will-affect-healthcare-spending.html" rel="noopener">analysis</a> from the Urban Institute and the Robert Wood Johnson Foundation.</p><div class="ad-wrapper ad-embedded"> <div id="halfpage" class="ad ad-hp"> <script>GPT.display('halfpage')</script> </div> <div id="mu-1" class="ad ad-mu"> <script>GPT.display('mu-1')</script> </div> </div> <p>Trump's spending law, dubbed the One Big, Beautiful Bill Act, will allow the enhanced premium tax credits for Affordable Care Act marketplace health plans to expire at the end of the year. This expiration, in addition to other policy changes in the law, is estimated to increase the uninsured population by <a target="_blank" href="https://www.cbo.gov/publication/61367#data" rel="noopener">10 million by 2030</a>, according to the Congressional Budget Office.</p> <p>The analysis estimated net premiums for marketplace health plans to increase significantly without the enhanced premium tax credits and for 7.3 million fewer people to receive subsidized coverage. As a result, about 4.8 million more adults are expected to become uninsured in 2026.</p> <p>This loss of insurance coverage will significantly disadvantage healthcare providers, with the loss of premium tax credits alone leading to revenue losses of $32.1 billion and $7.7 billion in additional uncompensated care costs in 2026.</p> <section class="section main-article-chapter" data-menu-title="Less coverage means less healthcare spending"> <h2 class="section-title"><i class="icon" data-icon="1"></i>Less coverage means less healthcare spending</h2> <p>Total spending on healthcare services would decrease by over $31 billion next year, accounting for about 1.3% of current total spending on the nonelderly population, according to the analysis.</p> <p>Hospitals would feel the greatest impact, with an estimated $14.2 billion loss in revenue next year. Meanwhile, physicians are slated to see $5.1 billion less as a result of the expiration of the enhanced premium tax credits.</p> <p>The analysis also projected $6.9 billion less spending on other healthcare services and $5.8 billion less spending on prescription drugs.</p> <p>Healthcare spending reductions would vary by state based on their share of the population currently enrolled in marketplace health plans, the analysis added.</p> <p>States that would experience the greatest declines in healthcare spending would be Florida ($6.7 billion), Georgia ($ 3.7 billion), Texas ($10.2 billion), Mississippi ($1.0 billion) and South Carolina ($1.5 billion). Notably, all these states elected to not expand Medicaid coverage under the Affordable Care Act.</p> <p>The rest of the U.S. and the District of Columbia would see healthcare spending declines of less than 1%.</p></section> <section class="section main-article-chapter" data-menu-title="Providers to incur the costs of the uninsured"> <h2 class="section-title"><i class="icon" data-icon="1"></i>Providers to incur the costs of the uninsured</h2> <p>Hospitals would take the brunt of uncompensated care stemming from the premium tax credit expiration, with an estimated $2.2 billion in additional costs. The analysis also found that physician offices would see an increase of $1.0 billion, while there would also be $15 billion in uncompensated care for prescription drugs and $3.1 billion related to other medical services.</p> <p>In total, the analysis projected $74.4 billion in uncompensated care if the government reverts to standard tax credits.</p> <p>Healthcare providers would finance a little more than half of the increase in uncompensated care costs, the analysis added.</p> <p>The federal and state governments finance a large portion of uncompensated care costs through the Medicare and Medicaid disproportionate share hospital programs, funding for public hospitals and uncompensated care pools. However, providers finance the rest by either writing off the costs or reducing costs for patients.</p> <p>What's troubling for hospitals and physicians is that funding from federal, state and local governments would not automatically increase as the uninsured population grows, the analysis pointed out. Whether they will even cover additional uncompensated care costs remains unclear.</p> <p>The analysis estimated that the federal government would fund 30% of the additional uncompensated care costs, while state and local governments would cover 19%.</p></section> <section class="section main-article-chapter" data-menu-title="A dire warning"> <h2 class="section-title"><i class="icon" data-icon="1"></i>A dire warning</h2> <p>Allowing enhanced premium tax credits would lead to negative effects that "couldn’t be more stark," said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, in statement.</p> <p>"Millions of people will lose coverage, and providers will face the one-two punch of losing revenue and increasing uncompensated care," she continued. "Healthcare institutions are often the economic engines of entire communities. If the credits expire, the ripple effects will be felt for years to come."</p> <p>Millions are slated to lose insurance under the new spending law. However, supporters of the law say the expiration of the enhanced premium tax credits will reduce federal spending on healthcare.</p> <p>Congress is debating whether to act on extending the premium tax credits or letting them sunset at the end of the year.</p> <p>"If these subsidies expire, it will be important for federal, state, and local policymakers to consider the potential adverse effects on healthcare access and affordability, as well as revenue losses for providers of all types," said Fred Blavin, lead author of the analysis and principal research associate at the Urban Institute.</p> <p><i>Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016. </i></p></section>
