Dive Brief:
- HCA Healthcare, one of the largest for-profit hospital operators in the country, said it could lose more than $1 billion this year due to the expiration of more generous Affordable Care Act subsidies and a decline in its Medicaid state supplemental payments.
- Executives on a Tuesday call with investors said HCA could lose between $600 million to $900 million due to the subsidy lapse and between $250 million to $450 million from declines in some of its Medicaid state supplemental payment programs.
- Still, the hospital operator said it’s implementing a multi-year resilience plan to mitigate the impacts and expects to offset about $400 million in losses this year. HCA anticipates its full-year 2026 earnings will skew closely to or exceed 2025 figures. Analysts called the guidance conservative.
Dive Insight:
Hospitals and providers have been racing to mitigate historic policy cost pressures, including the expiration of more generous subsidies on the ACA exchanges and healthcare cuts from last year’s “One Big Beautiful Bill.”
The ACA subsidies, which expired at the beginning of the month, were enacted during the COVID-19 pandemic to lower the costs of coverage. Enrollment in the exchanges swelled to new highs as a result, with more than 24 million people signing up for an ACA plan last year.
However, Congress let the subsidies lapse on Jan. 1. With the expiration of subsidies, premiums for beneficiaries are anticipated to more than double on average this year and millions are expected to lose insurance. Providers could lose more than $32 billion in revenue this year from the loss of subsidies, according to research from the Urban Institute.
Larger hospitals and health systems could see multi-million dollar losses. HCA, which operated 190 hospitals across 19 states and the United Kingdom as of December, recorded 8% of its total admissions from the ACA exchanges last year. The exchanges also represented about 10% of its revenue, executives said Tuesday.
Executives at HCA, which also reported its 2025 full-year and fourth quarter earnings results Tuesday, said the exact hit from the ACA subsidy lapse depends on a number of variables, including how many people lose coverage and what form of coverage others may migrate to.
“As you can imagine, assumptions around the variables are informed through our own data and experience as well as incorporating external studies and analysis. These variables are difficult to predict and require significant judgments,” CFO Mike Marks said on a call with investors.
HCA expects about a 15% to 20% decline in exchange volumes this year, Marks said. Of those, HCA expects approximately the same number will move to employer health insurance. The remainder will become uninsured — executives anticipate those people will utilize about 30% less services and rely more heavily on emergency rooms for care.
HCA also said it’s anticipating headwinds from a decline in Medicaid state supplemental payments this year. Changes in HCA’s payment programs are driving the shift: One payment program in Tennessee is constricting the number of benefit periods, while another in Texas is paused. A Virginia program logged a onetime retroactive payment in 2025 that will not reflect this year. However, executives noted the losses don’t include any potential upside from new approvals of grandfathered applications in other states.
To offset losses, HCA said it’s embarking on a number of efficiency initiatives it expects will save $400 million this year. The initiatives will focus on a wide-range of targets including digital transformation, capacity management and labor efficiency.
Despite the turbulence, HCA is projecting long-term volume growth of 2% to 3% this year. The hospital operator also expects revenue growth in 2026 and consistent margins compared to 2025. In 2026, HCA expects to log $76.5 billion to $80 billion in revenue for 2026, with full-year margins slightly above 20% and adjusted earnings before interest, taxes, depreciation and amoritization of $15.6 billion to $16.5 billion.
Analysts said HCA’s efficiency initiatives could help offset some of its expected losses.
“[Management] has focused immensely on finding cost/efficiency offsets to the [expiration of ACA subsidy] headwind, & we expect these ‘resiliency’ efforts to continue,” according to a Tuesday note from Jefferies analyst Brian Tanquilut.
HCA also released its 2025 full-year and fourth-quarter results. The hospital operator grew its revenue 7% year over year in 2025 to reach $75.6 billion. Volumes grew last year, with same facility admissions increasing 2.3%.
Outpatient surgeries declined slightly in 2025 by 0.5%. Still, HCA CEO Sam Hazen said outpatient development was a priority for the operator’s resiliency, and that it plans to continue developing its outpatient footprint.
