CHICAGO – The harmful effects of a repeal of the federal Affordable Care Act without a replacement package to soften the blow would extend beyond hospitals to lllinois' economy, according to the state hospital association.
Illinois faces the potential loss of $11 billion to $13 billion in economic activity, which could result in the loss of at least 84,000 jobs, according to estimates from the Illinois Health and Hospital Association. The association, in a report distributed late last month, breaks down the economic impact in each of the state's 18 congressional districts.
Illinois hospitals and health systems generate $88.8 billion for state and local economies annually and employ more than 260,000 people across the state. That supports what the IHA estimates is nearly 500,000 direct and indirect jobs.
The estimates are based on a repeal by Congress without replacement legislation or a resumption of higher federal reimbursement rates under the Medicare and Medicaid programs. Rates were cut based on the assumption that hospitals' costs for uncompensated care would ease due to the increased number of insured.
Illinois hospitals have been hit with more than $1 billion in Medicare payment cuts to help pay for ACA coverage, and that's projected to total another $10 billion between 2016 and 2025. More than 1 million state residents benefit from expanded coverage under the ACA.
"We can't afford to take action that disrupts healthcare coverage and the Illinois economy. Any repeal of ACA coverage should not take effect until the replacement plan takes effect," the association urged in a piece distributed last month as a letter to editor to publications around the state.
"If Congress does not make repeal of coverage contingent on adoption of a replacement plan, then Congress should also repeal the hospital payment cuts that help pay for ACA coverage," the letter authored by IHA president A.J. Wilhelmi reads. "Otherwise, people won't be able to get the care they need, local economies will suffer and jobs will be lost. Facing revenue losses, hospitals will be forced to cut spending by reducing services and staff, delaying new technology and facilities or shifting costs to privately insured patients."
The association represents 200 member hospitals and 50 systems in the state. About 41% of member hospitals operate on slim or negative margins. Many are located downstate where an increase in the uninsured population will "create uncertainty for providers and threaten the financial sustainability of providing the current level of healthcare services," the association said.
The Illinois group is part of a chorus of hospital groups warning of the negative effects repeal alone would have on the sector and local and state governments.
Nationally, a full repeal of the act may cost hospitals about $399.77 billion of revenue in the next 10 years, according to a report released last month by the Federation of American Hospitals and the American Hospital Association.
That would put pressure on ratings of the health care sector, which has issued almost $154 billion of bonds from 2010 through 2015, with pain likely to spread to state and local budgets as well.
"Growth in hospital bad debt and charity care costs would resume, negatively affecting operating margins," the Wells Fargo Municipal Research Group said in a Dec. 15 report. Wells Fargo sees an action coming quickly on repeal, but slowly on the replacement piece, presenting a challenge to the industry.