As the country gears up for November elections, health systems say they are keeping an eye on, but not severely concerned about, potential major changes in the Affordable Care Act exchanges or Medicaid supplemental programs that would hamper their bottom lines.
In the wake of the COVID-19 public health emergency, millions of Medicaid beneficiaries have been disenrolled from the program to the detriment of some payers highly invested in those populations.
That lengthy process and political efforts to limit future breaks in coverage are of interest to providers. Though Medicaid volumes have dipped in recent quarters, the number of hospital patients with coverage through commercial exchanges—where reimbursement may not match the average commercially insured patient but is still slightly above what they’d receive from Medicare—has risen as the disenrolled seek new sources of coverage.
Sun Park, chief financial officer of Tenet Healthcare, said Wednesday at the 2024 Wells Fargo Healthcare Conference that his system’s exchange volume had risen 60% from the second quarter of 2023 to the second quarter of 2024 and now represents 6% to 7% of total enterprise revenue.
HCA Healthcare had previously shared a similar 46% year-over-year exchange volume increase during its second-quarter earnings call.
Steve Filton, chief financial officer at Universal Health Services, noted during a Wells Fargo session Friday that his system’s increase was less substantial than others but still has risen to about 5% of the organization’s total acute care adjusted admissions.
Election season and any subsequent changes in policy limiting Medicaid subsidies and, subsequently, exchange volumes could throw a wrench in those numbers, the executives acknowledged.
HCA Chief Financial Officer Mike Marks, who on Thursday described the exchange population as “roughly our second best payer,” pointed out that limited subsidies would not evacuate all of the exchanges’ enrollees, and that some of those who leave would make their way back to commercial coverage.
“It’s not a net zero, but it is an impact,” he said at the conference. “We’ll know a lot more after the election and then, frankly, a lot more as we get into 2025.”
Filton, whose system is less exposed to the exchanges, had a similar muted take.
“Our view is if there’s an impact on commercial exchange enrollment because there’s a change in the administration and the subsidies or whatever, while we think it could be a bit of a headwind, just given the numbers we don’t think it’s likely to be a material headwind,” he said.
Despite the acknowledgements, there was also a degree of skepticism among the executives as to whether such restrictions would, or should, come to pass.
Tenet Healthcare CEO Saum Sutaria, M.D., who also chairs the Federation of American Hospitals, said the hospital and insurance industries’ stance on any down-the-line reductions in exchange volumes is the same as when Medicaid redeterminations began last year.
“On principle, it is not a good thing to take away coverage from people that rely on that coverage for the healthcare they have … because that fragments their care,” he said at the conference. “I understand we’re benefiting from redeterminations economically. As it turns out, it’s still not a good thing … and I think that principle probably should be well understood by everybody who’s going to have to make a decision on this.”
That’s not to say anything about Medicaid supplemental programs’ role in sustaining access to care.
“The industry tends to view the programs as durable” to political machinations because they’re also the “lifeblood” of safety-net hospitals, Filton said. “If the programs were to end or be reduced dramatically, I think what you would see is a lot of these safety-net hospitals would no longer be economically viable—and I think that’s a public policy outcome that, regardless of party, is really not an acceptable outcome,” he said.
For-profit systems’ participation in these state-level programs adds millions to their balance sheets, though Filton noted that “even with the benefit of these programs,” UHS and likely other large systems are “still just barely covering, or maybe not even still covering, our costs with our Medicaid patients.”
HCA CEO Sam Hazen described the programs as a recognition from the government “that providers need help to deal with the kind of chronic and historic underfunding of Medicaid.”
“They’re really focused on that goal which I think we’ve seen good support in both red states and blue states,” Hazen said. “We’ve seen historically good support from Republican presidential administrations and Democratic presidential administrations. So they feel way more durable.”
One political “nuance that’s never before existed” highlighted by each of the systems’ executives is that red states like Florida and Texas—where HCA and Tenet have said they more heavily rely on Medicaid supplemental payments—have numerous residents relying on the programs.
Filton said any federal efforts to upend the programs “would be a tough political sell” due to pushback that would come from these states in spite of their political leanings. Sutaria and Hazen agreed and noted that “progress is being made” educating state leaders on how their constituents are benefiting from that status quo.
“These are red states for sure, but we’ve got to make sure the political leaders in those states and who are representing in Washington understand the implications for their own citizens,” Hazen said.
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