Report: An end to ACA tax credits to increase uncompensated care costs in Tenn. by nearly one-third

Tennessee hospitals could see a 29% increase in uncompensated care costs if Congress allows enhanced health insurance marketplace subsidies to expire (Photo: Getty Images)

Tennessee hospitals could see a 29% increase in uncompensated care costs if Congress allows enhanced health insurance marketplace subsidies to expire this month, a new analysis found.

More than 500,000 low- and moderate-income Tennesseans rely on the enhanced tax credits, which significantly lower the cost of insurance premiums through the Affordable Care Act Marketplace.

Without the credits, rising health insurance premiums are expected to price millions out of health coverage and shift the burden for providing uncompensated care to hospitals, which by law are required to provide certain medical services regardless of whether insurance will cover them.

In Tennessee, demand for uncompensated care could rise by 29.2% or $378 million beginning in 2026 if the tax credits expire, an analysis by the Urban Institute and Robert Wood Johnson Foundation found. The analysis noted that rural communities could see the biggest financial hits from a surge in uninsured residents. Currently nine rural hospitals in Tennessee are at risk for closure.

Tennessee is among 15 states that would experience the largest increases in uncompensated care. Nine of these states, including Tennessee, have not expanded Medicaid.  

The enhanced subsidies were put in place in 2021 during the height of the coronavirus pandemic . Extending the subsidies has been a key source of contention in Congress’s current budget negotiations..

The Republican-controlled U.S. House passed a seven-week spending bill last week that didn’t include a continuation of the Affordable Care Act Marketplace tax enhancements. Democrats in the U.S. Senate have refused to provide the votes necessary to overcome the 60-vote filibuster to pass it.

Instead, Democrats have proposed a four-week funding measure that would permanently keep the tax credits in place.

Without a bipartisan agreement to avert a government shutdown by Sept. 30, the subsidies will come to an end.
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