Rae Woods (00:05):
From Advisory Board, we are bringing you a breaking Radio Advisory, your weekly download on how to untangle healthcare's most pressing challenges. My name is Rachel Woods. You can call me Rae. On July 4th, President Trump signed the One Big Beautiful Bill into law, and this is a big deal. In fact, a big enough deal that here at Radio Advisory, we're going to be shifting our recording and releasing schedule to make sure that we can spend a few minutes talking about what happened, what's next, and what it means for you, our listeners. Because in total, this law represents the biggest change to healthcare since the passage of the Affordable Care Act.

(00:46):
Since the ACA passed, we've seen a steady decline in the uninsured rate, which hit an all time low in 2022 through a combination of Medicaid expansion, enhanced for the public exchanges, increased outreach and enrollment efforts, and COVID era Medicaid protections. The provisions of this new law combined with the expiration of those enhanced subsidies at the end of 2025 has led the CBO to estimate that 16 million people will lose their insurance over the next 10 years. The largest losses are expected in Florida, Georgia, Louisiana and Texas. Now, what does this all mean for healthcare leaders? Providers have been telling us all year that impending Medicaid cuts, the biggest cuts to the program since it was founded in 1965, were their biggest source of concern.

(01:38):
Rural providers, and frankly, anyone with an already high government payer mix will face certain hits to their margin through the combination of reduced revenue from rate cuts, reduced volumes due to care avoidance and increased expenses from uninsured patients. Even those with a relatively moderate exposure to Medicaid face a range of other cuts. In other words, it's not just Medicaid. It's also dramatic cuts to ACA Marketplace coverage and cuts to research funding and expected cost increases from tariffs and immigration policies, and the potential for further cuts through 340B and Medicare that Congress may make in the future because there is still likely more to come.

(02:22):
For payers, even if they're not dealing with enrollment losses in Medicaid or the marketplace directly, know that their provider partners are going to come to them asking for better, higher rates to help them manage their margin. That, of course, raises costs for plans which have their own set of headwinds that they're dealing with, and higher costs for plans can trickle down into higher premiums for employees and consumers, which may lead them to delay their care as well. Coupled with the care avoidance from the uninsured or from both legal and undocumented immigrants, not to mention the poorer health outcomes we've been tracking for the last several years means that we expect case mix to get worse at the same time that payer mix does.

(03:03):
Ultimately, anyone who works with hospitals and health systems needs to understand the significance of these cuts. Life sciences companies and vendors are likely to have a harder time selling to cash-strapped providers, or those providers will be looking for more assurances from potential partners. Now, let's talk about what you do next. Remember, the first wave of cuts won't hit until 2026 in the form of marketplace enrollment hurdles at the start of the year and work requirements towards the end of the year. For providers, now is the time to evaluate your cost structure, to understand which services are your strengths and where you might need to turn to partnership to ensure access to care. It may be a moment to pause and reevaluate medium or long-term projects or investments.

(03:53):
It's also the time to set up the structures and processes you will need when these changes take effect. Remember all of that coverage churn that happened when the public health emergency ended and Medicaid redeterminations began? Well, providers and plans invested in a lot of resources to help patients and members with the administrative burden of proving and ultimately maintaining their Medicaid coverage and all of that muscle memory will be very important heading into 2026. It also means planning for your worst case scenario. Of course, how much each policy variable affects your organization will vary. You have to scenario plan for the range of outcomes you may see.

(04:37):
We actually built a tool to help you understand the impact of these policies and others on your organization. We talked about it in episode 256. I highly recommend going back to that episode. In fact, we're going to link it in the show notes. That's because for some of you or your partners or your neighbors, the impacts may be catastrophic and I don't say that lightly. You need to have a plan for what to do if and when that happens. A plan to consolidate, a plan to restructure, to partner, to sell, even to close. If you want help with that scenario planning, just send us an email at podcasts@advisory.com.

(05:21):
And to help you keep track of what's going on in the world of policy, we also added all of Advisory Board's policy updates, written and audio to a new page that includes a timeline of recent health policy developments. It includes news stories, expert insights from health leaders and from advisory board experts. Plus, it includes the audio updates that you've come to rely on from Radio Advisory. I'll add a link to that in the show notes. And make sure you're subscribed to this channel. We won't always do rapid release episodes like this, but wherever possible, we're adding our take on health policy to existing episodes to keep you as informed as possible. I can't stress this enough. We are always here to help. See you next week.