The Future of the ACA and Hospital Financial Reality

After some years, the healthcare industry was coming to practical grips with the Affordable Care Act. Healthcare cost growth rates were down. More people were insured, although not at the level or in the ways that commercial insurance companies wanted or needed to make their risk pools work profitably

And then came the 2016 election. Democrats lost the presidency while Republicans kept control of both houses of Congress. The long simmering plans and multiple attempts to repeal the ACA could finally succeed, now that Donald Trump would sign legislation repealing or at least significantly changing the legislation.

On the day of his inauguration, Trump signed his first executive order. It directed the executive branch to “take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the act, and prepare to afford the states more flexibility and control to create a more free and open health care market.” Largely seen as more symbolic than practical, given its lack of specificity, it nevertheless set a tone going forward. The ACA, as it has existed, was now on borrowed time.

Only, there are no concrete plans for replacement, either expressed by Trump or by the GOP, which means the future is largely hazy and, therefore, unpredictable. The Robert Wood Johnson Foundation, a major funder and force in healthcare, has spent tens of millions on the ACA through outreach as well as research into improving the law. It continues to support data analysis and the results of its funded work will likely help illuminate aspects that are crucial to healthcare executive decisions. Especially as the legislative future remains blurry, research into individual mandates, insurance markets, public financing options, and more will necessarily help inform strategy.

Some of the options currently being discussed, including block grants to states, cross-state insurance markets, and what is now being called ACA “repair” by many Republicans in Congress, could have massive impact on hospitals. Will Medicaid be drastically cut back? Could block grants become ways for states to cut various types of healthcare spending and to redirect money elsewhere?

Currently, hospitals are greatly worried about an increase in uncompensated care, which could drastically affect the financial stability of many institutions. Healthcare organizations gave up a collective hundreds of billions in funding as a trade-off against more paying patients. Without the ACA, and with no replacement in site, those billions of cuts may become permanent without alternative revenue sources.

Lobbying will become a fundamental effort of many care providers and professional organizations. That will mean a shift in budgets, as lobbying is not a cheap activity, and an impact on operational funding.

There are no easy and direct actions for executives to take other than recognize the need for political as well as traditional managerial activities and for the latest information to inform strategy. 

Are you interested in finding a rewarding and lucrative healthcare career that fits your individual strengths and interests? Find out how education can help you adapt to the changing healthcare landscape. American Sentinel University is an innovative, accredited provider of healthcare management degrees, including an MBA Healthcare and Master of Science Business Intelligence and Analytics.