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New Report Outlines Impact of ACA Repeal on Patients and Hospitals

December 06, 2016 | FAH Policy Blog Team

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The American Hospital Association (AHA) and the Federation of American Hospitals (FAH) sent letters to President-Elect Trump  and Congressional leaders today highlighting a new report that details the severe impact repealing the Affordable Care Act (ACA)’s coverage will have on community hospitals as they strive to care for their communities. The report finds that this would result in the largest ever cut to hospital funding, nearly 100% more than the Balanced Budget Act of 1997.

While expressing the importance for repeal legislation to be accompanied by replace legislation, Chip Kahn, FAH President and CEO, and Rick Pollack, AHA President and CEO, underscored the importance of protecting patients, hospitals and our caregivers if the Congress chooses to only repeal at this time.

      “As you begin reconsideration of the ACA, we want to be a constructive partner in this discussion. We strongly believe that any repeal legislation must be accompanied by provisions that protect the coverage for those currently receiving such    protection. However, if that is not the legislative path to be pursued, then it is vital that such legislation provide a true clean slate and also include repeal of the reductions in payments for hospitals services embedded in the ACA – specifically the substantial reductions to hospitals’ annual inflation updates and the cuts to Medicare and Medicaid DSH payments. If the coverage associated with the ACA disappears, the importance of these payments would be heightened – they are vital in helping defray the costs of treating our most vulnerable patients.

The report, which was commissioned by the AHA and FAH, was put together by the health care economics firm Dobson | DaVanzo.  It estimates the financial impact, from 2018 – 2026, on hospitals of repealing the ACA under H.R. 3762 without any replacement. Dobson | DaVanzo finds that the loss of coverage under H.R. 3762 would have a net negative impact on hospitals of $165.8 billion, after accounting for the restoration of the Medicaid DSH cuts that H.R. 3762 contemplates. Dobson | DaVanzo also finds that hospitals would lose $289.5 billion in inflation updates if the payment cuts in the ACA are not restored. Finally, Dobson | DaVanzo finds that the full restoration of the Medicare and Medicaid DSH payment reductions would amount to $102.9 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. As you know, hospitals are often the largest employer in many communities, and more than half of a hospital’s budget is devoted to supporting the salaries and benefits of caregivers who provide 24/7 coverage, which cannot be replaced,” wrote Pollack and Kahn.

The Pollack and Kahn letters also call attention to a second Dobson | DaVanzo analysis that estimates the cumulative federal payment reductions to hospitals that have been imposed subsequent to and independent of ACA.  These cuts total another $148 billion from 2010 to 2026.

Pollack and Kahn concluded the letters by committing to work with the President-Elect and Congress on legislation that achieves the shared goal of improving America’s health care system through patient-centered care, and believe strongly that empowering Americans through health coverage is key to success.