Darwin's Our Take 8.3.26: Loss of ‘enhanced’ ACA subsidies hits IDNs harder than expected

Hospitals and health systems are feeling the effects of a substantial increase in uninsured patients. In some instances, the increase is as high as about 20%, according to a New York Times article by Reed Abelson.

Due to the increase in uninsured patients, hospitals are reporting a rise in unpaid bills and charity care, Abelson wrote. They’re also seeing patients postpone or forego elective surgeries, often a reliable source of profit.

Abelson noted that hospital executives have “expressed growing unease over lost revenues amounting to hundreds of millions of dollars across the country’s vast health systems.”

The loss of enhanced subsidies for health plans bought through the Marketplace exchanges is largely responsible for the increase in uninsured patients. While the majority of those who enrolled in an ACA plan still qualified for a subsidy in 2026, Abelson noted, the subsidies were less generous.

As a result, premiums for ACA health plans increased by an average of 58% in 2026, according to a KFF analysis. In some cases, they more than doubled.

Consequently, more people selected bronze plans, which have lower premiums but higher deductibles and out-of-pocket costs. The KFF analysis revealed that nearly 2 million more people enrolled in a bronze plan for 2026 than for 2025 (9.2 million vs. 7.3 million).

Others dropped their coverage altogether.

Marketplace enrollment is down 13%, from a high of 22.1 million people in 2025 to 19.2 million people in February of this year, KFF reported in late June. These numbers reflect “effectuated” enrollment, which takes into account people who signed up for a plan or were automatically reenrolled but subsequently canceled or did not pay their premiums.

By the end of the year, Marketplace enrollment could be as low as 17.5 million, KFF reported.

On earnings calls in the past couple of weeks, executives at HCA Healthcare, Community Health Systems, Universal Health Services, and Tenet Healthcare talked about the increases in uninsured patients since the first of the year.

Sun Park, chief financial officer at Dallas-based Tenet, said the for-profit company is “roughly seeing a pretty consistent conversion from exchange patient volume into uninsured on a pretty much one-to-one basis.”  

According to Becker’s Payer Issues, Nashville, Tenn.-based HCA Healthcare initially assumed that 80% to 85% of those who dropped their ACA plan would become uninsured.

“We expected some of these patients to shift to other forms of coverage,” said CEO Sam Hazen on the company’s earnings call, “but this did not happen. Instead, these patients migrated almost one for one to uninsured.”

Accordingly, Becker’s reported, HCA raised its full-year estimate of the payer mix hit from between $600 million and $900 million at the end of the first quarter to between $1 billion and $1.2 billion at the end of the second quarter.

Abelson reported in the Times article that visits by uninsured patients were up 20% compared with last year at Franklin, Tenn.-based Community Health Systems.

CEO Kevin Hammons said on CHS’ earnings call, “We only collect a few pennies on the dollar” on those patients, noting that the health system is “effectively not recognizing any revenue on that self-pay business.”

CHS also revised its full-year estimate of the EBITDA hit resulting from the subsidy expiration, according to Becker’s, more than doubling the original estimate of between $20 million and $30 million to a new estimate of between $50 million and $75 million.

Steve Filton, chief financial officer of King of Prussia, Pa.-based Universal Health Services, said during the health system’s earnings call, “What was fairly apparent in the second quarter was that the decline in exchange volumes was offset almost on a direct one-for-one basis to an increase in self-pay volumes. It felt like virtually everyone who lost their exchange coverage became an uninsured patient.”

Filton said UHS originally assumed that up to 20% of those who lost their exchange coverage would get some other type of commercial insurance, most likely through an employer, Becker’s reported.

“That didn’t seem to be true, and probably that phenomenon is what gave rise to the $10 million increase in our exchange impact projection from $75 million to $85 million,” he said.

Abelson reported that approximately 30 million adults and children in the U.S. are uninsured. This does not take into account the millions more who are underinsured.

OUR TAKE: It’s interesting that these large health systems thought a considerable portion of patients who were losing their exchange plan would obtain coverage elsewhere. Why would they assume that?

As Cynthia Cox at KFF has pointed out, the ACA marketplaces are largely a last resort for people without an affordable offer of coverage through work. When that coverage disappears, there's often nowhere else to land, which is exactly why the conversion to uninsured has been running close to one-to-one.

If more people are unable to pay their exchange plan premiums as the year continues, hospitals may be revising their estimates yet again.

So far, most of the reporting on the "less generous" ACA subsidies has focused on larger health systems. But the impact of greater numbers of uninsured patients will almost certainly be harsher for small, rural hospitals and safety-net hospitals. Fitch has flagged twelve states where not-for-profit hospitals face the sharpest credit risk from the subsidy lapse: Alabama, Georgia, Kansas, Louisiana, Mississippi, Montana, North Dakota, South Carolina, South Dakota, Tennessee, West Virginia, and Wyoming. Seven of those states never expanded Medicaid and haven't built any state-level backstop, so there's no safety net absorbing the coverage loss. That's where to expect the most aggressive financial response from hospital leadership.

Add in the Medicaid cuts set to take effect next year, and many of those hospitals could end up struggling to keep their doors open.

It's worth watching what happens over the next few quarters rather than treating this as a one-time earnings story.

What else you need to know

OpenAI has expanded access to ChatGPT Health to all eligible U.S. users. The company launched ChatGPT Health in January with limited initial access and a waitlist for others who wanted to request access. Now, the dedicated Health feature of the AI chatbot is available to users who are at least 18 years old and have an eligible ChatGPT plan. Users can connect their wellness apps and supported medical records to ChatGPT and then give the chatbot permission to use that data to provide personalized analyses, summaries, insights, and updates.

OpenAI assured potential users when it launched ChatGPT Health that their health information would be stored separately from other chats they engaged in with ChatGPT, noting that the chatbot might use “context” from users’ non-Health chats to “make a health conversation more relevant,” but Health information would not flow back into non-Health chats. Users also have the option to disconnect their apps and remove ChatGPT’s access to their medical records at any time, according to OpenAI.

The full rollout of ChatGPT Health occurred despite multiple lawsuits against OpenAI in which plaintiffs have sought to delay it. The defendants allege the chatbot they or a family member used — ChatGPT-40, a model that OpenAI has retired — was responsible for providing erroneous information that ultimately resulted in the death of, or a near-fatal health issue for, the user. A spokesperson for OpenAI told Becker’s Hospital Review, “ChatGPT is not a doctor and should never be used as a substitute for medical care, diagnosis, or treatment.”

Meanwhile, OpenAI acknowledged recently that certain of its chatbot models gained internet access by identifying and exploiting a vulnerability while the models were being tested, leading to “an unprecedented cyber incident” involving an intrusion into Hugging Face, which is an online platform for AI and machine learning, and “other publicly available services.” The company said it is working with external partners to fully assess what happened.

Last week, Anthropic revealed that cybersecurity incidents have occurred involving three of its Claude models, the earliest of which took place in April. After learning of OpenAI’s security incidents, Anthropic said it initiated a transcript review of its own models on July 23 and identified the three incidents the next day.

On July 23, Reps. Ted Lieu, D-Calif., and Nathaniel Moran, R-Texas, introduced the AI Kill Switch Act, which “would require developers of the most powerful AI systems to maintain the technical capability to throttle, suspend, or shut them down.” The bill would also authorize the Secretary of the Department of Homeland Security, in consultation with other federal officials, “to order a slow down or shutdown of an AI system that can cause catastrophic harm.”

Risant Health’s founding CEO, Dr. Jaewon Ryu, is stepping down. While Risant’s board undertakes a national search for a permanent successor, Dale Maxwell, who retired in 2024 as president and CEO of Albuquerque, N.M.-based Presbyterian Healthcare Services, will serve as interim CEO. Becker’s Hospital Review reported that a spokesperson from Kaiser Permanente said Maxwell will start on Aug. 17 and Dr. Ryu’s last day with Risant will be Sept. 4.

A July 29 press release noted that Dr. Ryu made the decision to leave the Washington, D.C.-based nonprofit so that he could focus on his family. Risant Health was established in 2023 by Kaiser Permanente; since then, Danville, Pa.-based Geisinger and Greensboro, N.C.-based Cone Health have become part of Risant.

Humana will drop its Medicare Advantage plans from more markets in 2027 in an attempt to reach targeted margins. The move, which is expected to affect approximately 600,000 members, marks the second year in a row the insurer has chosen to shrink its MA markets. The company offered MA plans in three fewer states and 194 fewer counties in 2026, Healthcare Dive reported, but still attracted more than 1 million new enrollees by offering more generous benefits than rivals did.

Executives announced the decision during the company’s second-quarter earnings call on Wednesday. Jim Rechtin, Humana’s CEO, said the insurer’s main priority in MA bids for next year is “to remain on track to deliver our 2028 commitment of returning to a sustainable margin of at least 3%.”

Celeste Mellet, Humana’s chief financial officer, said the company would use the plan exits to “reduce benefit disruption” and “prioritize higher-performing plans.” But, she added, “we will work to recapture a significant portion” of the members in plans being eliminated — similar to the approximate 40% recapture rate in 2025. During the call, the company reaffirmed its anticipated 25% increase in MA membership in 2026.

Intermountain Health and AdventHealth are planning a joint venture designed to improve access to high-quality care in the greater Denver metro area. The two nonprofit health systems, based in Salt Lake City and Altamonte Springs, Fla., respectively, have signed a letter of intent and anticipate signing a definitive agreement in the weeks ahead. They expect to close the transaction early next year, pending regulatory approval.

AdventHealth’s five Denver-area hospitals will be part of the collaboration, along with their off-site emergency and urgent care centers and dozens of medical practices. Three of Intermountain Health’s hospitals in the area will participate, as will their affiliated physician practices and clinics. Intermountain’s Saint Joseph Hospital and its affiliated clinics will not be part of the joint venture. AdventHealth will oversee day-to-day operations, according to the announcement.  

DC developments

CMS is planning to end subsidies that have stabilized Medicare Part D premiums the last two years. As a result, millions of Medicare enrollees may pay higher monthly premiums for their prescription drug plans in 2027. The Biden administration established the voluntary subsidy program in 2024 to offset changes that would have significantly increased Part D premiums in 2025, The New York Times reported.

The subsidies, which originally were expected to continue through 2027, were intended to stabilize premiums as participating insurers adapted to the redesigned Part D benefit under the Inflation Reduction Act. The IRA lowered and capped certain costs for Part D enrollees but shifted more costs onto insurers.

In a fact sheet, CMS said the agency’s bid analysis for 2027 indicates Part D plan sponsors now have sufficient experience under the redesigned benefit “to support their assumptions” in developing plan bids. In a social media post, Dr. Mehmet Oz, CMS’ administrator, said the subsidies are no longer needed and that most enrollees will have a premium increase of less than $10 in 2027. Final average premiums for next year’s Medicare Advantage and Part D plans are expected to be released in September, ahead of the open enrollment period.

A federal agency is pressuring hospitals to share patients’ health data with a private contractor, KFF Health News reported. The Consumer Product Safety Commission wants to obtain medical records — including personally identifiable information — for millions of patients who visit emergency rooms for injuries they may or may not have sustained while using consumer products.

The agency, which normally has five commissioners on its governing board but currently has just one, Peter Feldman, who is acting as chairman, is “modernizing” its surveillance system, a spokesperson told KFF Health News. Feldman said at a trade event earlier this year that CPSC “is investing in AI-enabled workflows … while also building up digital infrastructure to handle a massive new volume of electronic health records.”

Konza Health, an organization that won a five-year contract with CPSC valued as high as $15.9 million, will automatically pull and analyze medical records of all patient visits from ERs nationwide, according to the article. CSPC wants at least 100 hospitals to begin providing detailed medical records by the end of 2026, the article noted. KFF Health News reported that Konza’s CEO said the organization would omit patients’ names, addresses, and medical information that is not needed by CPSC before sharing records with the agency.  

What we’re reading

The iPatient Meets the iDoctor. JAMA, 7.27.26 (registration or subscription required)

Who Broke the Healthcare System? MedCity News, 7.23.26

The Inequality–Pandemic Cycle — Rethinking Preparedness. NEJM, 7.29.26 (registration or subscription required)