A hospital corridor

Beauty is in the eye of the beholder. Although the One Big Beautiful Bill Act signed into law in July is projected to reduce federal health care spending by nearly $1.1 trillion by 2034, it also is likely to be costly for hospitals.

Kodiak, a health care technology company, quantified the impact of the health care provisions in the bill. Budgeted federal spending on Medicaid would decline by $911 billion by 2034, according to an analysis by the Kaiser Family Foundation. Nearly eight million people could lose their Medicaid coverage by 2034, a Congressional Budget Office analysis of an earlier version of the law found. Other estimates put that number closer to 15 million. 

In addition, unpaid medical bills would increase by $7.6 billion by 2034, according to an analysis of an earlier version of the law that was published in the Journal of the American Medical Association. Total uncompensated care costs would increase by more than $200 billion by 2034, with $63 billion of that coming from hospitals, based on an analysis of an earlier version of the law by the Urban Institute and the Robert Wood Johnson Foundation. 

“The numbers are jaw-dropping for health care revenue cycle leaders who themselves
are attempting to quantify the impact of the One Big Beautiful Bill Act’s provisions on their hospital, health system or medical practice,” according to Kodiak’s report.

The company looked at data from the 2,100 hospitals and 300,000 physicians that use its platforms to calculate how four different Medicaid disenrollment scenarios would affect an average hospital that uses its platforms:

  • A 5% decline in Medicaid gross charges that becomes a 5% increase in self-pay charges would result in a drop in the overall collection rate to 21% from 21.1% and a decline in net revenue of more than $1 million. 
  • A 10% decline in gross charges that becomes a 10% increase in self-pay charges would lead to a reduction in the overall collection rate to 20.9% from 21.1% and a decline in net revenue of more than $2 million. 
  • A 15% decline in gross charges that becomes a 15% increase in self-pay charges would result in a decline in the overall collection rate to 20.8% from 21.1% and a drop in net revenue of more than $3 million.
  • A 20% reduction in Medicaid gross charges that becomes a 20% increase in self-pay charges would lead to a drop in the overall collection rate to 20.8% from 21.1% and a reduction in net revenue of nearly $4 million. 

“Depending on the scenario, our analysis estimates that the average hospital will lose between 0.4% to 1.4% of its annual net revenue,” the report concluded. “Converted to dollars, that’s $1 million to $4 million. Extrapolated out to all hospitals, that’s a collective drop of up to $25 billion in net revenue in one year alone.“

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