Connecticut’s health care leaders and state officials have been warning for months about the potentially devastating impacts of President Donald J. Trump’s One Big Beautiful Bill Act on access to care for millions of Americans.
Nearly two months after the law’s passage, hospital executives here say there are critical details still unknown that make it difficult to determine exactly how it will impact providers and patients.
“My best guess is it’s not going to be good for hospital providers and health care in general,” Vincent Capece, president and CEO of Middlesex Hospital, an independent hospital located in Middletown. “There’s going to be less money available, but exactly how much and how that all works out when the dust settles is really hard to calculate.”
The law makes several changes to Medicaid, known as HUSKY in Connecticut, that are projected to kick anywhere from 100,000 to 170,000 residents off the program in the next decade. It also impose new limits on the amount of Medicaid funding states can collect from the federal government through what’s known as the “hospital provider tax.”
Those are just some of the policies that could spell trouble for a hospital’s bottom line.
Health care researchers predict the law’s major components, some of which aren’t slated for implementation until 2027 at the earliest, will pose the greatest challenge to rural hospitals and those that serve a large share of Medicaid patients. Hospitals that aren’t performing well financially might also be less poised to absorb potential revenue hits that the law’s measures could bring.
The Connecticut Mirror spoke with hospital executives from around the state about how they’re approaching major pending federal changes.
It’s too early to consider service cuts, in most cases
Most of the hospital leaders who spoke for this article said it’s still too early to consider scaling back services in response to the federal cuts.
Ben Wade, chief strategy officer at Stamford Health, said he’s hopeful they’ll be able to manage costs without reducing access to services.
“We have not identified any programs at this time for closure,” Wade said. “We don’t plan to do that.”
However, leaders at small community and rural hospitals acknowledged that they may have to scale back the availability of certain services.
“It’s not necessarily cutting programs,” said Kurt Barwis, CEO of Bristol Hospital. “It’s starting to look critically and strategically at ‘How do I retool these programs to accomplish the same thing but at a lower cost?’”
Barwis said he’s established partnerships with larger hospital systems, like UConn Health and Hartford HealthCare, and expects to do more of these in the future.
Kyle Kramer, CEO of Day Kimball Hospital in Putnam, said service changes are “inevitable” at rural community hospitals like his, where they must always think about whether there is enough demand for a particular service, he said.
“There has to be a high enough level of volume to maintain that proficiency,” Kramer said. “And if it becomes a service that is too expensive to offer, we’ve got to think about, ‘Okay, is this something that we should partner with somebody else who has larger scale to provide it?’"
People with commercial insurance may feel impacts to cost, access
While the federal changes directly impact people who get coverage through Medicaid and state-based exchanges, the ripple effects will be felt by everyone, health care leaders warned.
“The impact goes far beyond those who lose coverage. Our entire health system and every community we serve will feel the effects. Reduced services, longer wait times, staff reductions, and the potential closure of programs and facilities,” Daniel Keenan, vice president of government relations at Trinity Health of New England, stated in emailed comments.
Keenan pointed to emergency rooms as an example. When people don’t have coverage, they turn to emergency departments for basic care, resulting in crowding, service delays and staffing issues that impact the entire system, he said.
The changes could drive up costs for people with private insurance, as well.
Leaders at both Stamford and Middlesex hospitals say the reductions in government Medicaid payments will likely force them to negotiate increased payments from commercial insurers, which could result in higher premiums for those with private coverage.
“We will need to think about the upcoming commercial insurance negotiations that we have to make sure that we have the resources that we need to cover our expenses,” Wade said, adding that if insurers and employers don’t opt to absorb these costs, they will end up hitting people’s premiums.
Provider tax changes could deal the biggest financial blow
One of the big areas of uncertainty lies with the hospital provider tax, several hospital executives said. The provider tax is an arrangement that allows states to increase the amount of federal Medicaid dollars they get from the federal government by collecting taxes from hospitals and then redistributing those funds back to the facilities. The exchange counts as Medicaid spending by states and entitles them to extra reimbursements from Washington.
The federal budget bill decreases the “safe harbor limit” — or the rate at which states can tax hospitals — from 6% to 3.5% by 2031, with a phased-in reduction beginning in 2028.
Even though the new limit won’t take effect for several years, federal waivers for the tax rate will pose an issue as soon as next year, when the current provider tax agreement between the state and hospitals expires. In advance of a new agreement, approved by the legislature this year and slated to take effect in July 2026, Connecticut will have to reapply for a federal waiver to tax the hospitals above the safe harbor limit in order to go ahead with its plan to increase hospital taxes by $375 million.
In the past, states have been permitted to apply for waivers to tax hospitals at rates exceeding the safe harbor limit. Connecticut, for example, taxes hospitals at the maximum 6% for inpatient revenues, but received a federal waiver to tax outpatient revenues at slightly over 10%, said Paul Kidwell, senior vice president at the Connecticut Hospital Association. It’s unclear whether the federal government will continue to grant such waivers, he added.
“It’s a big question mark,” Kidwell said. “We’re proceeding as if we can continue, with the knowledge that we need more information from CMS in order to be certain.”
Capece, CEO at Middlesex Hospital, said the tax change could be the biggest financial disruptor for his hospital, even more so than changes to Medicaid eligibility.
“The risk really lies with regard to the provider tax issue,” Capece said. “It’s a huge amount of money.”
Barwis, of Bristol Hospital, called the expiration of the agreement at the end of this fiscal year a looming “day of reckoning” for Connecticut.
“Will [the Centers for Medicare and Medicaid Services] grant a new waiver to keep it at 10.5%? Or will CMS say, ‘No, no, no, we’re not going to grant this waiver again. You need to go down to 6%.’ And how will that affect hospitals in the state of Connecticut?” Barwis said.
Some think there’s still hope for change
At least some Connecticut hospital leaders hope the most potentially damaging effects of the bill could get scaled back or repealed before they go into effect.
Wade, who oversees strategy at Stamford Health, said there’s a chance that, if Democrats take control of Congress in the midterm elections, some of the changes could be “pushed off or unwound entirely,” he said.
“We’re still doing a lot of advocacy at the federal level because this is still a moving target,” Wade said.
Kramer, who heads up Day Kimball, agreed that there’s still time for things to change. Capece from Middlesex said he, too, is “cautiously optimistic.”
CHA’s Kidwell is less convinced the law could be scaled back but, he said, he’s grateful to be facing these federal changes in a state that wants to help as many people as possible keep their health coverage.
“We all have this goal of making sure as many people stay insured as possible and that compliance with federal rules is not so onerous that people fall off because of paperwork,” Kidwell said. “I don’t think that’s the same in other states where they might have a different motivation.”
This story was originally published by the Connecticut Mirror.
