Expiration of ACA enhanced subsidies would pose high financial risk for hospitals in 12 states

Amid a continuing push in Congress to extend the Affordable Care Act (ACA) enhanced subsidies, a new analysis identifies the states where expiration would have the biggest financial impact on hospitals.

Not-for-profit hospitals in a dozen states are at high risk of negative credit shocks if the subsidies are not renewed, according to a Fitch Ratings analysis. Hospitals in Alabama, Georgia, Kansas, Louisiana, Mississippi, Montana, North Dakota, South Carolina, South Dakota, Tennessee, West Virginia and Wyoming face “heightened financial headwinds.”

Seven of the high-risk states have not expanded Medicaid nor implemented backstops such as Basic Health Programs or state-based subsidization to fill the void in ACA coverage.

Five states have an expanded Medicaid program but lack state-level safety-net assistance and have a high concentration of rural hospitals.

“Sparse rural hospital networks tend to operate on lower margins than their urban and suburban counterparts, limiting their capacity to absorb uncompensated care,” Fitch wrote.

At least 10 states provide subsidies that were intended to supplement the ACA subsidies but now may partially fill the breach left if the federal subsidies expire permanently and enrollees are left with higher out-of-pocket premiums.

Hospitals in nine of those states — California, Connecticut, Maryland, Massachusetts, New Jersey, New Mexico, New York, Vermont and Washington — face a low risk of being negatively affected from a credit standpoint, according to Fitch.

A 10^th state, Colorado, is deemed medium-risk.

“In these [medium-risk] states, credit implications will rely more on hospital-specific characteristics: Diversified systems with limited Marketplace volumes should see modest effects, while safety-net and rural providers face greater risk with increased exposure to uninsured populations,” Fitch wrote.

Where things stand for the ACA subsidies

The Senate is still seeking a bipartisan compromise to extend the subsidies, according to legislators involved in the discussions. Efforts have picked up again in recent days.

Sen. Bernie Moreno, the Ohio Republican who is heading up the negotiations for the GOP, reportedly has sent Democrats updated text for a three-year bill. The subsidies would be phased out in favor of health savings accounts over the length of the deal, a concept espoused by Republicans.

Some of what’s at stake for ACA coverage in the talks was seen this week in new data from CMS. Through the Jan. 15 deadline to enroll on Healthcare.gov, just under 23 million people were signed up. That compares with 24.1 million in 2025, a reduction of 4.5%.

One factor that could boost the 2026 tally is that roughly 10 states extended their enrollment deadlines to late January, and data for the latter part of the month was not captured in CMS’s numbers.

Overall, however, the gap seems more likely to widen. Of the 20.2 million consumers categorized as returning in 2026, an unreported number were reenrolled automatically rather than actively choosing a plan. Some in that group can be expected to drop out by failing to pay their initial premium.

“Those numbers will continue to drop as attrition is back in a big way,” Ellen Montz, PhD, managing director with Manatt and formerly director of CMS’s Center for Consumer Information and Insurance Oversight, said Jan. 29 during a webinar.

She predicted that “at best, 85% of the folks who made their way through open enrollment will stay in the market and actually pay that first binder payment.” At least 3 million people would fall off the rolls in that scenario.

A projected nine-figure decline at one health system

In the for-profit hospital sector, HCA Healthcare shared its Q4 2025 financials and 2026 outlook and noted it anticipates a loss in adjusted EBITDA of between $600 million and $900 million this year due to the impact on ACA volumes. In 2025, the organization’s adjusted EBITDA was more than $15.5 billion.

Ongoing resiliency initiatives in revenue integrity, variable and fixed cost efficiencies, and capacity management stand to limit the net downswing to between $200 million and $500 million, CFO Mike Marks said during a Jan. 27 earnings call.

“We have been implementing steps to try to mitigate the impact of this [ACA] health insurance exchange headwind,” Marks said.

The company projects a drop of between 15% and 20% in ACA volumes from the expiration of the subsidies along with tightened enrollment protocols that were enacted in the One Big Beautiful Bill Act (OBBBA).

Where exactly the volume and dollar losses fall in the projected ranges will depend on several questions, Marks said, among them: “How many people lose exchange coverage? What form of coverage, if any, do those lives migrate to?”

A shift from ACA coverage to employer-sponsored insurance (ESI) would benefit hospitals, given the generally more robust reimbursement rates and comprehensiveness of ESI. Those who end up uninsured, representing 80% to 85% of HCA’s projected ACA volume decline, would be expected to decrease their collective healthcare utilization by roughly 30% and would be more likely to translate to bad debt when they receive care.

The impact of the downturn nonetheless would be less pronounced than it would be from a widespread loss of other private insurance, Marks indicated, because people with ACA marketplace coverage generally rely more on the emergency department than do the commercially insured.

Questions loom among the remaining insured

Another aspect that remains to be seen about 2026 ACA enrollees is whether “there will be a metal-tier shift from silver to bronze, and the [corresponding] impact on utilization and collectability of our patient-due balances,” Marks said.

Healthcare industry stakeholders can expect “a theme of skimpy coverage to compensate for increased premiums,” Montz said, noting reports by state-based marketplaces of “a very large customer swing between gold-plan and bronze-plan enrollment.”

One of the biggest concerns is all the uncertainty.

“[There are] a lot of modeling assumptions in that, a lot of judgments in that,” Marks said, referring to HCA’s projections. “We’re going to have to test [them] as we go through the first weeks, days and months of 2026.”