The expiration of the ACA’s enhanced premium tax credits is costing the largest for-profit health systems more than they expected, according to second-quarter earnings calls from HCA Healthcare, Community Health Systems and Tenet Healthcare.
Patients who lost subsidized exchange coverage are not moving to other insurance plans. Instead, they are becoming uninsured and continuing to seek hospital care.
Nashville, Tenn.-based HCA Healthcare now expects the payer mix shift to reduce adjusted EBITDA by $1 billion to $1.2 billion in 2026, up from its initial estimate of $600 million to $900 million. The shift reduced second-quarter adjusted EBITDA by about $400 million.
“As we look at the first half of the year, our expectations proved accurate, although the impact was greater than our estimates,” HCA CEO Sam Hazen said during the company’s second-quarter earnings call.
HCA did not miscalculate how many patients would leave the exchanges. It miscalculated where they would go.
The company had expected 80% to 85% of patients losing exchange coverage to become uninsured. Instead, “almost all of the individuals losing coverage on the exchanges are becoming uninsured,” HCA CFO Mike Marks said. An anticipated decline in hospital utilization among those patients also “did not materialize,” he said.
“We expected some of these patients to shift to other forms of coverage, but this did not happen,” Mr. Hazen said. “Instead, these patients migrated almost one for one to uninsured.”
Exchange adjusted admissions fell 15% year over year, while uninsured admissions increased 50%. Uninsured patients now account for more than 10% of HCA’s equivalent admissions.
The financial effect was concentrated in several markets. Three of HCA’s 15 domestic divisions — Gulf Coast, North Florida and South Atlantic — accounted for about half of the company’s total impact. Exchange admissions in those markets fell 25% to 28% during the first half of the year.
Franklin, Tenn.-based Community Health Systems reported a similar trend. The company more than doubled its estimate of the annual adjusted EBITDA impact from the ACA credits’ expiration to between $50 million and $75 million, up from an initial estimate of $20 million to $30 million.
Self-pay patients increased to slightly more than 6% of visits from slightly less than 5% a year earlier, representing an increase of about 20%.
“We underestimated … how many people would continue to come to our health system,” CHS Executive Vice President and CFO Jason Johnson said. Patients who had relied on the enhanced credits are continuing to use hospital services at close to their previous rate, he said.
However, those visits generate little revenue.
“We only collect a few pennies on the dollar” from self-pay patients, CHS CEO Kevin Hammons said, adding that the company is “effectively not recognizing any revenue on that self-pay business.”
CHS’ second-quarter adjusted EBITDA fell to $330 million from $380 million a year earlier.
Dallas-based Tenet Healthcare experienced the same pressure with less visible financial damage. Exchange revenue fell 17% year over year and exchange admissions declined about 13.5%, creating an estimated $65 million revenue headwind during the quarter.
However, cost reduction and AI initiatives that Tenet began planning in mid-2025 allowed the company to raise its full-year adjusted EBITDA guidance to between $4.83 billion and $5.03 billion.
“In light of the challenges that the decline in exchange enrollment presents, we are flexing our cost base and building an appropriate baseline on which to grow in the future,” Tenet Chair and CEO Saum Sutaria, MD, said. “With a focus on continued margin strength, our consistent results are driven by a transformed portfolio of businesses, continued strategic focus on higher acuity specialty services, strong leadership at the local level and an ability to effectively manage through the current dynamic environment.”
Dr. Sutaria also confirmed the coverage shift reported by HCA and CHS. Tenet CFO Sun Park said exchange volume is converting to uninsured volume “on a pretty much one-to-one basis.”
“We did see a proportionately equal increase in uninsured volumes in our Q2 as well, and we expect that to continue as well in the second half [of the year],” Mr. Park said.
Tenet’s results also challenged the assumption that the effects would be concentrated in states that did not expand Medicaid. Its largest exchange declines occurred in Florida, Arizona, Michigan, South Carolina and Texas, a group that includes both Medicaid expansion and nonexpansion states.
“These states, which are swing states, must have had a lot of members needing the support of premium tax credits in order to continue to acquire product,” Dr. Sutaria said. “We haven’t dug into it deeply enough to understand if the issue is that there just isn’t enough coverage from a bronze metal product standpoint that’s attractive enough versus other states, or if the issue has been that Medicaid eligibility for those at the lowest levels of income who would have required the highest premium support is that they’re just not qualifying for that Medicaid.”
“You can see it in our numbers … our exchange admissions are down. Uninsured is up,” Dr. Sutaria said. “It’s not quite one to one, but it’s certainly in that 80% to 100% range … and it’s bigger in numbers in those states that I called out.”
Executives described 2026 as the peak of the disruption rather than a new baseline.
Mr. Hazen said HCA expects attrition to normalize in 2027, assuming the ACA’s original premium tax credits remain in place and the enhanced subsidies are not restored.
Dr. Sutaria declined to forecast 2027 exchange enrollment without another two quarters of data, but expressed confidence in underlying demand.
“This is not an environment to be pessimistic about with respect to the acute care industry,” he said.
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