Projected federal spending cuts combined with an increase in uncompensated care means hospitals in Connecticut could face a $4 billion hit over the next decade.
That’s the potential impact of the federal budget reconciliation bill recently passed by the U.S. House of Representatives, according to a new analysis by the New Jersey-based Robert Wood Johnson Foundation and the Urban Institute in Washington, D.C.
According to the study, the bill would cut $3.3 billion in federal spending for Connecticut hospitals over the next decade. At the same time, hospitals in the state would be hit with a $700 million increase in uncompensated care — care they are required to provide to people without insurance or the ability to pay.
Combined, that’s a $4 billion hit to the state’s 27 acute-care hospitals.
According to the analysis, overall spending on healthcare services nationwide would decrease by $1.06 trillion between 2025 and 2034 from all payers under the reconciliation bill and the expiration of enhanced premium tax credits. The study said the decrease would be divided as follows:
- 40% attributable to hospitals ($424 billion)
- 11% to physician services ($120 billion)
- 26% to other services ($275 billion) and
- 23% to prescription drugs ($241 billion).
“The Medicaid cuts Congress is considering would be the largest funding reduction in the program’s history, and it is hard to overstate just how devastating the impacts would be,” said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation.
“Such drastic changes to Medicaid financing would have ripple effects that go well beyond people covered by the program,” she added, “further squeezing hospitals, limiting access to care for entire communities and destabilizing state and local economies.”
Earlier this month, the Connecticut Hospital Association (CHA) said the state’s hospitals face a $375 million increase in the state hospital tax, which was included in the two-year budget approved by the legislature.
CHA said that the tax increase, as well as payment reductions, “will result in devastating effects that will worsen financial burdens on hospitals at a time when they are already struggling.”
In its 2024 hospital financial health report, which is the latest available and utilizes data from 2023, CHA said the state’s hospitals already face significant financial challenges, including increasing expenses and Medicaid underpayments.
“Total hospital operating margin for Connecticut remained negative at -0.5% in 2023, lagging the Northeast/Mid-Atlantic margin of 2.2% and
national margin of 2.6%,” the report states. “This is at a time when
national margins are already historically low and hover at unsustainable levels.”
The report adds that hospitals and health systems “need positive operating margins to continue providing high-quality and equitable care, investing in life-saving technological advancements, and supporting their missions to create healthier communities and meet evolving patient needs.”
