Key Financial Impacts on Providers Under the Proposed House Reconciliation Bill

A new analysis from the Urban Institute, with support from the Robert Wood Johnson Foundation, analyzed the proposed budget reconciliation bill, passed by the House of Representatives on May 22. The study reviewed potential impacts on healthcare providers of all sizes if the bill, known as the One Big Beautiful Bill Act, is signed into law.

The bill proposes major funding cuts to Medicaid programs and the potential expiration of Affordable Care Act (ACA) credits, which combined could lead to a revenue loss exceeding $1 trillion. The magnitude of these cuts would impact both Democratic- and Republican-led states by reducing revenue and cutting accessibility to care for millions of Americans. 

The new analysis, released June 13, follows up a May 2025 analysis. The new report uses the Urban Institute’s Health Insurance Policy Simulation Model combined with updated projections from the Congressional Budget Office. Unfortunately, the new numbers spell even worse news for providers.

Major Revenue Loss

Estimates should healthcare providers could lose $797 billion in revenue over the next decade. Hospitals would see the biggest decline, losing $321 billion, while physicians are facing an $81 billion loss. 

The majority of revenue loss (36%) would take place in California, Florida, Texas and New York, the four most populous states. Another nine states (Arizona, Georgia, Illinois, Indiana, North Carolina, Ohio, Oregon, Pennsylvania and Washington) would experience more than $20 billion in revenue loss between 2025 and 2034.

Further Revenue Loss: ACA Tax Credits

Currently, ACA tax credits reduce the healthcare premiums of millions of Americans. The budget reconciliation bill allows these credits to expire at the end of 2025, making a serious dent in provider revenue. If these credits expire, the uninsured rate is set to rise 50%. The report indicates revenue loss would climb from $797 billion to over $1 trillion. 

Altogether, the breakdown of the potential $1 trillion in lost revenue includes absorbed costs from hospitals and office-based physicians, absorbed costs from other healthcare providers, like dentists, and loss of spending on prescription drugs. It’s a major financial hit to providers.

Lost coverage for millions

In addition to the loss of ACA tax credits, the bill also proposes cuts to Medicaid. These cuts could lead to nearly 16 million people losing insurance coverage, including:

• 7.8 million losing Medicaid
• 9.1 million from ACA marketplace adjustments

Uncompensated care losses

The loss of coverage is expected to significantly increase the cost of uncompensated care for providers. The study estimates a $204 billion increase in uncompensated care over the next ten years, most of which will be absorbed by hospitals. 

Again, the most populous states are the ones most impacted by the increase in uncompensated care:

• California: $27.5 billion increase
• Texas: $15.9 billion increase
• New York: $31.1 billion increase
• Florida: $11.7 billion increase

Qualitative impacts

The proposed federal funding cuts have major impacts on both patients and providers. Patients in need of care may lose coverage and find themselves avoiding necessary care because of medical bills they can’t afford. 

Coverage losses would weigh heavily on hospital finances. Under the Emergency Medical Treatment and Active Labor Act (EMTALA), hospitals must treat patients regardless of their insurance status. The more self-pay patients in the U.S., the more self-pay patients without coverage who come into a hospital’s emergency department.

The cuts are especially worrisome for financially at-risk hospitals and hospitals in low-income areas. Lower coverage means lower revenue means a lower quality of care for communities in need. 

What comes next?

In order for the budget reconciliation bill to become law, both the House of Representatives and the Senate must agree on a version of the text. The Senate is currently negotiating its version of the bill, which must then be accepted by the House. 

While Americans wait for Congress to come to a decision, it’s widely assumed that whatever the final law looks like, it will presumably come with negative impacts on hospital revenue and an increase in self-pay patients from Medicaid cuts. 

Now is the time for hospitals and health systems to prepare. It’s better to have the right tools and systems in place today rather than next year, during a potential influx in self-pay patients in need of care. Office Ally offers a suite of revenue recovery tools and solutions designed to reduce uncompensated care and increase your organization's profitability. Learn more about available revenue recovery tools.