Executive Summary

• The reconciliation bill passed a House vote (218-214) on Thursday after being approved by the Senate (51-50) earlier this week. The bill will now head to President Trump for final sign-off.
• Healthcare provisions in the bill are largely similar to those in initial versions, albeit with deeper cuts to Medicaid and potentially greater implications for uninsured rates. The final bill also further restricts state provider taxes, a key source of funding for the hospitals.
• The final bill will result in 11.8 mn individuals losing insurance coverage over the next 10 years, per the CBO. Given changes from the initial House version of the bill and updates from the CBO, we see the potential for modestly harsher headwinds to hospital adjusted EBITDA (now at 2-5% of total, phased in over time, prior to accounting for state provider taxes).

The healthcare-focused provisions in the bill are largely similar to those in initial versions (see here), albeit with deeper cuts to Medicaid and potentially greater implications for uninsured rates (detailed below). Those provisions most impactful to hospitals include Medicaid eligibility thresholds (primarily work requirements) and state provider taxes. In total, the bill will cut federal spending for Medicaid and the ACA Marketplace by over ~$1 tn over the next 10 years, according to the CBO. This includes ~$940 bn of federal Medicaid funding and ~$200 bn for health exchanges.

We view the final version of the bill as an incremental negative for the hospitals, though still manageable from a credit perspective. We previously estimated a 2-4% headwind to hospital adjusted EBITDA from 1) Medicaid eligibility provisions included in the House version of the bill and 2) the YE25 expiration of enhanced subsidies in the ACA Marketplace (see Hospitals: Implications of the Big Beautiful Bill).