Hospitals in the Trump 2.0 hot seat

Driving the news: Second-quarter earnings calls have begun to paint a picture of how the Republicans' actions — or lack thereof — are starting to impact for-profit hospitals.

• Citing the expiration of enhanced Affordable Care Act subsidies, HCA CEO Sam Hazen told investors last month that "many people became uninsured and still needed emergency care from hospitals," and the "impact was greater than our estimates."
• Admissions for patients who formerly had exchange coverage declined by 15%, he added. "We expected some of these patients to shift to other forms of coverage, but this did not happen. Instead, these patients migrated almost one for one to uninsured."
• Tenet is seeing much the same thing, with people dropping off ACA exchanges straight into the ranks of the uninsured "on a pretty much one-to-one basis," executive vice president and CFO Sun Park said on the company's earnings call.

The big picture: The first year of the second Trump administration featured high-profile Oval Office deals with pharmaceutical CEOs and much railing about health insurance premiums, but both industries have largely avoided painful policy outcomes.

• Drug companies, for example, ducked a worst-case scenario of wide-ranging tariffs and widespread most-favored nation pricing in Medicare.
• Insurers successfully lobbied to increase a proposed Medicare Advantage payment rate they argued was too low.
• Hospitals, on the other hand, are likely only starting to feel the financial fallout stemming from the GOP's major Medicaid changes passed last year, and there appears to be plenty of appetite for even more hospital reforms in the future.

Between the lines: Last year's Medicaid overhaul cracked down on how hospitals get paid by the program, limiting provider taxes and states' ability to direct enhanced spending to facilities. Republicans also added work requirements, which are estimated to swell the uninsured population by more than 5 million.

• Most of the biggest changes start taking effect next year.
• It "has introduced a new era of uncertainty, one in which the balance sheet cushion accumulated over the past five years will be tested," a recent Fitch Ratings report on nonprofit hospitals and health systems concluded.
• "Fiscal 2025 may ultimately prove to be an operational peak for the sector before a new and more challenging chapter begins."

The administration has also pushed regulatory changes opposed by hospitals, including recently proposing site-neutral payment reforms in Medicare for certain imaging services.

• There's also a new pilot program allowing drug companies to offer rebates, instead of up-front discounts, to certain safety net facilities for medicines under the 340B drug discount program.
• In Congress, House Republicans have particularly shown interest in more hospital legislation, including overhauling certain business practices they deem anti-competitive and implementing more aggressive site-neutral payment policies.
• Certain efforts attracted interest from some Democrats, as well.

What they're saying: Hospital policy is "where the money is," said Brian Blase, president of Paragon Health Institute, a conservative think tank that was highly influential in last year's Medicaid reforms.

• "If you're going to reduce federal health care spending and there's ultimately going to be less of it, you want less of it to go to big inefficient hospital systems."
• Blase said he's taking hospitals' alarm over rising uninsured populations with a grain of salt.
• "I'm very skeptical about what they say about uncompensated care based on the fact that we know nonprofits provide very little uncompensated care," he told me. "And hospitals are the least efficient part of our health care sector."

The American Hospital Association said it "remains deeply concerned about significant Medicaid cuts and other regulatory proposals that would make it harder for patients to access care."