Nonprofit hospitals in nonexpansion states with high exposure to ACA marketplace patients face increased financial pressure this year due to the expiration of the enhanced premium tax credits at the end of 2025, Fitch said in a Jan. 27 report.
Four things to know:
1. Nonprofit hospitals in seven nonexpansion states see greater risk from the subsidy expiration because they face coverage reductions due to limited Medicaid eligibility and the lack of state-level backstops. These states are Alabama, Georgia, Kansas, Mississippi, South Carolina, Tennessee and Wyoming.
2. Hospitals in five expansion states face high risk from the expiration because of rural hospital concentration and the lack of additional state safety-net programs. Fitch said sparse hospital networks tend to “operate on lower margins than their urban and suburban counterparts, limiting their capacity to absorb uncompensated care.” These states are Louisiana, Montana, North Dakota, South Dakota and West Virginia.
3. Fitch classified 15 states and D.C. as lower risk because they have backstops and limited enrollment exposure. Several of these states have implemented Basic Health Programs, bridge coverage or emergency appropriations to soften enrollment losses and stabilize risk pools. Fitch noted that New Mexico’s full subsidy replacement through mid-2026 illustrates this approach. Other states are likely to see modest coverage changes and have predominantly urban provider footprints. The states facing lower risk are: California, Connecticut, Delaware, Illinois, Massachusetts, Maryland, Michigan, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington.
4. Fitch said timing effects are expected to be uneven. While open enrollment for 2026 coverage showed modest year-over-year declines, the financial impact is expected to become clearer as 2026 premium bills take effect and midyear attrition emerges. Fitch expects growth in self-pay and charity care to be concentrated from midyear into the third quarter among providers with high ACA marketplace exposure, rather than across the broader hospital sector.
Read the full report here.
The post Nonprofit hospitals face credit headwinds as ACA subsidies expire: Fitch appeared first on Becker's Hospital Review | Healthcare News & Analysis.
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